LABOR LAW REVIEW Atty.

Joyrich Golangco
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15. SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. vs. NLRC
G.R. No. 161757 January 25, 2006
Carpio-Morales, J.:

Doctrine:
The theory of imputed knowledge ascribes the knowledge of the agent to the principal not the other way around.
Also, the agency between a foreign principal and its local recruitment agent is revoked if the foreign principal
directly manages the business (hiring of employee) entrusted to the local recruitment agent, dealing directly with
third persons.

FACTS:
Sunace International Management Services (Sunace), deployed to Taiwan Divina A. Montehermozo (Divina) as
a domestic helper under a 12-month contract effective February 1, 1997. 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 before the National Labor Relations
Commission (NLRC) against Sunace and three others including the employer-foreign principal alleging that she
was jailed for three months and that she was underpaid.

Divina filed also claimed that under her original one-year contract and the 2-year extended contract which was
with the knowledge and consent of Sunace, amounts representing income tax and savings were deducted from
her salary and while the amounts deducted in 1997 were refunded to her, those deducted in 1998 and 1999
were not.

For its part, Sunace alleged 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. The CA affirmed the Labor
Arbiter and NLRCs finding that Sunace knew of and impliedly consented to the extension of Divinas 2-year
contract. It went on to state that It is undisputed that Sunace was continually communicating with Divina’s
foreign employer. It thus concluded that as agent of the foreign principal, petitioner cannot profess ignorance of
such extension as obviously, the act of the principal extending complainant’s employment contract necessarily
bound it.

ISSUE: WON Sunace was solidarily liable with the foreign principal to Divina as to the events which transpired
during her 2-year extension in Taiwan.

SC RULING:
NO. The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer
Xiong, not the other way around. The knowledge of the principal-foreign employer cannot, therefore, be imputed
to its agent Sunace. Also, the agency is revoked if the principal directly manages the business entrusted to the
agent, dealing directly with third persons.

Here, there is no substantial proof that Sunace knew of and consented to be bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As such, it cannot be held solidarily liable
for any of Divinas claims arising from the 2-year employment extension. Furthermore, Sunace correctly points
out, there was an implied revocation of its agency relationship with its foreign principal when, after the
termination of the original employment contract, the foreign principal directly negotiated with Divina and entered
into a new and separate employment contract in Taiwan.

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ANTONIO M. SERRANO v. GALLANT MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC.
G.R. No. 167614, March 24, 2009
AUSTRIA-MARTINEZ

FACTS:
Antonio Serrano, a Filipino seafarer, was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co.,
Ltd. under a POEA-Approved Contract of Employment with the ff. terms and conditions:
Duration of contract 12 months
Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700 per month
Vacation leave with pay 7.00 days per month

On March 19, 1998, his departure date, Serrano was constrained to accept a downgraded employement
contract for Second Officer with a monthly salary of US$1,0000.00, upon the assurance and representation of
Gallant and Marlow that he would be made Chief Officer by the end of April 1998.

Gallant and Marlow did not deliver. Hence, Serrano refused to stay on as Second Officer and was repatriated to
the Philippines on May 26, 1998, serving only two months and seven days of his contract, leaving an unexpired
portion of nine months and 23 days.

Serrano filed a complaint for constructive dismissal and payment of his money claims amounting to
US$26,442.73, as well as moral and exemplary damages and attorney’s fees.

LA: Dismissal was illegal. Serrano was awarded US$8,770.00 representing Serrano’s salary for 3 months of the
unexpired portion of the contract + US$45.00 salary differential + 10% atty.’s fees. This was based on the salary
rate of US$2,590.00 consisting of: basic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, +
US$490.00/month, vacation leave pay = US$2,590.00/compensation per month.

NLRC: Serrano was only awarded a total of $4,669.50 reducing the applicable salary rate to US$1400 since RA
8042 does not provide for the award of OT pay, which should be proven to have been actually performed, and
for vacation leave pay.

CA: NLRC affirmed applicable salary rate. MR was denied. Hence, this petition for review where Serrano
assails, among others, the constitutionality of the clause “or for three (3) months for every year of the unexpired
term, whichever is less” under Sec. 10 of Ra 8042 alleging that it is violative of Sec. 3, Art. XIII of the
Constitution.

ISSUE:
Can Section 3 of Artt. XIII of the Constitution, on its own, be a source of a positive enforceable right?

