G.R. No. 81510 Case Digest

G.R. NO. 81510, March 14, 1990 Hortencia Salazar, petitioner

vs Hon. Tomas Achaoso as Administrator of POEA and Ferdie

Marquez, respondents Ponente: Sarmiento

Facts:

Concerns the validity of the power of Secretary of Labor to

i ssue of warrants of arrest and seizure under Article 38 of the

Labor Code, prohibiting illegal recruitment

On October 1987, Rosalie Tesoro of Pasay City in a sworn

statement filed with POEA charged Hortencia Salazar of illegally

taking her PECC Card thus prohibiting her to be employed.

On November 1987, Atty. Marquez telegram the petitioner to

report to the anti - illegal recruitment unit of PEOA, but on the

same day, having ascertained that the petitioner had no license

to operate a recruitment agency, Ach aoso issued his challenged

Closure and Seizure Order stating that pursuant to PD No. 1920,

the recruitment agency ordered be for closure and seizure of the

documents having verified that it has (1) no valid license from

DOLE to recruit and deploy workers f or overseas employment (2)

committed acts prohibited under Article 34 of Labor Code in

relation to Article 38.

On January 26, 1988, POEA director on Licensing and Regulation

Atty. Espiritu issued an office order designating the Atty

Marquez and other memb ers of a team tasked to implement closure

and seizure.

On January 28, 1988, petitioner filed a petition with POEA that

the personal properties seized at her residence be immediately

returned on the ground that it was contrary to law because: (1)

client wa s not given prior notice or hearing, (2) violates

section 2 of constitution (3) the premises invaded were the

private residence of the Salazar family and it was without

consent.

On February 2, 1988 before POEA could answer the letter,

petitioner filed th e instant petition, on even date, POEA filed

a criminal complaint against her with the Pasig Provincial

Fiscal

Issue: May POEA validly issue warrants of search and seizure

under Article 38 of the Labor Code?

Ruling: Under new constitution, only a judge may issue warrants of

search and arrest, however in the amended RA 8042, the minister

of labor shall have the power to cause the arrest and detention

of non - licensee of authority if after proper investigation.

Petition is granted, Article 38 of the Labor code is declared

unconstitutional and null and void.

G.R. No. 81510 March 14, 1990

HORTENCIA SALAZAR, petitioner, vs. HON. TOMAS D. ACHACOSO, in his capacity as Administrator of the Philippine Overseas Employment Administration, and FERDIE MARQUEZ, respondents.

Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J.:

This concerns the validity of the power of the Secretary of Labor to issue warrants of arrest and seizure under Article 38 of the Labor Code, prohibiting illegal recruitment.

The facts are as follows:

xxx xxx xxx

1. On October 21, 1987, Rosalie Tesoro of 177 Tupaz Street, Leveriza, Pasay City, in a sworn statement filed with the Philippine Overseas Employment Administration (POEA for brevity) charged petitioner Hortencia Salazar, viz:

04. T: Ano ba ang dahilan at ikaw ngayon ay narito at nagbibigay ng salaysay.

S: Upang ireklamo sa dahilan ang aking PECC Card ay ayaw ibigay sa akin ng dati kong manager. Horty Salazar 615 R.O. Santos, Mandaluyong, Mla.

05. T: Kailan at saan naganap and ginawang panloloko sa iyo ng tao/mga taong inireklamo mo?

S. Sa bahay ni Horty Salazar.

06. T: Paano naman naganap ang pangyayari?

S. Pagkagaling ko sa Japan ipinatawag niya ako. Kinuha ang PECC Card ko at sinabing hahanapan ako ng booking sa Japan. Mag 9 month's na ako sa Phils. ay hindi pa niya ako napa-alis. So lumipat ako ng ibang company pero ayaw niyang ibigay and PECC Card ko.

2. On November 3, 1987, public respondent Atty. Ferdinand Marquez to whom said complaint was assigned, sent to the petitioner the following telegram:

YOU ARE HEREBY DIRECTED TO APPEAR BEFORE FERDIE MARQUEZ POEA ANTI ILLEGAL RECRUITMENT UNIT 6TH FLR. POEA BLDG. EDSA COR. ORTIGAS AVE. MANDALUYONG MM ON NOVEMBER 6, 1987 AT 10 AM RE CASE FILED AGAINST YOU. FAIL NOT UNDER PENALTY OF LAW.

