DOLE PHILIPPINES, INC., petitioner, vs.

PAWIS NG MAKABAYANG
OBRERO (PAMAO-NFL), respondent.

DECISION
CORONA, J.:

Before us is a petition for review filed under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the January 9, 2001 resolution of the Court of Appeals which
denied petitioners motion for reconsideration of its September 22, 2000 decision which
[1]

in turn upheld the Order issued by the voluntary arbitrator dated 12 October 1998, the
[2]

dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

complainant. Respondent is hereby directed to extend the free meal benefit as
provided for in Article XVIII, Section 3 of the collective bargaining agreement to
those employees who have actually performed overtime works even for exactly three
(3) hours only.

SO ORDERED. [3]

The core of the present controversy is the interpretation of the provision for free
meals under Section 3 of Article XVIII of the 1996-2001 Collective Bargaining
Agreement (CBA) between petitioner Dole Philippines, Inc. and private respondent labor
union PAMAO-NFL. Simply put, how many hours of overtime work must a Dole
employee render to be entitled to the free meal under Section 3 of Article XVIII of the
1996-2001 CBA? Is it when he has rendered (a) exactly, or no less than, three hours of
actual overtime work or (b) more than three hours of actual overtime work?
The antecedents are as follows:
On February 22, 1996, a new five-year Collective Bargaining Agreement for the
period starting February 1996 up to February 2001, was executed by petitioner Dole
Philippines, Inc., and private respondent Pawis Ng Makabayang Obrero-NFL (PAMAO-
NFL). Among the provisions of the new CBA is the disputed section on meal allowance
under Section 3 of Article XVIII on Bonuses and Allowances, which reads:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL

ALLOWANCE of TEN PESOS (P10.00) to all employees who render at least TWO
(2) hours or more of actual overtime work on a workday, and FREE MEALS, as
presently practiced, not exceeding TWENTY FIVE PESOS (P25.00) after THREE (3)
hours of actual overtime work. [4]

Pursuant to the above provision of the CBA, some departments of Dole reverted to
the previous practice of granting free meals after exactly three hours of actual overtime
work.However, other departments continued the practice of granting free meals only
after more than three hours of overtime work. Thus, private respondent filed a complaint
before the National Conciliation and Mediation Board alleging that petitioner Dole
refused to comply with the provisions of the 1996-2001 CBA because it granted free
meals only to those who rendered overtime work for more than three hours and not to
those who rendered exactly three hours overtime work.
The parties agreed to submit the dispute to voluntary arbitration. Thereafter, the
voluntary arbitrator, deciding in favor of the respondent, issued an order directing
petitioner Dole to extend the free meal benefit to those employees who actually did
overtime work even for exactly three hours only.
Petitioner sought a reconsideration of the above order but the same was
denied. Hence, petitioner elevated the matter to the Court of Appeals by way of a
petition for review on certiorari.
On September 22, 2000, the Court of Appeals rendered its decision upholding the
assailed order.
Thus, the instant petition.
Petitioner Dole asserts that the phrase after three hours of actual overtime work
should be interpreted to mean after more than three hours of actual overtime work.
On the other hand, private respondent union and the voluntary arbitrator see it as
meaning after exactly three hours of actual overtime work.
The meal allowance provision in the 1996-2001 CBA is not new. It was also in the
1985-1988 CBA and the 1990-1995 CBA. The 1990-1995 CBA provision on meal
allowance was amended by the parties in the 1993-1995 CBA Supplement. The clear
changes in each CBA provision on meal allowance were in the amount of the meal
allowance and free meals, and the use of the words after and after more than to qualify
the amount of overtime work to be performed by an employee to entitle him to the free
meal.
To arrive at a correct interpretation of the disputed provision of the CBA, a review of
the pertinent section of past CBAs is in order.
The CBA covering the period 21 September 1985 to 20 September 1988 provided:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL

ALLOWANCE of FOUR (P4.00) PESOS to all employees who render at least TWO
(2) hours or more of actual overtime work on a workday, and FREE MEALS, as
presently practiced, after THREE (3) hours of actual overtime work. [5]

The CBA for 14 January 1990 to 13 January 1995 likewise provided:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL

ALLOWANCE of EIGHT PESOS (P8.00) to all employees who render at least TWO
(2) hours or more of actual overtime work on a workday, and FREE MEALS, as
presently practiced, not exceeding SIXTEEN PESOS (P16.00) after THREE (3)
hours of actual overtime work. [6]

The provision above was later amended when the parties renegotiated the
economic provisions of the CBA pursuant to Article 253-A of the Labor Code. Section 3
of Article XVIII of the 14 January 1993 to 13 January 1995 Supplement to the 1990-
1995 CBA reads:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL

SUBSIDY of NINE PESOS (P9.00) to all employees who render at least TWO (2)
hours or more of actual overtime work on a workday, and FREE MEALS, as presently
practiced, not exceeding TWENTY ONE PESOS (P21.00) after more than THREE (3)
hours of actual overtime work (Section 3, as amended). [7]

We note that the phrase more than was neither in the 1985-1988 CBA nor in the
original 1990-1995 CBA. It was inserted only in the 1993-1995 CBA Supplement. But
said phrase is again absent in Section 3 of Article XVIII of the 1996-2001 CBA, which
reverted to the phrase after three (3) hours.
Petitioner asserts that the phrase after three (3) hours of actual overtime work does
not mean after exactly three hours of actual overtime work; it means after more than
three hours of actual overtime work. Petitioner insists that this has been the
interpretation and practice of Dole for the past thirteen years.
Respondent, on the other hand, maintains that after three (3) hours of actual
overtime work simply means after rendering exactly, or no less than, three hours of
actual overtime work.
The Court finds logic in private respondents interpretation.
The omission of the phrase more than between after and three hours in the present
CBA spells a big difference.
No amount of legal semantics can convince the Court that after more than means
the same as after.
Petitioner asserts that the more than in the 1993-1995 CBA Supplement was mere
surplusage because, regardless of the absence of said phrase in all the past CBAs, it
had always been the policy of petitioner corporation to give the meal allowance only
after more than 3 hours of overtime work. However, if this were true, why was it included
only in the 1993-1995 CBA Supplement and the parties had to negotiate its deletion in
the 1996-2001 CBA?
Clearly then, the reversion to the wording of previous CBAs can only mean that the
parties intended that free meals be given to employees after exactly, or no less than,
three hours of actual overtime work.
The disputed provision of the CBA is clear and unambiguous. The terms are explicit
and the language of the CBA is not susceptible to any other interpretation. Hence, the
literal meaning of free meals after three (3) hours of overtime work shall prevail, which is
simply that an employee shall be entitled to a free meal if he has rendered exactly, or no
less than, three hours of overtime work, not after more than or in excess of three hours
overtime work.
Petitioner also invokes the well-entrenched principle of management prerogative
that the power to grant benefits over and beyond the minimum standards of law, or the
Labor Code for that matter, belongs to the employer x x x. According to this principle,
even if the law is solicitous of the welfare of the employees, it must also protect the right
of the employer to exercise what clearly are management prerogatives. Petitioner [8]

claims that, being the employer, it has the right to determine whether it will grant a free
meal benefit to its employees and, if so, under what conditions. To see it otherwise
would amount to an impairment of its rights as an employer.
We do not think so.
The exercise of management prerogative is not unlimited. It is subject to the
limitations found in law, a collective bargaining agreement or the general principles of
fair play and justice. This situation constitutes one of the limitations. The CBA is the
[9]

norm of conduct between petitioner and private respondent and compliance therewith is
mandated by the express policy of the law. [10]

Petitioner Dole cannot assail the voluntary arbitrators interpretation of the CBA for
the supposed impairment of its management prerogatives just because the same
interpretation is contrary to its own.
WHEREFORE, petition is hereby denied.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales,
JJ., concur.

G.R. No. 92009 February 17, 1993

MASTER IRON LABOR UNION (MILU), WILFREDO ABULENCIA, ROGELIO CABANA, LOPITO SARANILLA,
JESUS MOISES, BASILIO DELA CRUZ, EDGAR ARANES, ELY BORROMEO, DANIEL BACOLON, MATIAS
PAJIMULA, RESTITUTO PAYABYAB, MELCHOR BOSE, TEOFILO ANTOLIN, ROBERT ASPURIA, JUSTINO
BOTOR, ALFREDO FABROS, AGAPITO TABIOS, BENARDO ALFON, BENIGNO BARCENA, BERNARDO
NAVARRO, MOISES LABRADOR, ERNESTO DELA CRUZ, EDUARDO ESPIRITU, IGNACIO PAGTAMA, BAYANI
PEREZ, SIMPLICIO PUASO, EDWIN VELARDE, BEATO ABOGADO, DANILO SAN ANTONIO, BERMESI
BORROMEO, and JOSE BORROMEO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MASTER IRON WORKS AND CONSTRUCTION
CORPORATION, respondents.

Banzuela, Flores, Mirrales, Raeses, Sy, Taquio and Associates for petitioners.
Carlos L. Galarrita for private respondent.

MELO, J.:

The petition for certiorari before us seeks to annul and to set aside the decision of the National Labor Relations
Commission (Second Division) dated July 12, 1986 which affirmed that of Labor Arbiter Fernando V. Cinco declaring
illegal the strike staged by petitioners and terminating the employment of the individual petitioners.

The Master Iron Works Construction Corporation (Corporation for brevity) is a duly organized corporate entity
engaged in steel fabrication and other related business activities. Sometime in February 1987, the Master Iron Labor
Union (MILU) entered into a collective barganing agreement (CBA) with the Corporation for the three-year period
between December 1, 1986 and November 30, 1989 (Rollo, p. 7). Pertinent provisions of the CBA state:

Sec. 1. That there shall be no strike and no lockout, stoppage or shutdown of work, or any other
interference with any of the operation of the COMPANY during the term of this AGREEMENT,
unless allowed and permitted by law.

Sec. 2. Service Allowance The COMPANY agrees to continue the granting of service allowance
of workers assigned to work outside the company plant, in addition to his daily salary, as follows:

(a) For those assigned to work outside the plant within Metro Manila, the service
allowance shall be P12.00;

(b) For those assigned to work outside Metro Manila, the service allowance shall
be P25.00/day;

(c) The present practice of conveying to and from jobsites of workers assigned to
work outside of the company plant shall be maintained.

Right after the signing of the CBA, the Corporation subcontracted outside workers to do the usual jobs done by its
regular workers including those done outside of the company plant. As a result, the regular workers were scheduled
by the management to work on a rotation basis allegedly to prevent financial losses thereby allowing the workers only
ten (10) working days a month (Rollo, p. 8). Thus, MILU requested implementation of the grievance procedure which
had also been agreed upon in the CBA, but the Corporation ignored the request.

