PEOPLE OF THE PHILIPPINES, Petitioner, v. RODOLFO GALLO y GADOT, Accused-Appellant.

FACTS:
Accused-appellant Gallo and accused Pacardo and Manta together with Mardeolyn and 9 others, were
charged with syndicated illegal recruitment and 18 counts of estafacommitted against eighteen
complainants, including Dela Caza, Guantero and Sare. The present appeal concerns solely accusedappellants conviction for syndicated illegal recruitment in Criminal Case No. 02-206293 and for estafain
Criminal Case No. 02-206297. According to the prosecution, Dela Caza was introduced by Panuncio to
accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean
national at the office of MPM Agency located in Malate, Manila. Accused-appellant Gallo then introduced
himself as a relative of Mardeolyn and informed Dela Caza that the agency was able to send many workers
abroad. Together with Pacardo and Manta, he also told Dela Caza about the placement fee of PhP150,000
with a down payment of PhP45,000 and the balance to be paid through salary deduction. With accusedappellants assurance that many workers have been sent abroad, as well as the presence of the 2 Korean
nationals and upon being shown the visas procured for the deployed workers, Dela Caza was convinced to
part with his money and paid the agency. After 2 weeks, the said agency moved and changed their name.
After 2 more months of waiting in vain to be deployed, Dela Caza and the other applicants decided to take
action. The first attempt was unsuccessful because the agency again moved to another place. However,
with the help of the Office of Ambassador Seres and the Western Police District, they were able to locate
the new address at Carriedo, Manila. The agency explained that it had to move in order to separate those
who are applying as entertainers from those applying as factory workers. Accused-appellant Gallo,
together with Pacardo and Manta, were then arrested. For his defense, accused-appellant denied having
any part in the recruitment of Dela Caza. In fact, he testified that he also applied with MPM Agency for
deployment to Koreaas a factory worker. RTC and CA convicted the appellants.
ISSUE: Whether or not accused-appellant is guilty of illegal recruitment committed by a syndicate.
HELD: Yes. To commit syndicated illegal recruitment, three elements must be established: (1) the
offender undertakes either any activity within the meaning of recruitment and placement defined under
Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no
valid license or authority required by law to enable one to lawfully engage in recruitment and placement of
workers; and (3) the illegal recruitment is committed by a group of three (3) or more persons conspiring or
confederating with one another. When illegal recruitment is committed by a syndicate or in large scale, i.e.,
if it is committed against three (3) or more persons individually or as a group, it is considered an offense
involving economic sabotage.Under Art. 13(b) of the Labor Code, recruitment and placement refers to any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit
or not. SC believes that the prosecution was able to establish the elements of the offense sufficiently. The
evidence readily reveals that MPM Agency was never licensed by the POEA to recruit workers for overseas
employment. In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042.
Testimonial evidence presented by the prosecution clearly shows that, in consideration of a promise of
foreign employment, accused-appellant received the amount of Php 45,000.00 from Dela Caza. When
accused-appellant made misrepresentations concerning the agencys purported power and authority to
recruit for overseas employment, and in the process, collected money in the guise of placement fees, the
former clearly committed acts constitutive of illegal recruitment.

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, vs. JOY C. CABILES, Respondent.
FACTS: Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.
Respondent Joy Cabiles was hired thus signed a one-year employment contractfor a monthly salary of
NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. She
alleged that in her employment contract, she agreed to work as quality control for one year. In Taiwan, she
was asked to work as a cutter.
Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without
prior notice, that she was terminated and that she should immediately report to their office to get
her salary and passport. She was asked to prepare for immediate repatriation. Joy claims that she was
told that from June 26 to July 14, 1997, she only earned a total of NT$9,000.15 According to her, Wacoal
deducted NT$3,000 to cover her plane ticket to Manila.
On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC against petitioner
and Wacoal. LA dismissed the complaint. NLRC reversed LAs decision. CA affirmed the ruling of the
National Labor Relations Commission finding respondent illegally dismissed and awarding her three
months worth of salary, the reimbursement of the cost of her repatriation, and attorneys fees
ISSUE:
dismissal.