4. On the same day, having ascertained that the petitioner had no license to operate a recruitment agency, public respondent Administrator Tomas D. Achacoso issued his challenged CLOSURE AND SEIZURE ORDER NO. 1205 which reads:

HORTY SALAZAR No. 615 R.O. Santos St. Mandaluyong, Metro Manila

Pursuant to the powers vested in me under Presidential Decree No. 1920 and Executive Order No. 1022, I hereby order the CLOSURE of your recruitment agency being operated at No. 615 R.O. Santos St., Mandaluyong, Metro Manila and the seizure of the documents and paraphernalia being used or intended to be used as the means of committing illegal recruitment, it having verified that you have

(1) No valid license or authority from the Department of Labor and Employment to recruit and deploy workers for overseas employment;

(2) Committed/are committing acts prohibited under Article 34 of the New Labor Code in relation to Article 38 of the same code.

This ORDER is without prejudice to your criminal prosecution under existing laws.

Done in the City of Manila, this 3th day of November, 1987.

5. On January 26, 1988 POEA Director on Licensing and Regulation Atty. Estelita B. Espiritu issued an office order designating respondents Atty. Marquez, Atty. Jovencio Abara and Atty. Ernesto Vistro as members of a team tasked to implement Closure and Seizure Order No. 1205. Doing so, the group assisted by Mandaluyong policemen and mediamen Lito Castillo of the People's Journal and Ernie Baluyot of News Today proceeded to the residence of the petitioner at 615 R.O. Santos St., Mandaluyong, Metro Manila. There it was found that petitioner was operating Hannalie Dance Studio. Before entering the place, the team served said Closure and Seizure order on a certain Mrs. Flora Salazar who voluntarily allowed them entry into the premises. Mrs. Flora Salazar informed the team that Hannalie Dance Studio was accredited with Moreman Development (Phil.). However, when required to show credentials, she was unable to produce any. Inside the studio, the team chanced upon twelve talent performers practicing a dance number and saw about twenty more waiting outside, The team confiscated assorted costumes which were duly receipted for by Mrs. Asuncion Maguelan and witnessed by Mrs. Flora Salazar.

6. On January 28, 1988, petitioner filed with POEA the following letter:

Gentlemen:

On behalf of Ms. Horty Salazar of 615 R.O. Santos, Mandaluyong, Metro Manila, we respectfully request that the personal properties seized at her residence last January 26, 1988 be immediately returned on the ground that said seizure was contrary to law and against the will of the owner thereof. Among our reasons are the following:

1. Our client has not been given any prior notice or hearing, hence the Closure and Seizure Order No. 1205 dated November 3, 1987 violates "due process of law" guaranteed under Sec. 1, Art. III, of the Philippine Constitution.

2. Your acts also violate Sec. 2, Art. III of the Philippine Constitution which guarantees right of the people "to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose."

3. The premises invaded by your Mr. Ferdi Marquez and five (5) others (including 2 policemen) are the private residence of the Salazar family, and the entry, search as well as the seizure of the personal properties belonging to our client were without her consent and were done with unreasonable force and intimidation, together with grave abuse of the color of authority, and constitute robbery and violation of domicile under Arts. 293 and 128 of the Revised Penal Code.

Unless said personal properties worth around TEN THOUSAND PESOS (P10,000.00) in all (and which were already due for shipment to Japan) are returned within twenty-four (24) hours from your receipt hereof, we shall feel free to take all legal action, civil and criminal, to protect our client's interests.

We trust that you will give due attention to these important matters.

7. On February 2, 1988, before POEA could answer the letter, petitioner filed the instant petition; on even date, POEA

filed a criminal complaint against her with the Pasig Provincial Fiscal, docketed as IS-88-836. 1

On February 2, 1988, the petitioner filed this suit for prohibition. Although the acts sought to be barred are already fait accompli, thereby making prohibition too late, we consider the petition as one for certiorari in view of the grave public interest involved.

The Court finds that a lone issue confronts it: May the Philippine Overseas Employment Administration (or the Secretary of Labor) validly issue warrants of search and seizure (or arrest) under Article 38 of the Labor Code? It is also an issue squarely raised by the petitioner for the Court's resolution.

Under the new Constitution, which states:

. . . no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the persons or things to be seized.