Consequently, on April 8, 1987, MILU filed a notice of strike (Rollo,

p. 54) with the Department of Labor and Employment. Upon the intervention of the DOLE, through one Atty. Bobot
Hernandez, the Corporation and MILU reached an agreement whereby the Corporation acceded to give back the
usual work to its regular employees who are members of MILU (Rollo, p. 55).

Notwithstanding said agreement, the Corporation continued the practice of hiring outside workers. When the MILU
president, Wilfredo Abulencia, insisted in doing his regular work of cutting steel bars which was being done by casual
workers, a supervisor reprimanded him, charged him with insubordination and suspended him for three (3) days
(Rollo, pp. 9 & 51-52). Upon the request of MILU, Francisco Jose of the DOLE called for conciliation conferences.
The Corporation, however, insisted that the hiring of casual workers was a management prerogative. It later ignored
subsequent scheduled conciliation conferences (Rollo, pp. 51-52 & 57-58).

Hence, on July 9, 1987, MILU filed a notice of strike on the following grounds: (a) violation of CBA; (b) discrimination;
(c) unreasonable suspension of union officials; and (d) unreasonable refusal to entertain grievance (Rollo,
p. 9). On July 24, 1987, MILU staged the strike, maintaining picket lines on the road leading to the Corporation's plant
entrance and premises.

At about 11 o'clock in the morning of July 28, 1987, CAPCOM soldiers, who had been summoned by the
Corporation's counsel, came and arrested the picketers. They were brought to Camp Karingal and, the following day,
to the Caloocan City jail. Charges for illegal possession of firearms and deadly weapons were lodged against them.
Later, however, those charges were dismissed for failure of the arresting CAPCOM soldiers to appear at the
investigation (Rollo, p. 10). The dispersal of the picketlines by the CAPCOM also resulted in the temporary lifting of
the strike.

On August 4, 1987, the Corporation filed with the NLRC National Capital Region arbitration branch a petition to
declare the strike illegal (Rollo,
p. 40). On September 7, 1987, MILU, with the assistance of the Alyansa ng Manggagawa sa Valenzuela (AMVA), re-
staged the strike. Consequently, the Corporation filed a petition for injunction before the NLRC which, on September
24, 1987, issued an order directing the workers to remove the barricades and other obstructions which prevented
ingress to and egress from the company premises. The workers obliged on October 1, 1987 (Rollo, p. 25). On
October 22, 1987, through its president, MILU offered to return to work in a letter which states:

22 Okt. 1987

Mr. Elieze Hao

Master Iron Works & Construction Corp.

790 Bagbagin, Caloocan City

Dear Sir:

Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi, nagsusuhestiyon o nag-

oofer sa inyong pangasiwaan ng aming kahilingan na bumalik na sa trabaho dahilan din lang sa
kalagayan na tuloy tuloy ang ating pag-uusap para sa ikatitiwasay ng ating relasyon. Gusto naming
manatili ang ating magandang pagtitinginan bilang magkasangga para sa ika-uunlad ng ating
kumpanya. Sana ay unawain niyo kami dahil kailangan namin ng trabaho.

Gumaga
lang,

(Sgd.)

WILFREDO ABULENCIA
Pangulo

(Rollo, p. 590)

On October 30, 1987, MILU filed a position paper with counter-complaint before the NLRC. In said counter-complaint,
the workers charged the Corporation with unfair labor practice for subcontracting work that was normally done by its
regular workers thereby causing the reduction of the latter's workdays; illegal suspension of Abulencia without any
investigation; discrimination for hiring casual workers in violation of the CBA, and illegal dispersal of the picket lines
by CAPCOM agents (Rollo, pp. 26-27).

In due course, a decision dated March 16, 1988 was rendered by Labor Arbiter Fernando Cinco declaring illegal the
strike staged by MILU. The dispositive portion of the decision reads:

WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered, as follows:

1. Declaring the strike by the respondents illegal and unlawful;

2. Ordering the cancellation of the registered permit of respondent union MILU for having
committed an illegal strike;

3. Ordering the termination of employment status of the individual respondents, including the
forfeiture of whatever benefits are due them under the law, for having actively participated in an
 illegal strike, namely: Wilfredo Abulencia, President; Rogelio Cabana, Vice-President; Lopito
Saranilla, Secretary; Jesus Moises, Treasurer; Basilio dela Cruz, Auditor; as Members of the
Board:Edgar Aranes, Melchor Bose, Restituto Payabyab, Matias Pajimula, Daniel Bacolon, and Ely
Borromeo, as Members of the Union: Teofilo Antolin, Robert Aspuria, Justino Botor, Alfredo Fabros,
Agapito Tabios, Bernardo Alfon, Benigno Barcena, Bernardo Navaro, Moises Labrador, Ernesto
dela Cruz, Eduardo Espiritu, Ignacio Pagtama, Bayani Perez, Simplicio Puaso, Edwin Velarde,
Beato Abogado, Danila San Antonio, Bermes Borromeo and Jose Borromeo.

The respondents as appearing in Annex "A" of the Petition, but not included as among those whose
employment status were not terminated as above-mentioned, are given priority of reinstatement,
without backwages, in the event petitioner starts its normal operations, or shall be paid their
separation pay according to law.

4. Ordering the respondents to cease and desist from further committing the illegal acts complained
of;

5. Ordering Respondent Union to pay the amount of P10,000.00 to Petitioner's Counsel as

attorney's fees;

6. Ordering the dismissal of the claim for damages for lack of merit; and

7. Ordering the dismissal of the counter-complaint in view of the filing of a separate complaint by
the respondents.

SO ORDERED. (pp. 35-36, Rollo.)

On appeal to the NLRC, MILU and the individual officers and workers named in Labor Arbiter Cinco's decision alleged
that said labor arbiter gravely abused his discretion and exhibited bias in favor of the Corporation in disallowing their
request to cross-examine the Corporation's witnesses, namely, Corporate Secretary Eleazar Hao, worker Daniel
Ignacio and foreman Marcial Barcelon, who all testified on the manner in which the strike was staged and on the
coercion and intimidation allegedly perpetrated by the strikers (Rollo,
p. 151).

The Second Division of the NLRC affirmed with modifications the decision of the labor arbiter. The decision, which
was promulgated on July 12, 1989 with Commissioners Domingo H. Zapanta and Oscar N. Abella concurring and
Commissioner Daniel M. Lucas, Jr. dissenting, disagreed with the labor arbiter on the "summary execution of the life
of Master Iron Labor Union (MILU)" on the grounds that the Corporation did not specifically pray for the cancellation
of MILU's registration and that pursuant to Articles 239 and 240 of the Labor Code, only the Bureau of Labor
Relations may cancel MILU's license or certificate of registration. It also deleted the award of P10,000.00 as
attorney's fees for lack of sufficient basis but it affirmed the labor arbiter with regard to the declaration of illegality of
the strike and the termination of employment of certain employees and the rest of the dispositive portion of the labor
arbiter's decision (Rollo, pp. 48-49).

In his dissent, Commissioner Lucas stated that he is "for the setting aside of the decision appealed from, and
remanding of the case to the labor arbiter of origin, considering the respondent's countercharge or complaint for
unfair labor practice was not resolved on the merits" (Rollo, p. 49).

MILU filed a motion for the reconsideration but the same was denied by the NLRC for lack of merit in its Resolution of
August 9, 1989 (Rollo, p. 50). Hence, the instant petition. 1

Petitioners contend that notwithstanding the non-strike provision in the CBA, the strike they staged was legal because
the reasons therefor are non-economic in nature. They assert that the NLRC abused its discretion in holding that
there was "failure to exhaust the provision on grievance procedure" in view of the fact that they themselves sought
grievance meetings but the Corporation ignored such requests. They charge the NLRC with bias in failing to give
weight to the fact that the criminal charges against the individual petitioners were dismissed for failure of the
CAPCOM soldiers to testify while the same individual strikers boldly faced the charges against them. Lastly, they aver
that the NLRC abused its discretion in holding that the workers' offer to return to work was conditional.
In holding that the strike was illegal, the NLRC relied solely on the no-strike no-lockout provision of the CBA
aforequoted. As this Court has held in Philippine Metal Foundries, Inc. vs. CIR (90 SCRA 135 [1979]), a no-strike
clause in a CBA is applicable only to economic strikes. Corollarily, if the strike is founded on an unfair labor practice of
the employer, a strike declared by the union cannot be considered a violation of the no-strike clause.

An economic strike is defined as one which is to force wage or other concessions from the employer which he is not
required by law to grant (Consolidated Labor Association of the Philippines vs. Marsman & Co., Inc., 11 SCRA 589
[1964]). In this case, petitioners enumerated in their notice of strike the following grounds: violation of the CBA or the
Corporation's practice of subcontracting workers; discrimination; coercion of employees; unreasonable suspension of
union officials, and unreasonable refusal to entertain grievance.

Private respondent contends that petitioner's clamor for the implementation of Section 2, Article VIII of the CBA on
service allowances granted to workers who are assigned outside the company premises is an economic issue (Rollo,
p. 70). On the contrary, petitioners decry the violation of the CBA, specifically the provision granting them service
allowances. Petitioners are not, therefore, already asking for an economic benefit not already agreed upon, but are
merely asking for the implementation of the same. They aver that the Corporation's practice of hiring subcontractors
to do jobs outside of the company premises was a way "to dodge paying service allowance to the workers" (Rollo, pp.
61 & 70).

Much more than an economic issue, the said practice of the Corporation was a blatant violation of the CBA and
unfair labor practice on the part of the employer under Article 248(i) of the Labor Code. Although the end result,
should the Corporation be required to observe the CBA, may be economic in nature because the workers would then
be given their regular working hours and therefore their just pay, not one of the said grounds is an economic demand
within the meaning of the law on labor strikes. Professor Perfecto Fernandez, in his
book Law on Strikes,Picketing and Lockouts (1981 edition, pp. 144-145), states that an economic strike involves
issues relating to demands for higher wages, higher pension or overtime rates, pensions, profit sharing, shorter
working hours, fewer work days for the same pay, elimination of night work, lower retirement age, more healthful
working conditions, better health services, better sanitation and more safety appliances. The demands of the
petitioners, being covered by the CBA, are definitely within the power of the Corporation to grant and therefore the
strike was not an economic strike.