HELD:
The constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in
the sense that these are automatically acknowledged and observed without need for any enabling legislation.
However, to declare that the constitutional provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The
espousal of such view presents the dangerous tendency of being overbroad and exaggerated. The guarantees
of "full protection to labor" and "security of tenure", when examined in isolation, are facially unqualified, and the
broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal
regardless of circumstance. This interpretation implies an unimpeachable right to continued employment-a
utopian notion, doubtless-but still hardly within the contemplation of the framers. Subsequent legislation is still
needed to define the parameters of these guaranteed rights to ensure the protection and promotion, not only the
rights of the labor sector, but of the employers' as well. Without specific and pertinent legislation, judicial bodies
will be at a loss, formulating their own conclusion to approximate at least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable right to
stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing. As

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manifested by several framers of the 1987 Constitution, the provisions on social justice require legislative
enactments for their enforceability.

Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of
which the questioned clause may be declared unconstitutional. It may unwittingly risk opening the floodgates of
litigation to every worker or union over every conceivable violation of so broad a concept as social justice for
labor.

Section 3, Article XIII does not directly bestow on the working class any actual enforceable right, but merely
clothes it with the status of a sector for whom the Constitution urges protection through executive or legislative
action and judicial recognition. Its utility is best limited to being an impetus not just for the executive and
legislative departments, but for the judiciary as well, to protect the welfare of the working class.

When the challenge to a statute is premised on the perpetuation of prejudice against persons favored by the
Constitution with special protection -- such as the working class or a section thereof -- the Court may recognize
the existence of a suspect classification and subject the same to strict judicial scrutiny.

Article XIII, by itself, without the application of the equal protection clause, has no life or force of its own.

Nonetheless, the subject clause violates Serrano's right to substantive due process, for it deprives him of
property, consisting of monetary benefits, without any existing valid governmental purpose.

There is nothing in the text of the law or the records of the deliberations leading to its enactment or the
pleadings of respondent that would indicate that there is an existing governmental purpose for the subject
clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason
that the clause violates not just petitioner's right to equal protection, but also her right to substantive due process
under Section 1 of Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of
nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment
of R.A. No. 8042.

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As to Sec. 9, there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of
Section 6 of R.A. 8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed,
Section 15(a), Rule 110 of the latter Rules allows exceptions provided by laws. Section 9 of R.A. 8042, as an
exception to the rule on venue of criminal actions is, consistent with that law’s declared policy of providing a
criminal justice system that protects and serves the best interests of the victims of illegal recruitment.

On to the third case, the Court has already held that the liability of corporate directors and officers is not
automatic. To make them jointly and solidarily liable with their company, there must be a finding that they were
remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal activities.

13. SAMEER OVERSEAS PLACEMENT AGENCY, INC. vs. JOY C. CABILES

G.R. No. 170139 August 5, 2014
Leonen, J.:

Doctrine:
The re-enactment of the last paragraph of Sec. 10 of R.A. No. 8042 did not erase its unconstitutionality and a
central bank circular on interest rates cannot repeal a positive provision R.A. No. 8042, as regards interest rates
on certain pecuniary awards granted to illegally dismissed OFWs.

FACTS:
Joy C. Cabiles, submitted her application for a quality control job in Taiwan via the Sameer Overseas Placement
Agency, Inc. Joy’s application was accepted. Joy was later asked to sign a one-year employment contract for a
monthly salary of NT$15,360.00. She alleged that Sameer Overseas Agency required her to pay a placement
fee of P70,000.00 when she signed the employment contract.

Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. Sameer Overseas
Placement Agency claims that on July 14, 1997, 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."

Consequently, Joy filed a complaint with the NLRC against Sameer and Wacoal. She claimed that she was
illegally dismissed. She asked for the return of her placement fee, the withheld amount for repatriation costs,
payment of her salary for 23 months as well as moral and exemplary damages. Sameer, on the other hand,
posits among others that Petitioner Wacoal's accreditation with it had already been transferred to the Pacific
Manpower & Management Services, Inc. (Pacific) as of August 6, 1997. Thus, it asserts that it was already
substituted by Pacific Manpower.

Joy won before the NLRC and the CA who both awarded Joy a mere (3) months’ worth of salary,
reimbursement of withheld repatriation expense, and attorney’s fees. Sameer brought a petition for review with
the SC. Brought to the fore is the issue on the constitutionality of the last paragraph of Sec. 10 of R.A. No. 8042
which has been declared unconstitutional in Serrano v. Gallant Maritime but re-enacted by legislation
subsequent to Serrano. Also brought for discussion is the proper application of the newly imposed interest rates
on the pecuniary awards given to Joy in view of Central Bank Circular No. 799.