Whether or not Cabiles was entitled to the unexpired portion of her salary due to illegal

HELD: YES. The Court held that the award of the three-month equivalent of respondents salary should
be increased to the amount equivalent to the unexpired term of the employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court ruled that
the clause or for three (3) months for every year of the unexpired term, whichever is less is
unconstitutional for violating the equal protection clause and substantive due process. A statute or
provision which was declared unconstitutional is not a law. It confers no rights; it imposes no duties; it
affords no protection; it creates no office; it is inoperative as if it has not been passed at all. The Court
said that they are aware that the clause or for three (3) months for every year of the unexpired term,
whichever is less was reinstated in Republic Act No. 8042 upon promulgation of Republic Act No. 10022 in
2010.
Ruling on the constitutional issue
In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may
exercise its powers in any manner inconsistent with the Constitution, regardless of the existence of any law
that supports such exercise. The Constitutioncannot be trumped by any other law. All laws must be read in
light of the Constitution. Any law that is inconsistent with it is a nullity. Thus, when a law or a provision
of law is null because it is inconsistent with the Constitution, the nullity cannot be cured by
reincorporation or reenactment of the same or a similar law or provision. A law or provision of law
that was already declared unconstitutional remains as such unless circumstances have so changed as to
warrant a reverse conclusion.
The Court observed that the reinstated clause, this time as provided in Republic Act. No. 10022,
violates the constitutional rights to equal protection and due process.96 Petitioner as well as the Solicitor
General have failed to show any compelling change in the circumstances that would warrant us to revisit

the precedent. The Court declared, once again, the clause, or for three (3) months for every year of the
unexpired term, whichever is less in Section 7 of Republic Act No. 10022 amending Section 10 of Republic
Act No. 8042 is declared unconstitutional and, therefore, null and void.

Flourish Maritime Shipping vs. Almanzor

Labor Law. The choice of which amount to award an illegally dismissed overseas contract worker, i.e.,
whether his salaries for the unexpired portion of his employment contract, or three (3) months salary for
every year of the unexpired term, whichever is less, comes into play only when the employment contract
concerned has a term of at least one (1) year or more.
Facts:
Respondent Almanzor entered into a two-year employment contract with petitioner Flourish
Maritime Shipping as fisherman and was deployed to Taipei, Taiwan. While on board, he was given an
instruction which he did not understand and therefore was unable to obey. The master of the vessel struck
him and refused his requested medical assistance. Respondent was repatriated to the Philippines but was
not redeployed as promised, thus the complaint for illegal dismissal, payment for the unexpired portion of
his employment contract, earned wages, moral and exemplary damages plus attorneys fees.
Petitioners Flourish Maritime Shipping and Uy contended that respondent voluntarily resigned and
that the same did not comply with the grievance machinery and arbitration clause embodied in the
employment contract.
The Labor Arbiter rendered a decision in favour of respondent, awarding him six months of his
monthly pay (3months for every year of the unexpired term). On appeal, the NLRC affirmed in toto the
Labor Arbiters findings. The Court of Appeals, on petition for certiorari, modified the NLRC decision by
increasing the monetary award due respondent. The Court of Appeals awarded respondent the unexpired
portion of the first year (11 months and 4 days) and 3 months for the unexpired second year, for a total of
14 months and 4 days.
Issue No. 1:

WON respondent was illegally dismissed from employment.

Held: YES. Petitioners, as concluded by the Labor Arbiter, failed to adduce any convincing evidence to
establish its claim that respondent voluntarily residned from employment. Likewise, the NLRC held that
petitioners failed to show that respondent was not physically fit to perform work due to his old age. Neither
was it proved that the employment contract indeed provided a grievance machinery. Both labor tribunals
correctly concluded, as affirmed by the Court of Appeals, that respondent was not redeployed for work, in
violation of their employment contract. Perforce, the termination of respondents services is without just or
valid cause.
Issue No. 2: WON the award made by the Court of Appeals was contrary to law.