The other grounds, i.e., discrimination, unreasonable suspension of union officials and unreasonable refusal to
entertain grievance, had been ventilated before the Labor Arbiter. They are clearly unfair labor practices as defined in
Article 248 of the Labor Code. 2 The subsequent withdrawal of petitioners' complaint for unfair labor practice
(NLRC-NCR Case No. 00-11-04132-87) which was granted by Labor Arbiter Ceferina Diosana who also
considered the case closed and terminated (Rollo, pp. 97 & 109) may not, therefore, be considered as
having converted their other grievance into economic demands.

Moreover, petitioners staged the strike only after the Corporation had failed to abide by the agreement forged
between the parties upon the intervention of no less than the DOLE after the union had complained of the
Corporation's unabated subcontracting of workers who performed the usual work of the regular workers. The
Corporation's insistence that the hiring of casual employees is a management prerogative betrays its attempt to coat
with legality the illicit curtailment of its employees' rights to work under the terms of the contract of employment and to
a fair implementation of the CBA.

While it is true that an employer's exercise of management prerogatives, with or without reason, does not per
seconstitute unjust discrimination, such exercise, if clearly shown to be in grave abuse of discretion, may be looked
into by the courts (National Federation of Labor Unions vs. NLRC, 202 SCRA 346 [1991]). Indeed, the hiring, firing,
transfer, demotion, and promotion of employees are traditionally identified as management prerogatives. However,
they are not absolute prerogatives. They are subject to limitations found in law, a collective bargaining agreement, or
general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990] citing Abbott
Laboratories [Phil.], Inc. vs. NLRC, 154 SCRA 713 [1987]). The Corporation's assertion that it was exercising a
management prerogative in hiring outside workers being contrary to the contract of employment which, of necessity,
states the expected wages of the workers, as well as the CBA, is therefore untenable.

Private respondent's failure to traverse petitioners' allegations that the NLRC abused its discretion in holding that the
provision on grievance procedure had not been exhausted clearly sustains such allegation and upholds the
petitioners' contention that the Corporation refused to undergo said procedure. It should be remembered that a
grievance procedure is part of the continuous process of collective bargaining (Republic Savings Bank. vs. CIR, et al.,
21 SCRA 226 [1967]). It is intended to promote a friendly dialogue between labor and management as a means of
maintaining industrial peace. The Corporation's refusal to heed petitioners' request to undergo the grievance
procedure clearly demonstrated its lack of intent to abide by the terms of the CBA.

Anent the NLRC's finding that Abulencia's offer to return to work is conditional, even a cursory reading of the letter
aforequoted would reveal that no conditions had been set by petitioners. It is incongruous to consider as a "condition"
the statement therein that the parties would continue talks for a peaceful working relationship ("tuloy tuloy ang ating
pag-uusap sa ikatitiwasay ng ating relasyon"). Conferences form part of the grievance procedure and their mere
mention in Abulencia's letter did not make the same "conditional".

In the same manner, the following findings of the Labor Arbiter showed the illegal breakup of the picket lines by the
CAPCOM:

d) On 28 July 1987, CAPCOM soldiers, on surveillance mission, arrived at the picket line of
respondents and searches were made on reported deadly weapons and firearms in the possession
of the strikers. Several bladed weapons and firearms in the possession of the strikers were
confiscated by the CAPCOM soldiers, as a result of which, the apprehended strikers were brought
to Camp Tomas Karingal in Quezon City for proper investigation and filing of the appropriate
criminal charges against them. The strikers who were charged of illegal possession of deadly
weapon and firearms were: Edgar Aranes, Wilfredo Abulencia, Ernesto dela Cruz, Beato Abogado,
Lopito Saranilla, Restituto Payabyab, Jose Borromeo and Rogelio Cabana. Criminal informations
were filed by Inquest Fiscal, marked as Exhibits "E", "E-1 to E-8". These strikers were jailed for
sometime until they were ordered release after putting up the required bail bond. Other strikers
were also arrested and brought to Camp Tomas Karingal, and after proper investigation as to their
involvement in the offense charged, they were released for lack of prima facie evidence. They were
Edwin Velarde, Bayani Perez, Daniel Bacolon, Jesus Moises, Robert Aspurias and Benigno
Barcena.

After the strikers who were arrested were brought to Camp Tomas Karingal on 28 July 1987, the
rest of the strikers removed voluntarily their human and material barricades which were placed and
posted at the road leading to the premises of the Company. (Rollo, p. 32)

The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported outbreak of violence, was
clearly in violation of the following prohibited activity under Article 264 of the Labor Code:

(d) No public official or employee, including officers and personnel of the New Armed Forces of the
Philippines or the Integrated National Police, or armed person, shall bring in, introduce or escort in
any manner any individual who seeks to replace strikers in entering or leaving the premises of a
strike area, or work in place of the strikers. The police force shall keep out of the picket lines unless
actual violence or other criminal acts occur therein; Provided, That nothing herein shall be
interpreted to prevent any public officer from taking any measure necessary to maintain peace and
order, protect life and property, and/or enforce the law and legal order. (Emphasis supplied.)

As the Labor Arbiter himself found, no pervasive or widespread coercion or violence were perpetrated by the
petitioners as to warrant the presence of the CAPCOM soldiers in the picket lines. In this regard, worth quoting is the
following excerpt of the decision in Shell Oil Workers' Union vs. Shell Company of the Philippines, Ltd., 39 SCRA 276
[1971], which was decided by the Court under the old Industrial Peace Act but which excerpt still holds true:

. . . What is clearly within the law is the concerted activity of cessation of work in order that . . .
employer cease and desist from an unfair labor practice. That the law recognizes as a right. There
is though a disapproval of the utilization of force to attain such an objective. For implicit in the very
concept of the legal order is the maintenance of peaceful ways. A strike otherwise valid, if violent in
character, may be placed beyond the pale. Care is to be taken, however, especially where an unfair
labor practice is involved, to avoid stamping it with illegality just because it is tainted with such acts.
To avoid rendering illusory the recognition of the right to strike, responsibility in such a case should
be individual and not collective. A different conclusion would be called for, of course, if the
existence of force while the strike lasts is pervasive and widespread, consistently and deliberately
resorted to as a matter of policy. It could be reasonably concluded then that even if justified as to
ends, it becomes illegal because of the means employed. (at p. 292.)
All told, the strike staged by the petitioners was a legal one even though it may have been called to offset what the
strikers believed in good faith to be unfair labor practices on the part of the employer (Ferrer, et al. vs. Court of
Industrial Relations, et al., 17 SCRA 352 [1966]). Verily, such presumption of legality prevails even if the allegations of
unfair labor practices are subsequently found out to be untrue (People's Industrial and Commercial Employees and
Workers Org. [FFW] vs. People's Industrial and Commercial Corporation, 112 SCRA 440 [1982]). Consonant with
these jurisprudential pronouncements, is Article 263 of the Labor Code which clearly states "the policy of the State to
encourage free trade unionism and free collective bargaining". Paragraph (b) of the same article guarantees the
workers' "right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and
protection" and recognizes the "right of legitimate labor organizations to strike and picket and of employers to lockout"
so long as these actions are "consistent with the national interest" and the grounds therefor do not involve inter-union
and intra-union disputes.

The strike being legal, the NLRC gravely abused its discretion in terminating the employment of the individual
petitioners, who, by operation of law, are entitled to reinstatement with three years backwages. Republic Act No. 6715
which amended Art. 279 of the Labor Code by giving "full backwages inclusive of allowances" to reinstated
employees, took effect fifteen days from the publication of the law on March 21, 1989. The decision of the Labor
Arbiter having been promulgated on March 16, 1988, the law is not applicable in this case.

WHEREFORE, the questioned decision and resolution of the NLRC as well as the decision of the Labor Arbiter are
hereby SET ASIDE and the individual petitioners are reinstated to their positions, with three years backwages and
without loss of seniority rights and other privileges. Further, respondent corporation is ordered to desist from
subcontracting work usually performed by its regular workers.

SO ORDERED.

Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.

Gutierrez, Jr., J., is on leave.

# Footnotes

1 The Solicitor General at first refused to file a comment on the petition in view of his stand which is
contrary to that of the NLRC (Rollo, p. 81). Hence, the NLRC itself was directed to file comment on
the petition in the Resolution of June 20, 1990 (Rollo, p. 83). The NLRC's Legal Division filed two
motions for extension of time to file comment (Rollo, pp. 86 & 90). However, in the Resolution of
November 14, 1990 (Rollo, p. 110), the Court noted the private respondent's manifestation and
motion "pending filing of comment by the Solicitor General on the petition." The NLRC Legal
Division having failed to file comment within the extended period to file the same, in the Resolution
of December 10, 1990, the Court dispensed with the filing of the NLRC's comment. On December
14, 1990, the Solicitor General, taking note of the Resolution of November 14, 1990, requested a
new period within which to file comment for the NLRC. On January 21, 1991, he filed said comment
praying that the NLRC decision be set aside and instead judgment be rendered directing the
reinstatement of the individual petitioners with backwages and without loss of seniority rights and
other employment privileges and enjoining the private respondent from subcontracting work
regularly within the functions of petitioners (Rollo, p. 122).

2 Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit
any of the following unfair labor practice:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

(b) To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members when such will
interfere with, restrain or coerce employees in the exercise of their right to self-organization;
 (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any
labor organization, including the giving of financial or other support to it or its organizations or
supporters;

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization. Nothing in
this Code or in any other law shall stop the parties from requiring membership in a recognized
collective bargaining agent as a condition of employment, except those employees who are already
members of another union at the time of the signing of the collective bargaining agreement.
Employees of an appropriate collective bargaining agent may be assessed a reasonable fee
equivalent to the dues and other fees paid by members of the recognized collective bargaining
agent, if such non-union members accept the benefits under the collective agreement: Provided,
that the individual authorization required under Article 242, paragraph (o) of this Code shall not
apply to the non-members of the recognized collective bargaining agent;

(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having
given or being about to give testimony under this Code;

(g) To violate the duty to bargain collectively as prescribed by this Code;

(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the
settlement of any issue in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers and agents of
corporations, associations or partnerships who have actually participated in, authorized or ratified
under unfair labor practices shall be held criminally liable.

G.R. No. L-64313 January 17, 1985

NATIONAL HOUSING CORPORATION, petitioner,

vs.
BENJAMIN JUCO AND THE NATIONAL LABOR RELATIONS COMMISSION, respondents.

Government Corporate Counsel for petitioner.

Amante A. Pimentel for respondents.

GUTIERREZ, JR., J.:

Are employees of the National Housing Corporation (NHC) covered by the Labor Code or by laws and regulations
governing the civil service?