ISSUE(S): 1. WON the award of 3-months’ worth of salary to Joy was legal in view of the re-enactment of the
last paragraph of Sec. 10 of R.A. No. 8042 which was previously declared as unconstitutional.

2. WON the new Central Bank circular on interest rates applies to the award of reimbursement of
placement fee and other deductions.

SC RULING:
1. NO. the reinstated clause, this time as provided in Republic Act. No. 10022, violates the constitutional rights
to equal protection and due process.Sameer as well as the Solicitor General have failed to show any compelling
change in the circumstances that would warrant us to revisit the precedent. Again, limiting wages that should be
recovered by an illegally dismissed overseas worker to three months is both a violation of due process and the
equal protection clauses of the Constitution.

The adoption of the reinstated clause in Republic Act No. 8042 subjected the money claims of illegally
dismissed overseas workers with an unexpired term of at least a year to a cap of three months’ worth of their
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salary. There was no such limitation on the money claims of illegally terminated local workers with fixed-term
employment.

Also, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for more
than one year: those who are illegally dismissed with less than one year left in their contracts shall be entitled to
their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one year or
more remaining in their contracts shall be covered by the reinstated clause, and their monetary benefits limited
to their salaries for three months only

These classifications do not rest on any real or substantial distinctions that would justify different treatments in
terms of the computation of money claims resulting from illegal termination.

As such, Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in accordance with
Section 10 of Republic Act No. 8042. The award of the three-month equivalence of her salary must be modified
accordingly. Since she started working on June 26, 1997 and was terminated on July 14, 1997, respondent is
entitled to her salary from July 15, 1997 to June 25, 1998.

2. NO. A Central Bank Circular cannot repeal a law. Only a law can repeal another law. For example, Section 10
of Republic Act No. 8042 provides that unlawfully terminated overseas workers are entitled to the
reimbursement of his or her placement fee with an interest of 12% per annum. Since Bangko Sentral ng
Pilipinas circulars cannot repeal Republic Act No. 8042, the issuance of Circular No. 799 does not have the
effect of changing the interest on awards for reimbursement of placement fees from 12% to 6%. This is despite
Section 1 of Circular No. 799, which provides that the 6% interest rate applies even to judgments.

However, the same cannot be said for awards of salary for the unexpired portion of the employment contract
under Republic Act No. 8042. These awards are covered by Circular No. 799 because the law does not provide
for a specific interest rate that should apply.

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4. PEOPLE OF THE PHILIPPINES v. HON. DOMINGO PANIS, Presiding Judge of the Court of First
Instance of Zambales & Olongapo City, Branch III and SERAPIO ABUG
G.R. Nos. L-58674-77 July 11, 1990
CRUZ, J:

Doctrine:
The proviso “That any person or entity which, in any manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and placement” found in Article 13(b) of the Labor Code
merely creates a presumption that an individual or entity is engaged in recruitment and placement whenever he
or it is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of employment is
made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of)
workers. ". It does not require that there be at least two victims before the activity is to be considered as illegal
recruitment.

FACTS:
On January 9, 1981, four (4) Informations were filed against Abug charging him of Illegal Recruitment. Abug
then filed a Motion to Quash on the ground that the informations did not charge an offense because he was
accused of illegally recruiting only one person in each of the four informations. Under the proviso in Article 13(b),
he claimed, there would be illegal recruitment only "whenever two or more persons are in any manner promised
or offered any employment for a fee. " On the other hand, the prosecution argues that the requirement of two or
more persons is imposed only where the recruitment and placement consists of an offer or promise of
employment to such persons and always in consideration of a fee. The other acts mentioned in the body of the
article may involve even only one person and are not necessarily for profit.

ISSUE: WON the Labor Code requires that there be at least two victims before an activity is to be considered as
illegal recruitment.

SC RULING:
NO. The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise
or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be
deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create that
presumption.

This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding the failure of
a public officer to produce upon lawful demand funds or property entrusted to his custody. Such failure shall be
prima facie evidence that he has put them to personal use; in other words, he shall be deemed to have
malversed such funds or property. In the instant case, the word "shall be deemed" should by the same token be
given the force of a disputable presumption or of prima facie evidence of engaging in recruitment and
placement.

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