2

it is only a judge who may issue warrants of search and arrest. 3 In one case, it was declared that mayors

may not exercise this power:

xxx xxx xxx

But it must be emphasized here and now that what has just been described is the state of the law as it was in September, 1985. The law has since been altered. No longer does the mayor have at this time the power to conduct preliminary investigations, much less issue orders of arrest. Section 143 of the Local Government Code, conferring this power on the mayor has been abrogated, rendered functus officio by the 1987 Constitution which took effect on February 2, 1987, the date of its ratification by the Filipino people. Section 2, Article III of the 1987 Constitution pertinently provides that "no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the person or things to be seized." The constitutional proscription has thereby been manifested that thenceforth, the function of determining probable cause and issuing, on the basis thereof, warrants of arrest or search warrants, may be validly exercised only by judges, this being evidenced by the elimination in the present Constitution of the phrase, "such other responsible officer as may be authorized by law" found in the counterpart provision of said 1973 Constitution, who, aside from judges, might conduct preliminary investigations and issue warrants of arrest or search warrants.

4

Neither may it be done by a mere prosecuting body:

We agree that the Presidential Anti-Dollar Salting Task Force exercises, or was meant to exercise, prosecutorial powers, and on that ground, it cannot be said to be a neutral and detached "judge" to determine the existence of probable cause for purposes of arrest or search. Unlike a magistrate, a prosecutor is naturally interested in the success of his case. Although his office "is to see that justice is done and not necessarily to secure the conviction of the person accused," he stands, invariably, as the accused's adversary and his accuser. To permit him to issue search warrants and indeed, warrants of arrest, is to make him both judge and jury in his own right, when he is neither. That makes, to our mind and to that extent, Presidential Decree No. 1936 as amended by Presidential Decree No. 2002, unconstitutional.

5

Section 38, paragraph (c), of the Labor Code, as now written, was entered as an amendment by Presidential Decrees Nos. 1920 and 2018 of the late President Ferdinand Marcos, to Presidential Decree No. 1693, in the exercise of his legislative powers under Amendment No. 6 of the 1973 Constitution. Under the latter, the then Minister of Labor merely exercised recommendatory powers:

(c) The Minister of Labor or his duly authorized representative shall have the power to recommend the arrest and detention of any person engaged in illegal recruitment.

6

On May 1, 1984, Mr. Marcos promulgated Presidential Decree No. 1920, with the avowed purpose of giving more teeth to the campaign against illegal recruitment. The Decree gave the Minister of Labor arrest and closure powers:

(b) The Minister of Labor and Employment shall have the power to cause the arrest and detention of such non-licensee or non-holder of authority if after proper investigation it is determined that his activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers. The Minister shall order the closure of companies, establishment and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so.

7

On January 26, 1986, he, Mr. Marcos, promulgated Presidential Decree No. 2018, giving the Labor Minister search and seizure powers as well:

(c) The Minister of Labor and Employment or his duly authorized representatives shall have the power to cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is determined that his activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers. The Minister shall order the search of the office or premises and seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure of companies, establishment and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so.

8

The above has now been etched as Article 38, paragraph (c) of the Labor Code.

The decrees in question, it is well to note, stand as the dying vestiges of authoritarian rule in its twilight moments.

We reiterate that the Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go through the judicial process. To that extent, we declare Article 38, paragraph (c), of the Labor Code, unconstitutional and of no force and effect.

The Solicitor General's reliance on the case of Morano v. Vivo 9 is not well-taken. Vivo involved a

deportation case, governed by Section 69 of the defunct Revised Administrative Code and by Section 37 of the Immigration Law. We have ruled that in deportation cases, an arrest (of an undesirable alien) ordered by the President or his duly authorized representatives, in order to carry out a final decision of deportation is valid.

10 It is valid, however, because of the recognized supremacy of the Executive in

matters involving foreign affairs. We have held: 11

xxx xxx xxx

The State has the inherent power to deport undesirable aliens (Chuoco Tiaco vs. Forbes, 228 U.S. 549, 57 L. Ed. 960, 40 Phil. 1122, 1125). That power may be exercised by the Chief Executive "when he deems such action necessary for the peace and domestic tranquility of the nation." Justice Johnson's opinion is that when the Chief Executive finds that there are aliens whose continued presence in the country is injurious to the public interest, "he may, even in the absence of express law, deport them". (Forbes vs. Chuoco Tiaco and Crossfield, 16 Phil. 534, 568, 569; In re McCulloch Dick, 38 Phil. 41).

The right of a country to expel or deport aliens because their continued presence is detrimental to public welfare is absolute and unqualified (Tiu Chun Hai and Go Tam vs. Commissioner of Immigration and the Director of NBI, 104 Phil. 949, 956).

12

The power of the President to order the arrest of aliens for deportation is, obviously, exceptional. It (the power to order arrests) can not be made to extend to other cases, like the one at bar. Under the Constitution, it is the sole domain of the courts.