The background facts of this case are stated in the respondent-appellee's brief as follows:

The records reveal that private respondent (Benjamin C. Juco) was a project engineer of the
National Housing Corporation (NHC) from November 16, 1970 to May 14, 1975. For having been
implicated in a crime of theft and/or malversation of public funds involving 214 pieces of scrap G.I.
pipes owned by the corporation which was allegedly committed on March 5, 1975. Juco's services
were terminated by (NHC) effective as of the close of working hours on May 14, 1975. On March
25, 1977 he filed a complaint for illegal dismissal against petitioner (NHC) with Regional Office No.
 4, Department of Labor (now Ministry of Labor and Employment) docketed as R04-3-3309-77
(Annex A, Petition). The said complaint was certified by Regional Branch No. IV of the NLRC for
compulsory arbitration where it was docketed as Case No. RB-IV-12038-77 and assigned to Labor
Arbiter Ernilo V. Pealosa. The latter conducted the hearing. By agreement of the parties, the case
was submitted for resolution upon submission of their respective position papers. Private
respondent (Juco) submitted his position paper on July 15, 1977. He professed innocence of the
criminal acts imputed against him contending "that he was dismissed based on purely fabricated
charges purposely to harass him because he stood as a witness in the theft case filed against
certain high officials of the respondent's establishment" (NHC) and prayed for 'his immediate
reinstatement to his former position in the (NHC) without loss of seniority rights and the consequent
payment of his will back wages plus all the benefits appertaining thereto. On July 28, 1977, the
NHC also filed its position paper alleging that the Regional Office Branch IV, Manila, NLRC, "is
without authority to entertain the case for lack of jurisdiction, considering that the NHC is a
government owned and controlled corporation; that even assuming that this case falls within the
jurisdiction of this Office, respondent firm (now petitioner) maintains that respondent (Juco), now
private respondent, was separated from the service for valid and justified reasons, i.e., for having
sold company properties consisting of 214 pieces of scrap G.I. pipes at a junk shop in Alabang,
Muntinlupa, Metro Manila, and thereafter appropriating the proceeds thereof to his own benefit."

The pertinent portion of the decision of respondent National Labor Relations Commission (NLRC) reads:

The fact that in the early case of Fernandez v. Cedro (NLRC Case No. 201165-74, May 19, 1975)
the Commission, (Second Division) ruled that the respondent National Housing Corporation is a
government-owned or controlled corporation does not preclude us from later taking a contrary
stand if by doing so the ends of justice could better be served.

For although adherence to precedents (stare decisis) is a sum formula for achieving uniformity of
action and conducive to the smooth operation of an office, Idolatrous reverence for precedents
which have outlived their validity and usefulness retards progress and should therefore be avoided.
In fact, even courts do reverse themselves for reasons of justice and equity. This Commission as
an Administrative body performing quasi judicial function is no exception.

WHEREFORE, in the light of the foregoing, the decision appealed from is hereby, set aside. In
view, however, of the fact that the Labor Arbiter did not resolve the issue of illegal dismissal we
have opted to remand this case to the Labor Arbiter a quo for resolution of the aforementioned
issue.

The NHC is a one hundred percent (100%) government-owned corporation organized in accordance with Executive
Order No. 399, the Uniform Charter of Government Corporations, dated January 5, 1951. Its shares of stock are
owned by the Government Service Insurance System the Social Security System, the Development Bank of the
Philippines, the National Investment and Development Corporation, and the People's Homesite and Housing
Corporation. Pursuant to Letter of Instruction No. 118, the capital stock of NHC was increased from P100 million to
P250 million with the five government institutions above mentioned subscribing in equal proportion to the increased
capital stock. The NHC has never had any private stockholders. The government has been the only stockholder from
its creation to the present.

There should no longer be any question at this time that employees of government-owned or controlled corporations
are governed by the civil service law and civil service rules and regulations.

Section 1, Article XII-B of the Constitution specifically provides:

The Civil Service embraces every branch, agency, subdivision, and instrumentality of the
Government, including every government-owned or controlled corporation. ...

The 1935 Constitution had a similar provision in its Section 1, Article XI I which stated:

A Civil Service embracing all branches and subdivisions of the Government shall be provided by
law.
The inclusion of "government-owned or controlled corporations" within the embrace of the civil service shows a
deliberate effort of the framers to plug an earlier loophole which allowed government-owned or controlled
corporations to avoid the full consequences of the an encompassing coverage of the civil service system. The same
explicit intent is shown by the addition of "agency" and "instrumentality" to branches and subdivisions of the
Government. All offices and firms of the government are covered.

The amendments introduced in 1973 are not Idle exercises or a meaningless gestures. They carry the strong
message that t civil service coverage is broad and an- embracing insofar as employment in the government in any of
its governmental or corporate arms is concerned.

The constitutional provision has been implemented by statute. Presidential Decree No. 807 is unequivocal that
personnel of government-owned or controlled corporations belong to the civil service and are subject to civil service
requirements.

It provides:

SEC. 56. Government-owned or Controlled Corporations Personnel. All permanent personnel of

government-owned or controlled corporations whose positions are now embraced in the civil
service shall continue in the service until they have been given a chance to qualify in an
appropriate examination, but in the meantime, those who do not possess the appropriate civil
service eligibility shag not be promoted until they qualify in an appropriate civil service examination.
Services of temporary personnel may be terminated any time.

The very Labor Code, P. D. No. 442 as amended, which the respondent NLRC wants to apply in its entirety to the
private respondent provides:

ART. 277. Government employees. The terms and conditions of employment of all government
employees, including employees of government-owned and controlled corporations shall be
governed by the Civil Service Law, rules and regulations. Their salaries shall be standardized by
the National Assembly as provided for in the New Constitution. However, there shall be reduction of
existing wages, benefits and other terms and conditions of employment being enjoyed by them at
the time of the adoption of the Code.

Our decision in Alliance of Government Workers, et al v. Honorable Minister of Labor and Employment et all. (124
SCRA 1) gives the background of the amendment which includes government-owned or controlled corporations in the
embrace of the civil service.

We stated:

Records of the 1971 Constitutional Convention show that in the deliberation held relative to what is
now Section 1(1), Article XII-B, supra, the issue of the inclusion of government-owned or controlled
corporations figured prominently.

The late delegate Roberto S. Oca, a recognized labor leader, vehemently objected to the inclusion
of government-owned or controlled corporations in the Civil Service. He argued that such inclusion
would put asunder the right of workers in government corporations, recognized in jurisprudence
under the 1935 Constitution, to form and join labor unions for purposes of collective bargaining with
their employers in the same manner as in the private section (see: records of 1971 Constitutional
Convention).

In contrast, other labor experts and delegates to the 1971 Constitutional Convention enlightened
the members of the Committee on Labor on the divergent situation of government workers under
the 1935 Constitution, and called for its rectification. Thus, in a Position Paper dated November 22,
197 1, submitted to the Committee on Labor, 1971 Constitutional Convention, then Acting
Commissioner of Civil Service Epi Rey Pangramuyen declared:

It is the stand, therefore, of this Commission that by reason of the nature of the
public employer and the peculiar character of the public service, it must
 necessary regard the right to strike given to unions in private industry as not
applying to public employees and civil service employees. It has been stated that
the Government, in contrast to the private employer, protects the interests of all
people in the public service, and that accordingly, such conflicting interests as
are present in private labor relations could not exist in the relations between
government and those whom they employ.

Moreover, determination of employment conditions as well as supervision of the

management of the public service is in the hands of legislative bodies. It is further
emphasized that government agencies in the performance of their duties have a
right to demand undivided allegiance from their workers and must always
maintain a pronounced esprit de corps or firm discipline among their staff
members. It would be highly incompatible with these requirements of the public
service, if personnel took orders from union leaders or put solidarity with
members of the working class above solidarity with the Government. This would
be inimical to the public interest.

Moreover, it is asserted that public employees by joining labor unions may be

compelled to support objectives which are political in nature and thus jeopardize
the fundamental principle that the governmental machinery must be impartial and
non-political in the sense of party politics. (See: Records of 1971 Constitutional
Convention).

Similar, Delegate Leandro P. Garcia, expressing for the inclusion of government-owned or

controlled corporations in the Civil Service, argued:

It is meretricious to contend that because Government-owned or controlled

corporations yield profits, their employees are entitled to better wages and fringe
benefits than employees of Government other than Government-owned and
controlled corporations which are not making profits. There is no gainsaying the
fact that the capital they use is the people's money. (see: Records of the 1971
Constitutional Convention).

Summarizing the deliberations of the 1971 Constitutional Convention on the inclusion of

Government-owned or controlled corporation Dean Joaquin G. Bernas, SJ., of the Ateneo de
Manila University Professional School of Law, stated that government-owned corporations came
under attack as g cows of a privileged few enjoying salaries far higher than their counterparts in the
various branches of government, while the capital of these corporations belongs to the Government
and government money is pumped into them whenever on the brink of disaster, and they should
therefore come under the strict surveillance of the Civil Service System. (Bernas, The 1973
Philippine Constitution, Notes and Cases, 1974 ed., p. 524).

Applying the pertinent provisions of the Constitution, the Labor Code as amended, and the Civil Service Decree as
amended and the precedent in the Alliance of Government Workers decision, it is clear that the petitioner National
Housing Corporation comes under the jurisdiction of the Civil Service Commission, not the Ministry of Labor and
Employment.

This becomes more apparent if we consider the fact that the NHC performs governmental functions and not
proprietary ones.

The NHC was organized for the governmental objectives stated in its amended articles of incorporation as follows:

SECOND: That the purpose for which the corporation is organized is to assist and carry out the
coordinated massive housing program of the government, principally but not limited to low-cost
housing with the integration cooperation and assistance of all governmental agencies concerned,
through the carrying on of any or all the following activities:
 l) The acquisition, development or reclamation of lands for the purpose of construction and building
therein preferably low-cost housing so as to provide decent and durable dwelling for the greatest
number of inhabitants in the country;

2) The promotion and development of physical social and economic community growth through the
establishment of general physical plans for urban, suburban and metropolitan areas to be
characterized by efficient land use patterns;

3) The coordination and implementation of all projects of the government for the establishment of
nationwide and massive low cost housing;

4) The undertaking and conducting of research and technical studies of the development and
promotion of construction of houses and buildings of sound standards of design liability, durability,
safety, comfort and size for improvement of the architectural and engineering designs and utility of
houses and buildings with the utilization of new and/or native materials economics in material and
construction, distribution, assembly and construction and of applying advanced housing and
building technology.