Held: YES. Section 10 of R.A. 8042 provides: Money Claims. In case of termination of overseas
employment without just, valid or authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee 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. x x x x.
The correct interpretation of this provision was
settled in Marsaman Manning Agency Inc. v. NLRC where this Court held that the choice of which amount
to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired
portion of his employment contract, or three (3) months salary for every year of the unexpired term,
whichever is less, comes into play only when the employment contract concerned has a term of at least
one year or more.
The employment contract involved in the instant case covers a two-year period but the overseas
contract worker actually worked for only 26 days prior to his illegal dismissal. Thus, the three months
salary rule applies. Respondent, therefore, is entitled to six (6) months salary as correctly held by the
Labor Arbiter and affirmed by the NLRC.

FARLE P. ALMODIEL, petitioner vs. NLRC, RAYTHEON PHILS., INC., respondents, G.R. No. 100641
June 14, 1993
THE CASE: Subject of this petition for certiorari is the March 1991 decision of the National Labor Relations
Commission which reversed and set aside the Labor Arbiter's decision and ordered instead the payment of
separation pay and financial assistance of P100,000.00. Petitioner imputes grave abuse of discretion on
the part of the Commission and prays for the reinstatement of the Labor Arbiter's decision which declared
his termination on the ground of redundancy illegal.
FACTS: Petitioner F. Almodiel, a CPA, was hired as Cost Accounting Manager of Raytheon Philippines, Inc.
He started as a probationary or temporary employee. His major duties were: (1) plan, coordinate and carry
out year - end and physical inventory; (2) formulate and issue out hard copies of Standard Product costing
and other cost/pricing analysis if needed and required and (3) set up the written Cost Accounting System
for the whole company. After a few months, he was given a regularization increase of P1,600.00 a month.
On August 17, 1988, he recommended and submitted a Cost Accounting/Finance Reorganization, affecting
the whole finance group but the same was disapproved by the Controller. However, he was assured by the
Controller that should his position or department which was apparently a one-man department with no
staff becomes untenable or unable to deliver the needed service due to manpower constraint, he would be
given a three (3) year advance notice.
On January 27, 1989, petitioner was summoned by his immediate boss and in the presence of IRD
Manager, Mr. Rolando Estrada, he was told of the abolition of his position on the ground of redundancy. He
pleaded with management to defer its action or transfer him to another department, but he was told that
the decision of management was final and that the same has been conveyed to the Department of Labor
and Employment. Thus, he was constrained to file the complaint for illegal dismissal before the Arbitration
Branch of the National Capital Region, NLRC, Department of Labor and Employment.

Labor Arbiters Ruling: 1989 - Labor Arbiter declared that complainant's termination on the
ground of redundancy is highly irregular and without legal and factual basis, thus ordering the respondents
to reinstate complainant to his former position with full backwages without lost of seniority rights and
other benefits. Respondents are further ordered to pay complainant P200,000.00 as moral damages and
P20,000.00 as exemplary damages, plus ten percent (10%) of the total award as attorney's fees.
Raytheon appealed on the grounds that the Labor Arbiter committed grave abuse of discretion in denying
its rights to dismiss petitioner on the ground of redundancy, in relying on baseless surmises and selfserving assertions of the petitioner that its act was tainted with malice and bad faith and in awarding
moral and exemplary damages and attorney's fees.
NLRCs Ruling: 1991 - the NLRC reversed the decision and directed Raytheon to pay petitioner the
total sum of P100,000.00 as separation pay/financial assistance.
ISSUES: 1. Whether NLRC committed grave abuse of discretion amounting to (lack of) or in excess of
jurisdiction in declaring as valid and justified the termination of petitioner on the ground of redundancy. 2.
Whether bad faith, malice and irregularity crept in the abolition of petitioner's position of Cost Accounting
Manager on the ground of redundancy.
RULING:
1. No. There is no dispute that petitioner was duly advised, one (1) month before, of the termination of his
employment on the ground of redundancy in a written notice by his immediate superior in January 27,
1989. He was issued a check representing separation pay but in view of his refusal to acknowledge the
notice and the check, they were sent to him thru registered mail on January 30, 1989. The Department of
Labor and Employment was served a copy of the notice of termination of petitioner in accordance with the
pertinent provisions of the Labor Code and the implementing rules.
2. No. Whether petitioner's functions as Cost Accounting Manager have been dispensed with or merely
absorbed by another is however immaterial. For even conceding that the functions of petitioner's position
were merely transferred, no malice or bad faith can be imputed from said act. This Court said that
redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of
what is reasonably demanded by the actual requirements of the enterprise. The characterization of an
employee's services as no longer necessary or sustainable, and therefore, properly terminable, was an
exercise of business judgment on the part of the employer. The wisdom or soundness of such
characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of
the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown.
Indeed, an employer has no legal obligation to keep more employees than are necessary for the operation
of its business. Petitioner does not dispute the fact that a cost accounting system was installed and used at
Raytheon subsidiaries and plants worldwide; and that the functions of his position involve the submission
of periodic reports utilizing computerized forms designed and prescribed by the head office with the
installation of said accounting system. Petitioner attempts to controvert these realities by alleging that
some of the functions of his position were still indispensable and were actually dispersed to another
department. What these indispensable functions that were dispersed, he failed however, to specify and
point out. Besides, the fact that the functions of a position were simply added to the duties of another does
not affect the legitimacy of the employer's right to abolish a position when done in the normal exercise of
its prerogative to adopt sound business practices in the management of its affairs.
Considering further that petitioner held a position which was definitely managerial in character, Raytheon
had a broad latitude of discretion in abolishing his position. An employer has a much wider discretion in
terminating employment relationship of managerial personnel compared to rank and file employees. The