Moreover, the search and seizure order in question, assuming, ex gratia argumenti, that it was validly issued, is clearly in the nature of a general warrant:

Pursuant to the powers vested in me under Presidential Decree No. 1920 and Executive Order No. 1022, I hereby order the CLOSURE of your recruitment agency being operated at No. 615 R.O. Santos St., Mandaluyong, Metro Manila and the seizure of the documents and paraphernalia being used or intended to be used as the means of committing illegal recruitment, it having verified that you have

(1) No valid license or authority from the Department of Labor and Employment to recruit and deploy workers for overseas employment;

(2) Committed/are committing acts prohibited under Article 34 of the New Labor Code in relation to Article 38 of the same code.

This ORDER is without prejudice to your criminal prosecution under existing laws. 13

We have held that a warrant must identify clearly the things to be seized, otherwise, it is null and void, thus:

xxx xxx xxx

Another factor which makes the search warrants under consideration constitutionally objectionable is that they are in the nature of general warrants. The search warrants describe the articles sought to be seized in this wise:

1) All printing equipment, paraphernalia, paper, ink, photo equipment, typewriters, cabinets, tables, communications/ recording equipment, tape recorders, dictaphone and the like used and/or connected in the printing of the "WE FORUM" newspaper and any and all documents/communications, letters and facsimile of prints related to the "WE FORUM" newspaper.

2) Subversive documents, pamphlets, leaflets, books, and other publications to promote the objectives and purposes of the subversive organizations known as Movement for Free Philippines, Light-a-Fire Movement and April 6 Movement; and

3) Motor vehicles used in the distribution/circulation of the "WE FORUM" and other subversive materials and propaganda, more particularly,

1) Toyota-Corolla, colored yellow with Plate No. NKA 892;

2) DATSUN, pick-up colored white with Plate No. NKV 969;

3) A delivery truck with Plate No. NBS 542;

4) TOYOTA-TAMARAW, colored white with Plate No. PBP 665; and

5) TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 472 with marking "Bagong Silang."

In Stanford v. State of Texas, the search warrant which authorized the search for "books, records, pamphlets, cards, receipts, lists, memoranda, pictures, recordings and other written instruments concerning the Communist Parties of Texas, and the operations of the Community Party in Texas," was declared void by the U.S. Supreme Court for being too general. In like manner, directions to "seize any evidence in connection with the violation of SDC 13-3703 or otherwise" have been held too general, and that portion of a search warrant which authorized the seizure of any "paraphernalia which could be used to violate Sec. 54-197 of the Connecticut General Statutes (the statute dealing with the crime of conspiracy)" was held to be a general warrant, and therefore invalid. The description of the articles sought to be seized under the search warrants in question cannot be characterized differently.

In the Stanford case, the U.S. Supreme court calls to mind a notable chapter in English history; the era of disaccord between the Tudor Government and the English Press, when "Officers of the Crown were given roving commissions to search where they pleased in order to suppress and destroy the literature of dissent both Catholic and Puritan." Reference herein to such historical episode would not be relevant for it is not the policy of our government to suppress any newspaper or publication that speaks with "the voice of non-conformity" but poses no clear and imminent danger to state security.

14

For the guidance of the bench and the bar, we reaffirm the following principles:

1. Under Article III, Section 2, of the l987 Constitution, it is only judges, and no other, who may issue warrants of arrest and search:

2. The exception is in cases of deportation of illegal and undesirable aliens, whom the President or the Commissioner of Immigration may order arrested, following a final order of deportation, for the purpose of deportation.

WHEREFORE, the petition is GRANTED. Article 38, paragraph (c) of the Labor Code is declared UNCONSTITUTIONAL and null and void. The respondents are ORDERED to return all materials seized as a result of the implementation of Search and Seizure Order No. 1205.

No costs.

SO ORDERED.

FIRST DIVISION

G.R. No. 195792, November 24, 2014

ABOSTA SHIP MANAGEMENT AND/OR ARTEMIO CORBILLA, Petitioners, v.

WILHILM M. HILARIO, Respondent.

D E C I S I O N

SERENO, C.J.:

Abosta Ship Management Corporation (petitioner) filed a Petition for Review on Certiorari1

under Rule 45 of the 1997 Rules of Civil Procedure assailing the Court of Appeals (CA)

Decision2 dated 3 December 2010 and Resolution

3 dated 11 February 2011 in CA-G.R. SP No.

110745.