5) Construction and installation in these projects of low-cost housing privately or cooperatively

owned water and sewerage system or waste disposal facilities, and the formulations of a unified or
officially coordinated urban transportation system as a part of a comprehensive development plan
in these areas.

The petitioner points out that it was established as an instrumentality of the government to accomplish governmental
policies and objectives and extend essential services to the people. It would be incongruous if employees discharging
essentially governmental functions are not covered by the same law and rules which govern those performing other
governmental functions. If government corporations discharging proprietary functions now belong to the civil service
with more reason should those performing governmental functions be governed by civil service law.

The respondent NLRC cites a 1976 opinion of the Secretary of Justice which holds that the phrase "government-
owned or controlled corporations" in Section 1, Article XII-B of the Constitution contemplates only those government-
owned or controlled corporations created by special law. The opinion states that since the Constitution provides for
the organization or regulation of private corporations only by "general law", expressly excluding government-owned or
controlled corporations, it follows that whenever the Constitution mentions government-owned or controlled
corporations, it must refer to those created by special law. P.D. No. 868 which repeals all charters, laws, decrees,
rules, and provisions exempting any branch, agency, subdivision, or instrumentality of the government, including
government- owned or controlled corporations from the civil service law and rules is also cited to show that
corporations not governed by special charters or laws are not to be brought within civil service coverage. The
discussions in the Constitutional Convention are also mentioned. It appears that at the time the Convention discussed
government-owned or controlled corporations, all such corporations were organized only under special laws or
charters.

The fact that "private" corporations owned or controlled by the government may be created by special charter does
not mean that such corporations not created by special law are not covered by the civil service. Nor does the decree
repealing all charters and special laws granting exemption from the civil service law imply that government
corporations not created by special law are exempt from civil service coverage. These charters and statutes are the
only laws granting such exemption and, therefore, they are the only ones which could be repealed. There was no
similar exempting provision in the general law which called for repeal. And finally, the fact that the Constitutional
Convention discussed only corporations created by special law or charter cannot be an argument to exclude
petitioner NHC from civil service coverage. As stated in the cited speech delivered during the convention sessions of
March 9, 1972, all government corporations then in existence were organized under special laws or charters. The
convention delegates could not possibly discuss government-owned or controlled corporations which were still non-
existent or about whose existence they were unaware.

Section I of Article XII-B, Constitution uses the word "every" to modify the phrase "government-owned or controlled
corporation."

"Every" means each one of a group, without exception It means all possible and all taken one by one. Of course, our
decision in this case refers to a corporation created as a government-owned or controlled entity. It does not cover
cases involving private firms taken over by the government in foreclosure or similar proceedings. We reserve
judgment on these latter cases when the appropriate controversy is brought to this Court.

The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section 1, Article
XII-B of the Constitution It would be possible for a regular ministry of government to create a host of subsidiary
corporations under the Corporation Code funded by a willing legislature. A government-owned corporation could
create several subsidiary corporations. These subsidiary corporations would enjoy the best of two worlds. Their
officials and employees would be privileged individuals, free from the strict accountability required by the Civil Service
Decree and the regulations of the Commission on Audit. Their incomes would not be subject to the competitive
restraints of the open market nor to the terms and conditions of civil service employment.
Conceivably, all government-owned or controlled corporations could be created, no longer by special charters, but
through incorporation under the general law. The constitutional amendment including such corporations in the
embrace of the civil service would cease to have application. Certainly, such a situation cannot be allowed to exist.

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the respondent National Labor
Relations Commission is SET ASIDE. The decision of the Labor Arbiter dismissing the case before it for lack of
jurisdiction is REINSTATED.

SO ORDERED.

Fernando, C.J., Teehankee, Makasiar, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, Escolin, Relova, De la
Fuente and Cuevas, JJ., concur.

Separate Opinions

ABAD SANTOS, J., dissenting:

It was I, as Secretary of Justice, who issued Opinion No. 62, series of 1976, for the Commissioner of Civil Service
who wanted to know the scope of the constitutional provisions on the Civil Service in respect of government-owned or
controlled corporations. In response I opined, for the reasons stated therein, that only those corporations created by
special law are contemplated.

In the case at bar the National Housing Corporation was not created by special law; it was organized pursuant to the
Corpotation Law Act No. 1459 entitled, AN ACT PROVIDING FOR THE FORMATION AND ORGANIZATION OF
CORPORATIONS, DEFINING THEIR POWERS, FIXING THE DUTIES OF DIRECTORS AND OTHER OFFICERS
THEREOF, DECLARING THE RIGHTS AND LIABILITIES OF SHAREHOLDERS AND MEMBERS, PRESCRIBING
THE CONDITIONS UNDER WHICH SUCH CORPORATIONS MAY TRANSACT BUSINESS. [Act No. 1459 has been
replaced by Batas Pambansa Blg. 68 known as The New Corporation Code.] In the fight of my opinion, the National
Housing Corporation is not covered by the Civil Service provisions of the Constitution. Hence I dissent.

Is the National Housing Corporation covered by the Labor Code? I am not prepared to answer this question at this
time. I do wish to emphasize that whether or not a corporation is "government-owned or controlled" depends upon the
purpose of the inquiry. A corporation may be "government-owned or controlled" for one purpose but not for another. In
other words, it is not possible to broadly categorize a corporation as government-owned or controlled."

It may be asked, if the National Housing Corporation is not covered by the Civil Service should it not be covered
instead by the Labor Code? My answer is, not necessarily. For it may well be that the National Housing Corporation is
in limbo.

The following corporations (the list is not exhaustive) appear to be "government-owned or controlled" not by virtue of
foreclosure or similar proceedings:
 Human Settlements Development Corporation

Nayon Filipino Foundation, Inc.

Philippine Aero Space Development Corporation

Philippine Associated Smelting and Refining Corporation

Petrophil Corporation Petron TBA Corporation

Philippine National Oil Co. Food Terminal Inc.

Republic Planters Bank

QUARE: Is this Court ready to hold that each and everyone of the above-named corporation is government-owned or
controlled for Civil Service purposes?

Separate Opinions

ABAD SANTOS, J., dissenting:

It was I, as Secretary of Justice, who issued Opinion No. 62, series of 1976, for the Commissioner of Civil Service
who wanted to know the scope of the constitutional provisions on the Civil Service in respect of government-owned or
controlled corporations. In response I opined, for the reasons stated therein, that only those corporations created by
special law are contemplated.

In the case at bar the National Housing Corporation was not created by special law; it was organized pursuant to the
Corpotation Law Act No. 1459 entitled, AN ACT PROVIDING FOR THE FORMATION AND ORGANIZATION OF
CORPORATIONS, DEFINING THEIR POWERS, FIXING THE DUTIES OF DIRECTORS AND OTHER OFFICERS
THEREOF, DECLARING THE RIGHTS AND LIABILITIES OF SHAREHOLDERS AND MEMBERS, PRESCRIBING
THE CONDITIONS UNDER WHICH SUCH CORPORATIONS MAY TRANSACT BUSINESS. [Act No. 1459 has been
replaced by Batas Pambansa Blg. 68 known as The New Corporation Code.] In the fight of my opinion, the National
Housing Corporation is not covered by the Civil Service provisions of the Constitution. Hence I dissent.

Is the National Housing Corporation covered by the Labor Code? I am not prepared to answer this question at this
time. I do wish to emphasize that whether or not a corporation is "government-owned or controlled" depends upon the
purpose of the inquiry. A corporation may be "government-owned or controlled" for one purpose but not for another. In
other words, it is not possible to broadly categorize a corporation as government-owned or controlled."

It may be asked, if the National Housing Corporation is not covered by the Civil Service should it not be covered
instead by the Labor Code? My answer is, not necessarily. For it may well be that the National Housing Corporation is
in limbo.

The following corporations (the list is not exhaustive) appear to be "government-owned or controlled" not by virtue of
foreclosure or similar proceedings:

Human Settlements Development Corporation

Nayon Filipino Foundation, Inc.

Philippine Aero Space Development Corporation

 Philippine Associated Smelting and Refining Corporation

Petrophil Corporation Petron TBA Corporation

Philippine National Oil Co. Food Terminal Inc.

Republic Planters Bank

QUARE: Is this Court ready to hold that each and everyone of the above-named corporation is government-owned or
controlled for Civil Service purposes?

G.R. Nos. L-58674-77 July 11, 1990

PEOPLE OF THE PHILIPPINES, petitioner,

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

CRUZ, J:

The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise known as the Labor
Code, reading as follows:

(b) Recruitment and placement' refers to any act of canvassing, enlisting, contracting, transporting,
hiring, or procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not: Provided, That any person or entity which,
in any manner, offers or promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.

Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo City
alleging that Serapio Abug, private respondent herein, "without first securing a license from the Ministry of Labor as a
holder of authority to operate a fee-charging employment agency, did then and there wilfully, unlawfully and criminally
operate a private fee charging employment agency by charging fees and expenses (from) and promising employment
in Saudi Arabia" to four separate individuals named therein, in violation of Article 16 in relation to Article 39 of the
Labor Code. 1

Abug filed a motion to quash on the ground that the informations did not charge an offense because he was accused
of illegally recruiting only one person in each of the four informations. Under the proviso in Article 13(b), he claimed,
there would be illegal recruitment only "whenever two or more persons are in any manner promised or offered any
employment for a fee. " 2

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

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

The view of the private respondents is that to constitute recruitment and placement, all the acts mentioned in this
article should involve dealings with two or mre persons as an indispensable requirement. On the other hand, the
petitioner argues that the requirement of two or more persons is imposed only where the recruitment and placement
consists of an offer or promise of employment to such persons and always in consideration of a fee. The other acts
mentioned in the body of the article may involve even only one person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or promise of
employment if the purpose was to apply the requirement of two or more persons to all the acts mentioned in the basic
rule. For its part, the petitioner does not explain why dealings with two or more persons are needed where the
recruitment and placement consists of an offer or promise of employment but not when it is done through
"canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an exception
thereto but merely to create a presumption. The presumption is that the individual or entity is engaged in recruitment
and placement whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an offer or
promise of employment is made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring (of) workers. "

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers.
Any of the acts mentioned in the basic rule in Article 13(b) win constitute recruitment and placement even if only one
prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in
consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing
with them shall be deemed to be engaged in the act of recruitment and placement. The words "shall be deemed"
create that presumption.

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 beprima
facie evidence that he has put them to personal use; in other words, he shall be deemed to have malversed such
funds or property. In the instant case, the word "shall be deemed" should by the same token be given the force of a
disputable presumption or of prima facie evidence of engaging in recruitment and placement. (Klepp vs. Odin Tp.,
McHenry County 40 ND N.W. 313, 314.)