reason is that officers in such key positions perform not only functions which by nature require the
employer's full trust and confidence but also functions that spell the success or failure of an enterprise.

Petitioner claims that the functions of his position were absorbed by the Payroll/Mis/Finance
Department under Ang Tan Chai, a resident alien without any working permit from the DOLE as
required by law. Almodiel also claims that he is better qualified than Ang Tan Chai, a B.S. Industrial
Engineer, hired merely as a Systems Analyst Programmer or its equivalent in early 1987, promoted
as MIS Manager only during the middle part of 1988 and a resident alien.

On the other hand, Raytheon insists that petitioner's functions as Cost Accounting Manager had not
been absorbed by Ang Tan Chai, a permanent resident born in this country. It claims to have
established below that Ang Tan Chai did not displace petitioner or absorb his functions and duties
as they were occupying entirely different and distinct positions requiring different sets of expertise
or qualifications and discharging functions altogether different and foreign from that of petitioner's
abolished position.

Destitute of merit is petitioner's imputation of unlawful discrimination when Raytheon caused corollary
functions appertaining to cost accounting to be absorbed by Danny Ang Tan Chai, a resident alien without
a working permit. Article 40 of the Labor Code which requires employment permit refers to non-resident
aliens. The employment permit is required for entry into the country for employment purposes and is
issued after determination of the non-availability of a person in the Philippines who is competent, able and
willing at the time of application to perform the services for which the alien is desired. Since Ang Tan Chai
is a resident alien, he does not fall within the ambit of the provision.
Petitioner also assails that he is better qualified for the position. It should be noted, however, that Ang Tan
Chai was promoted to the position during the middle part of 1988 or before the abolition of petitioner's
position in early 1989. Besides the fact that Ang Tan Chai's promotion thereto is a settled matter, it has
been consistently held that an objection founded on the ground that one has better credentials over the
appointee is frowned upon so long as the latter possesses the minimum qualifications for the position. In
the case at bar, since petitioner does not allege that Ang Tan Chai does not qualify for the position, the
Court cannot substitute its discretion and judgment for that which is clearly and exclusively management
prerogative.
It is a well-settled rule that labor laws do not authorize interference with the employer's judgment in the
conduct of his business. The determination of the qualification and fitness of workers for hiring and firing,
promotion or reassignment are exclusive prerogatives of management. The Labor Code and its
implementing Rules do not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the
courts) managerial authority. The employer is free to determine, using his own discretion and business
judgment, all elements of employment, "from hiring to firing" except in cases of unlawful discrimination or
those which may be provided by law.
NOTES: Termination of an employee's services because of redundancy is governed by Article 283 of the
Labor Code which provides as follows:
Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the worker and the Department of
Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least one (1) month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses and in