The antecedents of this case are as follows: cralawlawlibrary

On 24 October 2002, an employment contract was executed by petitioner, on behalf of its foreign

principal Panstar Shipping Co., Ltd., and respondent. In this contract, the latter was hired as a

bosun (boatswain) of the foreign vessel Grand Mark for a period of nine months, with a monthly

salary of USD566.4 The contract was duly approved by the Philippine Overseas Employment

Agency (POEA) on 25 October 2002.5

chanroblesvirtuallawlibrary

On 27 November 2002, upon reporting to the office of petitioner, respondent was informed that

the latter's deployment had been postponed due to shifting demands of the foreign principal. It

appears, though, that the foreign principal decided to promote an able seaman on board the

vessel instead of hiring respondent. Petitioner thus requested respondent to wait for another two

to three months for a vacancy to occur.6 In the meantime, respondent was allowed to make cash

advances7 as financial assistance.

Eventually, on 28 January 2003, respondent filed a Complaint with the POEA against petitioner

for violation of Section 2(r), Rule I, Part VI of the 2002 POEA Rules by failing to deploy

respondent within the prescribed period without any valid reason. Respondent likewise filed a

Complaint with the Labor Arbiter on 6 February 2003 based on the same ground and sought

actual, moral and exemplary damages and attorney's fees.

Petitioner moved for the dismissal of the Complaint, alleging that the Labor Arbiter had no

jurisdiction over the matter, as jurisdiction was supposedly lodged with the POEA. However, the

Labor Arbiter denied the motion, stating that the action for damages arising from employment

relations was clearly within its jurisdiction.

On 13 February 2004, the National Labor Relations Commission (NLRC) granted petitioner's

appeal and reversed the Labor Arbiter's Order. The NLRC held that considering no employer-

employee relationship existed between the parties, the POEA had jurisdiction over the case. The

claim for non-deployment was administrative in character, and sanctions may be imposed by the

POEA.8

chanroblesvirtuallawlibrary

Respondent consequently filed a Petition for Certiorari with the CA questioning the ruling of the

NLRC.

On 17 March 2006, the CA granted the Petition. It pointed out that Section 10 of the Labor Code

provides that the jurisdiction of the Labor Arbiter includes claims arising by virtue of any law or

contract involving Filipino workers for overseas deployment, including claims for actual, moral,

exemplary and other forms of damages. Meanwhile, the POEA has jurisdiction over pre-

employment cases that are administrative in character. Thus, respondent's Complaint was

reinstated.9

chanroblesvirtuallawlibrary

After the parties submitted their respective Position Papers, the Labor Arbiter ordered petitioner

to pay respondent his salary for nine months in the amount of USD 10,071. The Labor Arbiter

found that the contract executed between the parties and the non-fulfillment thereof entitled

respondent to his salary for the whole duration of the contract. However, the arbiter did not find

bad faith, which would have merited the award of moral damages.10

chanroblesvirtuallawlibrary

This Decision prompted petitioner to appeal to the NLRC. On 11 March 2009, it held that

respondent's non-deployment was due to a valid exercise of the foreign principal's management

prerogative, which should be given due respect. Thus, the NLRC dismissed the Complaint, but

ordered petitioner "to comply with our directive to deploy respondent as soon as possible or face

the inevitable consequences."11

chanroblesvirtuallawlibrary

Dissatisfied with the NLRC's ruling, respondent filed a Petition for Certiorari with the CA. On 3

December 2010, it granted the Petition and held that the NLRC committed grave abuse of

discretion by holding that the able seaman's promotion was a valid management prerogative. The

CA further ruled that since respondent had already been hired for the same position, then there

was no longer any vacant position to which to promote the able seaman. Moreover, under the

POEA Rules, petitioner assumed joint and solidary liability with its foreign principal, and was

thus liable to respondent. It thus found the NLRC's Decision to be contrary to law and prevailing

jurisprudence. Finally, the CA ruled that NLRC's Order for petitioner "to deploy respondent as

soon as possible or face inevitable consequences" was "nonsensical" considering that the

controversy arose from way back in 2002, and that the assailed Order was issued in 2009.12

chanroblesvirtuallawlibrary

The CA likewise denied the Motion for Reconsideration filed by petitioner. Hence, this Petition.

ASSIGNMENT OF ERRORS

Petitioner raises the following errors allegedly committed by the CA: chanroblesvirtuallawlibrary

The Honorable Court of Appeals committed grave reversible error when it ruled that

complainant is entitled to actual damages in the light of Paul v. Santiago case, the doctrine of

stare decis [sic] being inapplicable in the instant case as to the issue of award of actual damages.

The Honorable NLRC did not commit grave abuse of discretion when it ruled differently from

Santiago case [on] the issue of actual damages contrary to erroneous decision of the Court of

Appeals that NLRC committed grave abuse of discretion in disregarding Santiago case on the

issue of actual damages.