It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of records of debates
and deliberations that would otherwise have been available if the Labor Code had been enacted as a statute rather
than a presidential decree. The trouble with presidential decrees is that they could be, and sometimes were, issued
without previous public discussion or consultation, the promulgator heeding only his own counsel or those of his close
advisers in their lofty pinnacle of power. The not infrequent results are rejection, intentional or not, of the interest of
the greater number and, as in the instant case, certain esoteric provisions that one cannot read against the
background facts usually reported in the legislative journals.

At any rate, the interpretation here adopted should give more force to the campaign against illegal recruitment and
placement, which has victimized many Filipino workers seeking a better life in a foreign land, and investing hard-
earned savings or even borrowed funds in pursuit of their dream, only to be awakened to the reality of a cynical
deception at the hands of theirown countrymen.

WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four informations
against the private respondent reinstated. No costs.

SO ORDERED.

G.R. No. L-50734-37 February 20, 1981

WALLEM PHILIPPINES SHIPPING, INC., petitioner,

vs.
THE HON. MINISTER OF LABOR, in his capacity as Chairman of the National Seamen Board Proper, JAIME
CAUNCA, ANTONIO CABRERA, EFREN GARCIA, JOSE OJEDA and RODOLFO PAGWAGAN,respondents.

DE CASTRO, J.:

Petition for certiorari with preliminary injunction with prayer that the Orders dated December 19, 1977 and April 3,
1979 of the National Seamen Board (NSB) be declared null and void. Private respondents were hired by petitioner
sometime in May 1975 to work as seamen for a period of ten months on board the M/V Woermann Sanaga, a Dutch
vessel owned and operated by petitioner's European principals. While their employment contracts were still in force,
private respondents were dismissed by their employer, petitioner herein, and were discharged from the ship on
charges that they instigated the International Transport Federation (ITF) to demand the application of worldwide ITF
seamen's rates to their crew.

Private respondents were repatriated to the Philippines on October 27, 1975 and upon their arrival in Manila, they
instituted a complaint against petitioner for illegal dismissal and recovery of wages and other benefits corresponding
to the five months' unexpired period of their shipboard employment contract.

In support of their complaint, private respondents submitted a Joint Affidavit 1 stating the circumstances
surrounding their employment and subsequent repatriation to the Philippines, material averments of which
are herein below reproduced:

J O I N TAF F I DAV I T

xxx xxx xxx

5. That aside from our basic monthly salary we are entitled to two (2) months vacation leave, daily
subsistence allowance of US$8.14 each, daily food allowance of US$2.50. as well as overtime pay
which we failed to receive because our Shipboard Employment Contract was illegally terminated;

6. That while we were in Rotterdam, on or about July 9, 1975, representative of the ITF boarded
our vessel and talked with the Ship's Captain;

7. That the following day, the representatives of the ITF returned and was followed by Mr. M.S.K.
Ogle who is the Company's Administrative Manager, again went to see the Captain;

8. That at around 7:00 in the evening all the crew members were called in the Mess Hall where the
ITF representatives informed us that they have just entered into a "Special Agreement" with the
Wallem Shipping Management, Ltd., represented by Mr. M.S.K. Ogle, Administrative Manager,
wherein new salary rates was agreed upon and that we were going to be paid our salary
differentials in view of the new rates;

9. That in the same meeting, Mr. M.S.K. Ogle also spoke where he told that a Special Agreement
has been signed and that we will be receiving new pay rate and enjoined us to work hard and be
good boys;

10. That the same evening we received our salary differentials based on the new rates negotiated
for us by the ITF.

11. That while we were in the Port Dubai, Saudi Arabia, we were not receiving our pay, since the
Ship's Captain refused to implement the world-wide rates and insisted on paying us the Far East
Rate;

12. That the Port Dubai is one that is within the Worldwide rates sphere.

13. That on October 22, 1975, Mr. Greg Nacional Operation Manager of respondent corporation,
arrived in Dubai Saudi Arabia and boarded our ship;

14. That on October 23, 1975, Mr. Nacional called all the crew members, including us to a meeting
at the Mess Hall and there he explained that the Company cannot accept the worldwide rate. The
Special Agreement signed by Mr. Ogle in behalf of the Company is nothing but a scrap of paper.
Mr. Jaime Caunca then asked Mr. Nacional, in view of what he was saying, whether the Company
will honor the Special Agreement and Mr. Nacional answered "Yes". That we must accept the Far
East Rates which was put to a vote. Only two voted for accepting the Far East Rates;
15. That immediately thereafter Mr. Nacional left us;

16. That same evening, Mr. Nacional returned and threatened that he has received a cable from
the Home Office that if we do not accept the Far East Rate, our services will be terminated and
there will be a change in crew;

17. That when Mr. Nacional left, we talked amongst ourselves and decided to accept the Far East
Rates;

18. That in the meeting that evening because of the threat we informed Mr. Nacional we were
accepting the Far East Rate and he made us sign a document to that effect;

19. That we the complainants with the exception of Leopoldo Mamaril and Efren Garcia, were not
able to sign as we were at the time on work schedules, and Mr. Nacional did not bother anymore if
we signed or not;

20. That after the meeting Mr. Nacional cabled the Home Office, informing them that we the
complainants with the exception of Messrs. Mamaril and Garcia were not accepting the Far East
Rates;

21. That in the meeting of October 25, 1975, Mr. Nacional signed a document whereby he
promised to give no priority of first preference in "boarding a vessel and that we are not
blacklisted";

22. That in spite of our having accepted the Far East Rate, our services were terminated and
advised us that there was a change in crew;

23. That on October 27, 1975, which was our scheduled flight home, nobody attended us, not even
our clearance for our group travel and consequently we were not able to board the plane, forcing us
to sleep on the floor at the airport in the evening of October 27, 1975;

24. That the following day we went back to the hotel in Dubai which was a two hours ride from the
airport, where we were to await another flight for home via Air France;

25. That we were finally able to leave for home on November 2, 1975 arriving here on the 3rd of
November;

26. That we paid for all excess baggages;

27. That Mr. Nacional left us stranded, since he went ahead on October 27, 1975;

28. That immediately upon arriving in Manila, we went to respondent Company and saw Mr.
Nacional, who informed us that we were not blacklisted, however, Mr. Mckenzie, Administrative
Manager did inform us that we were all blacklisted;

29. That we were asking from the respondent Company our leave pay, which they refused to give,
if we did not agree to a US$100.00 deduction;

30. That with the exception of Messrs. Jaime Caunca Amado Manansala and Antonio Cabrera, we
received our leave pay with the US$100.00 deduction;

31. That in view of the written promise of Mr. Nacional in Dubai last October 23, 1975 to give us
priority and preference in boarding a vessel and that we were not blacklisted we have on several
occasions approached him regarding his promise, which up to the present he has refused to honor.

xxx xxx xxx

Answering the complaint, petitioner countered that when the vessel was in London, private respondents together with
the other crew insisted on worldwide ITF rate as per special agreement; that said employees threatened the ship
authorities that unless they agreed to the increased wages the vessel would not be able to leave port or would have
been picketed and/or boycotted and declared a hot ship by the ITF; that the Master of the ship was left with no
alternative but to agree; that upon the vessel's arrival at the Asian port of Dubai on October 22, 1975, a
representative of petitioner went on board the ship and requested the crew together with private respondents to
desist from insisting worldwide ITF rate and instead accept the Far East rate; that said respondents refused to accept
Far East ITF rates while the rest of the Filipino crew members accepted the Far East rates; that private respondents
were replaced at the expense of petitioner and it was prayed that respondents be required to comply with their
obligations under the contract by requiring them to pay their repatriation expenses and all other incidental expenses
incurred by the master and crew of the vessel.

After the hearing on the merits, the hearing Officer of the Secretariat rendered a decision 2 on March 14, 1977
finding private respondents to have violated their contract of employment when they accepted salary rates
different from their contract verified and approved by the National Seamen Board. As to the issue raised
by private respondents that the original contract has been novated, it was held that:

xxx xxx xxx

For novation to be a valid defense, it is a legal requirement that all parties to the contract should
give their consent. In the instant case only the complainants and respondents gave their consent.
The National Seamen Board had no participation in the alleged novation of the previously approved
employment contract. It would have been different if the consent of the National Seamen Board
was first secured before the alleged novation of the approved contract was undertaken, hence, the
defense of novation is not in order.

xxx xxx xxx

The Hearing Officer likewise rules that petitioner violated the contract when its representative signed the Special
Agreement and he signed the same at his own risk and must bear the consequence of such act, and since both
parties are in paridelicto, complaint and counterclaim were dismissed for lack of merit but petitioner was ordered to
pay respondents Caunca and Cabrera their respective leave pay for the period that they have served M/V Woermann
Sanaga plus attorney's fees.

Private respondents filed a motion for reconsideration with the Board which modified the decision of the Secretariat in
an Order 3 of December 19, 1977 and ruled that petitioner is liable for breach of contract when it ordered
the dismissal of private respondents and their subsequent repatriation before the expiration of their
respective employment contracts. The Chairman of the Board stressed that "where the contract is for a
definite period, the captain and the crew members may not be discharged until after the contract shall
have been performed" citing the case of Madrigal Shipping Co., Inc. vs. Ogilvie, et al. (104 Phil. 748). He
directed petitioner to pay private respondents the unexpired portion of their contracts and their leave pay,
less the amount they received as differentials by virtue of the special agreements entered in Rotterdam,
and ten percent of the total amounts recovered as attorney's fees.

Petitioner sought clarification and reconsideration of the said order and asked for a confrontation with private
respondents to determine the specific adjudications to be made. A series of conferences were conducted by the
Board. It was claimed by petitioner that it did not have in its possession the records necessary to determine the exact
amount of the judgment since the records were in the sole custody of the captain of the ship and demanded that
private respondents produce the needed records. On this score, counsel for respondents manifested that to require
the master of the ship to produce the records would result to undue delay in the disposition of the case to the
detriment of his clients, some of whom are still unemployed.

Under the circumstances, the Board was left with no alternative but to issue an Order dated April 3, 1979 4 fixing the
amount due private respondents at their three (3) months' salary equivalent without qualifications or
deduction. Hence,the instant petition before Us alleging grave abuse of discretion on the part of the
respondent official as Chairman of the Board, in issuing said order which allegedly nullified the findings of
the Secretariat and premised adjudication on imaginary conditions which were never taken up with full
evidence in the course of hearing on the merits.