cases of closure or cessation of operations of establishment or undertaking not due to

serious business losses or financial reverses, the separation pay shall be equivalent to at
least one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole
year.
ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC.
FACTS: Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow
Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief Officer, with
the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per
month. On the date of his departure, Serrano was constrained to accept a downgraded employment
contract upon the assurance and representation of respondents that he would be Chief Officer by the end
of April 1998. Respondents did not deliver on their promise to make Serrano Chief Officer.
Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines, serving only
two months and 7 days, leaving an unexpired portion of nine months and twenty-three days. Upon
complaint filed by Serrano before the Labor Arbiter (LA), the dismissal was declared illegal. On appeal, the
NLRC modified the LA decision based on the provision of RA 8042. Serrano filed a Motion for Partial
Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th paragraph of
Section 10 of RA 8042.
ISSUES: Whether or not the subject clause violates Section 10, Article III of the Constitution on nonimpairment of contracts; Whether or not the subject clause violate Section 1, Article III of the Constitution,
and Section 18, Article II and Section 3, Article XIII on labor as a protected sector.
HELD: On the first issue. The answer is in the negative. Petitioners claim that the subject clause unduly
interferes with the stipulations in his contract on the term of his employment and the fixed salary package
he will receive is not tenable. The subject clause may not be declared unconstitutional on the ground that
it impinges on the impairment clause, for the law was enacted in the exercise of the police power of the
State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs,
with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may
be employed.
On the second issue. The answer is in the affirmative. To Filipino workers, the rights guaranteed under the
foregoing constitutional provisions translate to economic security and parity. Upon cursory reading, the
subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals
that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of
one year or more; Second, among OFWs with employment contracts of more than one year; and Third,
OFWs vis--vis local workers with fixed-period employment; The subject clause singles out one
classification of OFWs and burdens it with a peculiar disadvantage. Thus, the subject clause in the 5th
paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal
protection. The subject clause or for three months for every year of the unexpired term, whichever is less
in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL.
PEOPLE OF THE PHILIPPINES v. LARRY LAURO DOMINGO
FACTS: Appellant Larry Domingo (Domingo) was charged with Illegal Recruitment (Large Scale) and
two (2) counts of Estafa before Regional Trial Court (RTC) of Malolos, Bulacan. Domingo, denied all the
accusations against him and claimed that he was a driver hired by the real recruiter, Gimeno, whom he
met inside the Victory Liner Bus bound for Manila in September, 2000 Domingo likewise presented as
witnesses private complainants Enrico Espiritu and Roberto Castillo who corroborated his claim that it was
Gimeno who actually recruited them, and that the filing of the complaint against appellant was a