The Honorable Court of Appeals committed reversible error when it disregarded the factual

findings of the NLRC, that, if properly considered, would justify petitioner's use of management

prerogative.

The Honorable Court of Appeals committed reversible error in reinstating the award of actual

damages despite the want of any factual and legal basis and again in missapplying [sic] Datuman

case in the instant case.13

The Court's Ruling

The issue boils down to whether the CA committed serious errors of law.

We rule in the negative.

There is no dispute that the parties entered into a contract of employment on 24 October 2002,

and that petitioner failed to deploy respondent. The controversy arose from the act of the foreign

principal in promoting another person, an act that effectively disregarded the contract dated 24

October 2002 entered into between petitioner, on behalf of its foreign principal, and respondent.

There was a clear breach of contract when petitioner failed to deploy respondent in accordance

with the POEA-approved contract.

The Court is left with the issue of whether such breach would entitle respondent to the payment

of actual damages for the failure of petitioner to comply with the latter's obligations in

accordance with the employment contract.

It is the contention of petitioner that respondent's non-deployment was due to the foreign

principal's management prerogative to promote an able seaman. Supposedly, this exercise of

management prerogative is a valid and justifiable reason that would negate any liability for

damages.

We do not agree.

Based on a communication sent by a certain M.K. Jin dated 10 October 2002,14

the foreign

principal had already chosen respondent from among the other candidates as BSN (bosun or

boatswain). Pursuant to this communication, petitioner entered into an employment contract and

hired respondent on 24 October 2002. Subsequent communications, though, show that the

foreign principal approved a different candidate for the position of BSN.15

Thus, petitioner did

not deploy respondent.

There was an apparent violation of the contract at the time that the foreign principal decided to

promote another person as expressed in its communications dated 10 November 2002 and 14

November 2002. The vacancy for the position of boatswain ceased to exist upon the execution of

the contract between petitioner and respondent on 24 October 2002, a contract subsequently

approved by the POEA on 25 October 2002. Clearly, there was no vacancy when the foreign

principal changed its mind, since the position of boatswain had already been filled up by

respondent.

The contract was already perfected on the date of its execution, which occurred when petitioner

and respondent agreed on the object and the cause, as well as on the rest of the terms and

conditions therein. Naturally, contemporaneous with the perfection of the employment contract

was the birth of certain rights and obligations, a breach of which may give rise to a cause of

action against the erring party.16

Also, the POEA Standard Contract must be recognized and

respected. Thus, neither the manning agent nor the employer can simply prevent a seafarer from

being deployed without a valid reason.17

chanroblesvirtuallawlibrary

True, the promotion and choice of personnel is an exercise of management prerogative. In fact,

this Court has upheld management prerogatives, so long as they are exercised in good faith for

the advancement of the employer's interest, and not for the purpose of defeating or

circumventing the rights of the employees under special laws or under valid agreements.18

However, there are limitations on the exercise of management prerogatives, such as existing laws

and the principle of equity and substantial justice.19

chanroblesvirtuallawlibrary

Under the principle of equity and substantial justice, change of mind was not a valid reason for

the non-deployment of respondent. He lost the opportunity to apply for other positions in other

agencies when he signed the contract of employment with petitioner. Simply put, that contract

was binding on the parties and may not later be disowned simply because of a change of mind of

either one of them.

The unilateral and unreasonable failure to deploy respondent constitutes breach of contract,

which gives rise to a liability to pay actual damages. The sanctions provided for non-deployment

do not end with the suspension or cancellation of license or the imposition of a fine and the

return of all documents at no cost to the worker. They do not forfend a seafarer from instituting

an action for damages against the employer or agency that has failed to deploy him.20

chanroblesvirtuallawlibrary

Considering that it was petitioner who entered into the contract of employment with respondent

for and on behalf of the foreign principal, it has the primary obligation to ensure the

implementation of that contract. Furthermore, in line with the policy of the state to protect and

alleviate the plight of the working class, Section 1, paragraph f (3) of Rule II of the POEA Rules

and Regulations,21

clearly provides that the private employment agency shall assume joint and

solidary liability with the employer. Indeed, this Court has consistently held that private

employment agencies are held jointly and severally liable with the foreign-based employer for

any violation of the recruitment agreement or contract of employment.22

This joint and solidary

liability imposed by law on recruitment agencies and foreign employers is meant to assure the

aggrieved worker of immediate and sufficient payment of what is due him.23

chanroblesvirtuallawlibrary

In sum, the failure to deploy respondent was an exercise of a management prerogative that went

beyond its limits and resulted in a breach of contract. In turn, petitioner's breach gave rise to

respondent's cause of action to claim actual damages for the pecuniary loss suffered by the latter

in the form of the loss of nine months' worth of salary as provided in the POEA-approved

contract of employment.