The whole controversy is centered around the liability of petitioner when it ordered the dismissal of herein private
respondents before the expiration of their respective employment contracts.

In its Order of December 19, 1977 5 the Board, thru its Chairman, Minister Blas F. Ople, held that there is no
showing that the seamen conspired with the ITF in coercing the ship authorities to grant salary increases,
and the Special Agreement was signed only by petitioner and the ITF without any participation from the
respondents who, accordingly, may not be charged as they were, by the Secretariat, with violation of their
employment contract. The Board likewise stressed that the crew members may not be discharged until
after the expiration of the contract which is for a definite period, and where the crew members are
discharged without just cause before the contract shall have been performed, they shall be entitled to
collect from the owner or agent of the vessel their unpaid salaries for the period they were engaged to
render the services, applying the case of Madrigal Shipping Co., Inc. vs. Jesus Ogilivie et al. 6

The findings and conclusion of the Board should be sustained. As already intimated above, there is no logic in the
statement made by the Secretariat's Hearing Officer that the private respondents are liable for breach of their
employment contracts for accepting salaries higher than their contracted rates. Said respondents are not signatories
to the Special Agreement, nor was there any showing that they instigated the execution thereof. Respondents should
not be blamed for accepting higher salaries since it is but human for them to grab every opportunity which would
improve their working conditions and earning capacity. It is a basic right of all workingmen to seek greater benefits not
only for themselves but for their families as well, and this can be achieved through collective bargaining or with the
assistance of trade unions. The Constitution itself guarantees the promotion of social welfare and protection to labor.
It is therefore the Hearing Officer that gravely erred in disallowing the payment of the unexpired portion of the
seamen's respective contracts of employment.

Petitioner claims that the dismissal of private respondents was justified because the latter threatened the ship
authorities in acceeding to their demands, and this constitutes serious misconduct as contemplated by the Labor
Code. This contention is not well-taken. The records fail to establish clearly the commission of any threat. But even if
there had been such a threat, respondents' behavior should not be censured because it is but natural for them to
employ some means of pressing their demands for petitioner, who refused to abide with the terms of the Special
Agreement, to honor and respect the same. They were only acting in the exercise of their rights, and to deprive them
of their freedom of expression is contrary to law and public policy. There is no serious misconduct to speak of in the
case at bar which would justify respondents' dismissal just because of their firmness in their demand for the fulfillment
by petitioner of its obligation it entered into without any coercion, specially on the part of private respondents.

On the other hand, it is petitioner who is guilty of breach of contract when they dismissed the respondents without just
cause and prior to the expiration of the employment contracts. As the records clearly show, petitioner voluntarily
entered into the Special Agreement with ITF and by virtue thereof the crew men were actually given their salary
differentials in view of the new rates. It cannot be said that it was because of respondents' fault that petitioner made a
sudden turn-about and refused to honor the special agreement.

In brief, We declare petitioner guilty of breach of contract and should therefore be made to comply with the directives
contained in the disputed Orders of December 19, 1977 and April 3, 1979.

WHEREFORE, premises considered, the decision dated March 14, 1977 of the Hearing Officer is SET ASIDE and the
Orders dated December 19, 1977 and April 3, 1979 of the National Seamen Board are AFFIRMED in toto. This
decision is immediately executory. Without costs.

SO ORDERED.

Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.

Teehankee (Chairman), J., concur in the result.

G.R. No. L-58011 & L-58012 November 18, 1983

VIR-JEN SHIPPING AND MARINE SERVICES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ROGELIO BISULA RUBEN ARROZA JUAN GACUTNO
LEONILO ATOK, NILO CRUZ, ALVARO ANDRADA, NEMESIO ADUG SIMPLICIO BAUTISTA, ROMEO ACOSTA,
and JOSE ENCABO respondents.

Antonio R. Atienza for petitioner.

The Solicitor General for respondent NLRC,

Quasha, Asperilia, Ancheta &- Valmonte Pena Marcos Law Offices for private respondents.

RESOLUTION

GUTIERREZ, JR., J.: +.wph!1

Before the Court en banc is a motion to reconsider the decision promulgated on July 20, 1982 which set aside the
decision of respondent National Labor Relations Commission and reinstated the decision of the National Seamen
Board.

To better understand the issues raised in the motion for reconsideration, we reiterate the background facts of the
case, Taken from the decision of the National Labor Relations Commission: t.hqw

It appears that on different dates in December, 1978 and January, 1979, the Seamen entered into
separate contracts of employment with the Company, engaging them to work on board M/T' Jannu
for a period of twelve (12) months. After verification and approval of their contracts by the NSB, the
Seamen boarded their vessel in Japan.

On 10 January 1919, the master of the vessel complainant Rogelio H. Bisula, received a cable from
the Company advising him of the possibility that the vessel might be directed to call at ITF-
controlled ports said at the same time informing him of the procedure to be followed in the
computation of the special or additional compensation of crew members while in said ports. ITF is
the acronym for the International Transport Workers Federation, a militant international labor
organization with affiliates in different ports of the world, which reputedly can tie down a vessel in a
port by preventing its loading or unloading, This is a sanction resorted to by ITF to enforce the
payment of its wages rates for seafarers the so-called ITF rates, if the wages of the crew members
of a vessel who have affiliated with it are below its prescribed rates.) In the same cable of the
Company, the expressed its regrets for hot clarifying earlier the procedure in computing the special
compensation as it thought that the vessel would 'trade in Caribbean ports only.

On 22 March 1979, the Company sent another cable to complainant Bisula, this time informing him
of the respective amounts each of the officers and crew members would receive as special
compensation when the vessel called at the port of Kwinana Australia, an ITF-controlled port. This
was followed by another cable on 23 March 1979, informing him that the officers and crew
members had been enrolled as members of the ITF in Sidney, Australia, and that the membership
fee for the 28 personnel complement of the vessel had already been paid.

In answer to the Company's cable last mentioned, complainant Bisula, in representation of the
other officers and crew members, sent on 24 March 1979 a cable informing the Company that the
officers and crew members were not agreeable to its 'suggestion'; that they were not contented with
their present salaries 'based on the volume of works, type of ship with hazardous cargo and
registered in a world wide trade': that the 'officers and crew (were) not interested in ITF
membership if not actually paid with ITF rate that their 'demand is only 50% increase based on
present basic salary and that the proposed wage increase is the 'best and only solution to solve ITF
problem' since the Company's salary rates 'especially in tankers (are) very far in comparison with
other shipping agencies in Manila ...
 In reply, the Company proposed a 25% increase in the basic pay of the complainant crew
members, although it claimed, that it would "suffer and absorb considerable amount of losses." The
proposal was accepted by the Seamen with certain conditions which were accepted by the
Company. Conformably with the agreement of the parties which was effected through the cables
abovementioned, the Seamen were paid their new salary rates.

Subsequently, the Company sought authority from the NSB to cancel the contracts of employment
of the Seamen, claiming that its principals had terminated their manning agreement because of the
actuations of the Seamen. The request was granted by the NSB Executive Director in a letter dated
10 April 1979. Soon thereafter, the Company cabled the Seamen informing them that their
contracts would be terminated upon the vessel's arrival in Japan. On 19 April 1979 they Arere
asked to disembark from the vessel, their contracts were terminated, and they were repatriated to
Manila. There is no showing that the Seamen were given the opportunity to at least comment on
the Company's request for the cancellation of their contracts, although they had served only three
(3) out of the twelve (12) months' duration of their contracts.

The private respondents filed a complaint for illegal dismissal and non-payment of earned wages with the National
Seamen Board. The Vir-jen Shipping and Marine Services Inc. in turn filed a complaint for breach of contract and
recovery of excess salaries and overtime pay against the private respondents. On July 2, 1980, the NSB rendered a
decision declaring that the seamen breached their employment contracts when they demanded and received from
Vir-jen Shipping wages over and above their contracted rates. The dismissal of the seamen was declared legal and
the seamen were ordered suspended.

The seamen appealed the decision to the NLRC which reversed the decision of the NSB and required the petitioner
to pay the wages and other monetary benefits corresponding to the unexpired portion of the manning contract on the
ground that the termination of the contract by the petitioner was without valid cause. Vir-jen Shipping filed the present
petition.

The private respondents submit the following issues in their motion for reconsideration: t.hqw

A. THIS HONORABLE COURT DID VIOLENCE TO LAW AND JURISPRUDENCE WHEN IT HELD
THAT THE FINDING OF FACT OF THE NATIONAL SEAMEN BOARD THAT THE SEAMEN
VIOLATED THEIR CONTRACTS IS MORE CREDIBLE THAN THE FINDING OF FACT OF THE
NATIONAL LABOR RELATIONS COMMISSION THAT THE SEAMEN DID NOT VIOLATE THEIR
CONTRACT.

B. THIS HONORABLE COURT ERRED IN FINDING THAT VIR-JEN'S HAVING AGREED TO A

25% INCREASE OF THE SEAMEN'S BASIC WAGE WAS NOT VOLUNTARY BUT WAS DUE TO
THREATS.

C. THIS HONORABLE COURT ERRED WHEN IT TOOK COGNIZANCE OF THE ADDENDUM

AGREEMENT; ASSUMING THAT THE ADDENDUM AGREEMENT COULD BE TAKEN
COGNIZANCE OF, THIS HONORABLE COURT ERRED WHEN' IT FOUND THAT PRIVATE
RESPONDENTS HAD VIOLATED THE SAME.

D, THIS HONORABLE COURT ERRED WHEN IT DID NOT FIND PETITIONER VIRJEN LIABLE
FOR HAVING TERMINATED BEFORE EXPIRY DATE THE EMPLOYMENT CONTRACTS OF
PRIVATE RESPONDENTS, THERE BEING NO LEGAL AND JUSTIFIABLE GROUND FOR SUCH
TERMINATION.

E. THIS HONORABLE COURT ERRED IN FINDING THAT THE PREPARATION BY PETITIONER

OF THE TWO PAYROLLS AND THE EXECUTION OF THE SIDE CONTRACT WERE NOT MADE
IN BAD FAITH.

F. THIS HONORABLE COURT INADVERTENTLY DISCRIMINATED AGAINST PRIVATE

RESPONDENTS.
At the outset, we are faced with the question whether or not the Court en banc should give due course to the motion
for reconsideration inspite of its having been denied twice by the Court's Second Division. The case was referred to
and accepted by the Court en banc because of the movants' contention that the decision in this case by the Second
Division deviated from Wallem Phil. Shipping Inc. v. Minister of Labor (L-50734-37, February 20, 1981), a First
Division case with the same facts and issues. We are constrained to answer the initial question in the affirmative.