desperate attempt on their part to get even because Gimeno could not be located. Prosecution witness
Simeon Cabigao (Cabigao) testified that he was among those who were recruited by Domingo, but he later
on recanted his testimony. By Joint Decision, the trial court found Domingo guilty beyond reasonable doubt
of Illegal Recruitment (Large Scale) and of 2 counts of Estafa.
On appeal to the Court of Appeals, Domingo maintained that the trial court erred for failing to give weight
to Cabigaos retraction. The Court of Appeals affirmed the decision of the trial court on all accounts. Hence,
the present petition.
ISSUE: Whether or not the retraction of Cabigao should be given weight
HELD: That one of the original complaining witnesses, Cabigao, later recanted, via an affidavit and
his testimony in open court, does not necessarily cancel an earlier declaration. Like any other testimony,
the same is subject to the test of credibility and should be received with caution. For a testimony
solemnly given in court should not be set aside lightly, least of all by a mere affidavit executed after the
lapse of considerable time. In the case at bar, the Affidavit of Recantation was executed three years after
the complaint was filed. It is thus not unreasonable to consider his retraction an afterthought to deny
its probative value. At all events, and even with Cabigaos recantation, the Supreme Court finds that the
prosecution evidence consisting of the testimonies of the four other complainants, whose credibility has
not been impaired, has not been overcome.
Eparwa Security and Janitorial Services vs. Liceo De Cagayan University
Facts:
Eparwa and LDCU, through their representatives, entered into a Contract for Security Services.
Subsequently 11 security guards whom Eparwa assigned to LDCU filed a complaint before the NLRC-RAB
against both Eparwa and LDCU for underpayment of salary, legal holiday pay, 13th month pay, rest day,
service incentive leave, night shift differential, overtime pay, and payment for attorney's fees. LDCU made
a cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security guards.
The LA found that the security guards are entitled to wage differentials and premium for holiday
and rest day work. The LA held Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor Code
and likewise orderd Eparwa to reimburse LDCU for whatever amount the latter may be required to pay the
security guards. On appeal to the NLRC, Eparwa and LDCU was held solidarily liable for the wage
differentials and premium for holiday and rest day work, but the NLRC did not require Eparwa to reimburse
LDCU for its payments to the security guards. Upon motion for reconsideration, NLRC declared that
although Eparwa and LDCU are solidarily liable to the security guards for the monetary award, LDCU alone
is ultimately liable ordering it to reimburse Eparwa for payments made to the contractual employees. Upon
appeal to the CA, the appellate court allowed LDCU to claim reimbursement from Eparwa. Eparwa then
filed an action for certiorari before the SC.
Issue:
Whether or not LDCU alone is ultimately liable to the security guards for the wage differentials and
premium for holiday and rest day pay without any right of reimbursement from Eparwa.
SC Ruling:
This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure
compliance of the provisions therein including the statutory minimum wage. The contractor is made liable
by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer
of the contractor's employees for purposes of paying the employees their wages should the contractor be
unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers'
performance of any work, task, job or project, thus giving the workers ample protection as mandated by
the 1987 Constitution. For the security guards, the actual source of the payment of their wage differentials
and premium for holiday and rest day work does not matter as long as they are paid. This is the import of
Eparwa and LDCU's solidary liability. Creditors, such as the security guards, may collect from anyone of the
solidary debtors. Solidary liability does not mean that, as between themselves, two solidary debtors are
liable for only half of the payment. LDCU's ultimate liability comes into play because of the expiration of
the Contract for Security Services. There is no privity of contract between the security guards and LDCU,

but LDCU's liability to the security guards remains because of Articles 106, 107 and 109 of the Labor Code.
Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the
expiration of the contract, but Eparwa's liability to the security guards remains because of their employeremployee relationship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement
from LDCU for any payment it may make to the security guards. However, LDCU cannot claim any
reimbursement from Eparwa for any payment it may make to the security guards.
General Milling Corporation vs. Torres
FACTS:
Earl Timothy Cone is a US citizen, who was hired by General Milling as a sports consultant and assistant
coach. He possessed an alien employment permit which was changed to pre-arranged employee by the
Board of Special Inquiry of the Commission on Immigration and Deportation. GMC requested that Cones
employment permit be changed to a full-fledged coach, which was contested by The Basketball Coaches
Association of the Philippines. Alleging that GMC failed to show that there is no competent person in the
Philippines to do the coaching job. Secretary of Labor cancelled Cones employment permit.
ISSUE: Whether or not the Secretary of Labor act with grave abuse of discretion in revoking Cones Alien
Employment Permit?
HELD: The Secretary of Labor did not act with grave abuse of discretion in revoking Cones Alien
Employment Permit. GMCs claim that hiring of a foreign coach is an employers prerogative has no legal
basis. Under Section 40 of the Labor Code, an employer seeking employment of an alien must first obtain
an employment permit from the Department of labor. GMCs right to choose whom to employ is limited by
the statutory requirement of an employment permit. The Labor Code empowers the Labor Secretary to
determine as to the availability of the services of a person in the Philippines who is competent, able and
willing at the time of the application to perform the services for which an alien is desired.
Hornales v NLRC
FACTS: Mario Hornales, together with other Filipinos, were sent to Singapore by JEAC International
Management & Contractor Services. Upon arrival, they were met the owner of Step-Up Employment
Agency Victor Lim, and were told that there would be working as fishermen. On board the vessel, Hornales
and the others were subjected to inhuman working conditions, such as inadequate supply of food and
water, maltreatment by the captain, and lack of medical attendance. They were also required to work for
22 hours a day without pay. Unable to bear the situation, Hornales and some other Filipinos left the vessel
while it was docked at Mauritius Islands. Upon return to the Philippines, Hornales asked JEAC to pay his
salaries. In turn, JEAC required him to surrender his passport promising that they would procure another job
for him, and later gave him P500.
Hornales filed with POEA a complaint for non-payment of wages and recovery of damages against
JEAC, its owner Canayan, and Country Bankers Insurance Corporation, its surety. JEAC-Canayans defense:
Hornales, Lim, and Min Fee Fishery Ltd are total strangers to them. This was supported by a (1) Joint
Affidavit of Hornales co-workers in Singapore, stating that Hornales admitted to them that he didnt apply
to any agency , that he went to Singapore as a tourist, and that he applied directly to Step-Up Agency; and
by a (2) Certification from Step-Up Agency corroborating the statements in the Joint Affidavit.
Supplemental Affidavit of Hornales: (1) He claimed he knew Canayan since 1990. (2) While the vessel was
docked at Mauritius Islands, Canayan reminded him of his loan obligations by sending him photocopies of
the PNB checks Canayan issued in his favour. (3) Canayan also sent him agreements whereby Victor Lim
was authorized to deduct from his salary the amount of his loan obligations. POEA in favour of Hornales.
NLRC dimissed complaint; no employee-employer relationship gave considerable weight to the Joint
Affidavit
Since POEA noted that JEAC is a service contractor not authorized to deploy fishermen, JEAC, could not
have deployed Hornales as an overseas contract worker. What is apparent is that Hornales obtained a
tourist passport and plane ticket from JEAC as a travel agent on a clearly fly now pay later plan