WHEREFORE, premises considered, the instant Petition is DENIED.

SO ORDERED.

G.R. No. 162419 July 10, 2007

PAUL V. SANTIAGO, petitioner,

vs.

CF SHARP CREW MANAGEMENT, INC., respondent.

D E C I S I O N

TINGA, J.:

At the heart of this case involving a contract between a seafarer, on one hand, and the manning

agent and the foreign principal, on the other, is this erstwhile unsettled legal quandary: whether

the seafarer, who was prevented from leaving the port of Manila and refused deployment without

valid reason but whose POEA-approved employment contract provides that the employer-

re from the port in

the point of hire, is entitled to relief?

This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision

and Resolution of the Court of Appeals dated 16 October 2003 and 19 February 2004,

respectively, in CA-G.R. SP No. 68404.1

Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for

about five (5) years.2 On 3 February 1998, petitioner signed a new contract of employment with

respondent, with the duration of nine (9) months. He was assured of a monthly salary of

US$515.00, overtime pay and other benefits. The following day or on 4 February 1998, the

contract was approved by the Philippine Overseas Employment Administration (POEA).

Petitioner was to be deployed on board the "MSV Seaspread" which was scheduled to leave the

port of Manila for Canada on 13 February 1998.

President, sent a facsimile message to the captain of "MSV Seaspread," which reads:

I received a phone call today from the wife of Paul Santiago in Masbate asking me not to

send her husband to MSV Seaspread anymore. Other callers who did not reveal their

identity gave me some feedbacks that Paul Santiago this time if allowed to depart will

jump ship in Canada like his brother Christopher Santiago, O/S who jumped ship from

the C.S. Nexus in Kita-kyushu, Japan last December, 1997.

We do not want this to happen again and have the vessel penalized like the C.S. Nexus in

Japan.

Forewarned is forearmed like his brother when his brother when he was applying he

behaved like a Saint but in his heart he was a serpent. If you agree with me then we will

send his replacement.

Kindly advise.3

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To this message the captain of "MSV Seaspread" replied:

Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to

return to Seaspread.4

On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore,

but he was reassured that he might be considered for deployment at some future date.

Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent

and its foreign principal, Cable and Wireless (Marine) Ltd.5 The case was raffled to Labor

Arbiter Teresita Castillon-Lora, who ruled that the employment contract remained valid but had

not commenced since petitioner was not deployed. According to her, respondent violated the

rules and regulations governing overseas employment when it did not deploy petitioner, causing

petitioner to suffer actual damages representing lost salary income for nine (9) months and fixed

overtime fee, all amounting to US$7, 209.00.

The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29

January 1999 reads:

WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant

actual damages in the amount of US$7,209.00 plus 10% attorney's fees, payable in

Philippine peso at the rate of exchange prevailing at the time of payment.

All the other claims are hereby DISMISSED for lack of merit.

SO ORDERED.6

On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is

no employer-employee relationship between petitioner and respondent because under the

Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board

Ocean Going Vessels (POEA Standard Contract), the employment contract shall commence

upon actual departure of the seafarer from the airport or seaport at the point of hire and with a

POEA-approved contract. In the absence of an employer-employee relationship between the 7

exercise of its management prerogative.8 The NLRC disposed of the appeal in this wise:

WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29,

1999 is hereby AFFIRMED in so far as other claims are concerned and with

well as excluding Pacifico Fernandez as party respondent.

SO ORDERED.9

Petition

lack of merit.10

He elevated the case to the Court of Appeals through a petition for certiorari.

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In its Decision11

dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in

by the very modification introduced by the Commission (vacating the award of actual damages 12

According to the appellate court, petitioner is not entitled to actual damages because damages are

not recoverable by a worker who was not deployed by his agency within the period prescribed in

the POEA Rules.13

-deployment was a

ve.14

It added that since petitioner had not

departed from the Port of Manila, no employer-employee relationship between the parties arose

and any claim for damages against the so-called employer could have no leg to stand on.15

16

The present petition is anchored on two grounds, to wit:

A. The Honorable Court of Appeals committed a serious error of law when it ignored

[S]ection 10 of Republic A

Act of 1995 as well as Section 29 of the Standard Terms and Conditions Governing the

Employment of Filipino Seafarers On-Board Ocean-Going Vessels (which is deemed

incorporated under the petitioner

claims or disputes of the Overseas Filipino Worker by virtue of a contract fall within the

jurisdiction of the Labor Arbiter of the NLRC.