ISSUE/RULING: WON JEAC and Canayan were responsible for Hornales recruitment and deployment to
Singapore?
YES. NLRC Decision Set Aside. POEA Decision Reinstated. The Court started by examining each piece of
evidence to arrive at its conclusion.
Joint Affidavit It has no probative value because Hornales wasnt able to cross-examine it and
affiants merely swore as to what Hornales told them, but not as to the truth of the statements. Certification
It was not sworn, and seemed like a last ditch-effort of Step-Up to help JEAC. PNB Checks and agreements
These strongly disprove Canayans total strangers theory and revealed a contract of agency. The
factual and legal bases of NLRCs conclusions are bereft of substantial evidence the quantum of proof in
labor cases. There is nothing on record which shows that JEAC is a mere travel agency. Even Canayan
consistently plead that JEAC is a licensed recruitment agency authorized to recruit and deploy Filipino
contract workers. NLRC conveniently closed its eyes to the name of Victor Lim, as mentioned in the
agreements, when it ruled that Lim and Ste-Up are indeed total strangers to JEAC and Canayan.
POEAs decision was more convincing and supported by substantial evidence:
The PNB checks representing salaries from the account of Canayan evidences latters
participation in Hornales recruitment and deployment. Based from the agreements, the
Court wonders where Canayan got the name of Step-Up if the same is not known to him. It is
very unlikely for Hornales to go to Singapore as a tourist and then land a job without
knowing anyone.
JEAC and Canayans last argument was that, they cant be held liable because there was no employment
contract between him and and Step-Up Agency had been approved by POEA. They also claim that the
absence of a (1) Special Power of Attorney and (2) Affidavit of Responsibility, as required by the POEA
Rules and Regulations only proves that they did not employ Hornales to Singapore. To this, the Court said
that the acts can be used as a basis of absolving JEAC and Canayan. At most, theses act of deploying
Hornales to Singapore without complying with the POEA requirements only made them susceptible to
cancellation of suspension of license as provided by the POEA Rules and Regulations. But of course, such
violations should be threshed out in a proper administrative proceeding. RE JEACs surety: Its liability is also
founded on the POEA Rules and Regulations. Cash and surety bonds are required precisely as a means of
ensuring prompt and effective recourse against such companies when held liable for applicants or
workers claims, as well as for all valid and legal claims arising from labor violations.