B. The Honorable Court of Appeals committed a serious error when it disregarded the

required quantum of proof in labor cases, which is substantial evidence, thus a total

departure from established jurisprudence on the matter.17

Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules

when it failed to deploy him within thirty (30) calendar days without a valid reason. In doing so,

it had unilaterally and arbitrarily prevented the consummation of the POEA- approved contract.

Since it prevented his deployment without valid basis, said deployment being a condition to the

consummation of the POEA contract, the contract is deemed consummated, and therefore he

should be awarded actual damages, consisting of the stipulated salary and fixed overtime pay.18

Petitioner adds that since the contract is deemed consummated, he should be considered an

employee for all intents and purposes, and thus the labor arbiter and/or the NLRC has

jurisdiction to take cognizance of his claims.19

Petitioner additionally claims that he should be considered a regular employee, having worked

for five (5) years on board the same vessel owned by the same principal and manned by the same

prevent him from attaining the status of a regular employee.20

Petitioner submits that respondent had no valid and sufficient cause to abandon the employment

contract, as it merely relied upon alleged phone calls from his wife and other unnamed callers in

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arriving at the conclusion that he would jump ship like his brother. He points out that his wife

had executed an affidavit21

strongly denying having called respondent, and that the other alleged

callers did not even disclose their identities to respondent.22

Thus, it was error for the Court of

Appeals to adopt the unfounded conclusion of the NLRC, as the same was not based on

substantial evidence.23

On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award

deployment was withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC

controversy involves a breach of contractual obligations and as such is cognizable by civil

courts.24

On another matter, respondent claims that the second issue posed by petitioner involves

a recalibration of facts which is outside the jurisdiction of this Court.25

There is some merit in the petition.

There is no question that the parties entered into an employment contract on 3 February 1998,

whereby petitioner was contracted by respondent to render services on board "MSV Seaspread"

for the consideration of US$515.00 per month for nine (9) months, plus overtime pay. However,

respondent failed to deploy petitioner from the port of Manila to Canada. Considering that

petitioner was not able to depart from the airport or seaport in the point of hire, the employment

contract did not commence, and no employer-employee relationship was created between the

parties.26

However, a 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.

Moreover, while the POEA Standard Contract must be recognized and respected, neither the

manning agent nor the employer can simply prevent a seafarer from being deployed without a

valid reason.

se of action.

Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner and must

therefore answer for the actual damages he suffered.

worker who was not deployed by his agency. The fact that the POEA Rules27

are silent as to the

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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. They

do not forfend a seafarer from instituting an action for damages against the employer or agency

which has failed to deploy him.

The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does

not provide for damages and money claims recoverable by aggrieved employees because it is not

the POEA, but the NLRC, which has jurisdiction over such matters.

Despite the absence of an employer-employee relationship between petitioner and respondent,

he jurisdiction of

labor arbiters is not limited to claims arising from employer-employee relationships. Section 10

of R.A. No. 8042 (Migrant Workers Act), provides that:

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 [Emphasis supplied]

Since the present petition involves the employment contract entered into by petitioner for

overseas employment, his claims are cognizable by the labor arbiters of the NLRC.

Article 2199 of the 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

in the contract. He is not, however, entitled to overtime pay. While the contract indicated a fixed

overtime pay, it is not a guarantee that he would receive said amount regardless of whether or not

he rendered overtime work. Even though petitioner was "prevented without valid reason from

rendering regular much less overtime service,"28

the fact remains that there is no certainty that

petitioner will perform overtime work had he been allowed to board the vessel. The amount of

US$286.00 stipulated in the contract will be paid only if and when the employee rendered

overtime work. This has been the tenor of our rulings in the case of Stolt-Nielsen Marine

Services (Phils.), Inc. v. National Labor Relations Commission29

where we discussed the matter

in this light:

The contract provision means that the fixed overtime pay of 30% would be the basis for

computing the overtime pay if and when overtime work would be rendered. Simply

stated, the rendition of overtime work and the submission of sufficient proof that said

work was actually performed are conditions to be satisfied before a seaman could be

entitled to overtime pay which should be computed on the basis of 30% of the basic

monthly salary. In short, the contract provision guarantees the right to overtime pay but

the entitlement to such benefit must first be established. Realistically speaking, a seaman,

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