A fundamental postulate of Philippine Constitutional Law is the fact, that there is only one Supreme Court from whose
decisions all other courts are required to take their bearings. (Albert v. Court of First Instance, 23 SCRA 948; Barrera
v. Barrera, 34 SCRA 98; Tugade v. Court of Appeals, 85 SCRA 226). The majority of the Court's work is now
performed by its two Divisions, but the Court remains one court, single, unitary, complete, and supreme. Flowing from
this nature of the Supreme Court is the fact that, while ' individual Justices may dissent or partially concur with one
another, when the Court states what the law is, it speaks with only one voice. And that voice being authoritative
should be a clear as possible.

Any doctrine or principle of law laid down by the Court, whether en banc or in Division, may be modified or reversed
only by the Court en banc. (Section 2(3), Article X, Constitution.) In the rare instances when one Division disagrees in
its views with the other Division, or the necessary votes on an issue cannot be had in a Division, the case is brought
to the Court en banc to reconcile any seeming conflict, to reverse or modify an earlier decision, and to declare the
Court's doctrine. This is what has happened in this case.

The decision sought to be reconsidered appears to be a deviation from the Court's decision, speaking through the
First Division, in Wallem Shipping, Inc. v. Hon. Minister of Labor (102 SCRA 835). Faced with two seemingly
conflicting resolutions of basically the same issue by its two Divisions, the Court. therefore, resolved to transfer the
case to the Court en banc. Parenthetically, the petitioner's comment on the third motion for reconsideration states that
the resolution of the motion might be the needed vehicle to make the ruling in the Wallem case clearer and more in
time with the underlying principles of the Labor Code. We agree with the petitioner.

After an exhaustive, painstaking, and perspicacious consideration of the motions for reconsideration and the
comments, replies, and other pleadings related thereto, the Court en banc is constrained to grant the motions. To
grant the motion is to keep faith with the constitutional mandate to afford protection to labor and to assure the rights
of workers to self-organization and to just and humane conditions of work. We sustain the decision of the respondent
National labor Relations Commission.

There are various arguments raised by the petitioners but the common thread running through all of them is the
contention, if not the dismal prophecy, that if the respondent seamen are sustained by this Court, we would in effect
"kill the en that lays the golden egg." In other words, Filipino seamen, admittedly among the best in the world, should
remain satisfied with relatively lower if not the lowest, international rates of compensation, should not agitate for
higher wages while their contracts of employment are subsisting, should accept as sacred, iron clad, and immutable
the side contracts which require them to falsely pretend to be members of international labor federations, pretend to
receive higher salaries at certain foreign ports only to return the increased pay once the ship leaves that port, should
stifle not only their right to ask for improved terms of employment but their freedom of speech and expression, and
should suffer instant termination of employment at the slightest sign of dissatisfaction with no protection from their
Government and their courts. Otherwise, the petitioners contend that Filipinos would no longer be accepted as
seamen, those employed would lose their jobs, and the still unemployed would be left hopeless.

This is not the first time and it will not be the last where the threat of unemployment and loss of jobs would be used to
argue against the interests of labor; where efforts by workingmen to better their terms of employment would be
characterized as prejudicing the interests of labor as a whole.

In 1867 or one hundred sixteen years ago. Chief Justice Beasley of the Supreme Court of New Jersey was ponente
of the court's opinion declaring as a conspiracy the threat of workingmen to strike in connection with their efforts to
promote unionism, t.hqw

It is difficult to believe that a right exists in law which we can scarcely conceive can produce, in any
posture of affairs, other than injuriois results. It is simply the right of workmen, by concert of action,
and by taking advantage of their position, to control the business of another, I am unwilling to hold
that a right which cannot, in any, event, be advantageous to the employee, and which must always
be hurtful to the employer, exists in law. In my opinion this indictment sufficiently shows that the
force of the confederates was brought to bear upon their employer for the purpose of oppression
 and mischief and that this amounts to a conspiracy, (State v. Donaldson, 32 NJL 151, 1867. Cited
in Chamberlain, Sourcebook on Labor, p. 13. Emphasis supplied)

The same arguments have greeted every major advance in the rights of the workingman. And they have invariably
been proved unfounded and false.

Unionism, employers' liability acts, minimum wages, workmen's compensation, social security and collective
bargaining to name a few were all initially opposed by employers and even well meaning leaders of government and
society as "killing the hen or goose which lays the golden eggs." The claims of workingmen were described as
outrageously injurious not only to the employer but more so to the employees themselves before these claims or
demands were established by law and jurisprudence as "rights" and before these were proved beneficial to
management, labor, and the nation as a whole beyond reasonable doubt.

The case before us does not represent any major advance in the rights of labor and the workingmen. The private
respondents merely sought rights already established. No matter how much the petitioner-employer tries to present
itself as speaking for the entire industry, there is no evidence that it is typical of employers hiring Filipino seamen or
that it can speak for them.

The contention that manning industries in the Philippines would not survive if the instant case is not decided in favor
of the petitioner is not supported by evidence. The Wallem case was decided on February 20, 1981. There have been
no severe repercussions, no drying up of employment opportunities for seamen, and none of the dire consequences
repeatedly emphasized by the petitioner. Why should Vir-jen be all exception?

The wages of seamen engaged in international shipping are shouldered by the foreign principal. The local manning
office is an agent whose primary function is recruitment and who .usually gets a lump sum from the shipowner to
defray the salaries of the crew. The hiring of seamen and the determination of their compensation is subject to the
interplay of various market factors and one key factor is how much in terms of profits the local manning office and the
foreign shipowner may realize after the costs of the voyage are met. And costs include salaries of officers and crew
members.

Filipino seamen are admittedly as competent and reliable as seamen from any other country in the world. Otherwise,
there would not be so many of them in the vessels sailing in every ocean and sea on this globe. It is competence and
reliability, not cheap labor that makes our seamen so greatly in demand. Filipino seamen have never demanded the
same high salaries as seamen from the United States, the United Kingdom, Japan and other developed nations. But
certainly they are entitled to government protection when they ask for fair and decent treatment by their employer.-,
and when they exercise the right to petition for improved terms of employment, especially when they feel that these
are sub-standard or are capable of improvement according to internationally accepted rules. In the domestic scene,
there are marginal employers who prepare two sets of payrolls for their employees one in keeping with minimum
wages and the other recording the sub-standard wages that the employees really receive, The reliable employers,
however, not only meet the minimums required by fair labor standards legislation but even go way above the
minimums while earning reasonable profits and prospering. The same is true of international employment. There is
no reason why this Court and the Ministry of Labor and. Employment or its agencies and commissions should come
out with pronouncements based on the standards and practices of unscrupulous or inefficient shipowners, who claim
they cannot survive without resorting to tricky and deceptive schemes, instead of Government maintaining labor law
and jurisprudence according to the practices of honorable, competent, and law-abiding employers, domestic or
foreign.

If any minor advantages given to Filipino seamen may somehow cut into the profits of local manning agencies and
foreign shipowners, that is not sufficient reason why the NSB or the ILRC should not stand by the former instead of
listening to unsubstantiated fears that they would be killing the hen which lays the golden eggs.

Prescinding from the above, we now hold that neither the National Seamen Board nor the National Labor Relations
Commission should, as a matter of official policy, legitimize and enforce cubious arrangements where shipowners
and seamen enter into fictitious contracts similar to the addendum agreements or side contracts in this case whose
purpose is to deceive. The Republic of the Philippines and its ministries and agencies should present a more
honorable and proper posture in official acts to the whole world, notwithstanding our desire to have as many job
openings both here and abroad for our workers. At the very least, such as sensitive matter involving no less than our
dignity as a people and the welfare of our workingmen must proceed from the Batasang Pambansa in the form of
policy legislation, not from administrative rule making or adjudication
Another issue raised by the movants is whether or not the seamen violated their contracts of employment.

The form contracts approved by the National Seamen Board are designed to protect Filipino seamen not foreign
shipowners who can take care of themselves. The standard forms embody' the basic minimums which must be
incorporated as parts of the employment contract. (Section 15, Rule V, Rules and Regulations Implementing the
Labor Code.) They are not collective bargaining agreements or immutable contracts which the parties cannot improve
upon or modify in the course of the agreed period of time. To state, therefore, that the affected seamen cannot
petition their employer for higher salaries during the 12 months duration of the contract runs counter to established
principles of labor legislation. The National Labor Relations Commission, as the appellate tribunal from decisions of
the National Seamen Board, correctly ruled that the seamen did not violate their contracts to warrant their dismissal.

The respondent Commission ruled: t.hqw

In the light of all the foregoing facts, we find that the cable of the seamen proposing an increase in
their wage rates was not and could not have been intended as a threat to comp el the Company to
accede to their proposals. But even assuming, if only for the sake of argument, that the demand or
proposal for a wage increase was accompanied by a threat that they would report to ITF if the
Company did not accede to the contract revision - although there really was no such threat as
pointed out earlier the Seamen should not be held at fault for asking such a demand. In the
same case cited above, the Supreme Court held: t.hqw

Petitioner claims that the dismissal of private respondents was justified because
the latter threatened the ship authorities in acceding to their demands, and this
constitutes serious misconduct as contemplated by the Labor Code. This
contention is not well-taken. But even if there had been such a threat,
respondents' behavior should not be censured because it is but natural for them
to employ some means of pressing their demands for petitioner, the refusal to
abide with the terms of the Special Agreement, to honor and respect the same,
They were only acting in the exercise of their rights, and to deprive them of their
freedom of expression is contrary to law and public policy. There is no serious
misconduct to speak of in the case at bar which would justify respondents'
dismissal just because of their firmness in their demand for the fulfillment by
petitioner of its obligation it entered into without any coercion, specially on the
part of private respondents. (Emphasis supplied).

The above citation is from Wallem.

The facts show that when the respondents boarded the M/T Jannu there was no intention to send their ship to
Australia. On January 10, 1979, the petitioner sent a cable to respondent shipmaster Bisula informing him of the
procedure to be followed in the computation of special compensation of crewmembers while in ITF controlled ports
and expressed regrets for not having earlier clarified the procedure as it thought that the vessel would trade in
Carribean ports only.

On March 22, 1979, the petitioner sent another cable informing Bisula of the special compensation when the ship
would call at Kwinana Australia.

The following day, shipmaster Bisula cabled Vir-jen stating that the officers and crews were not interested in ITF
membership if not paid ITF rates and that their only demand was a 50 percent increase based on their then salaries.
Bisula also pointed out that Vir-jen rates were "very far in comparison with other shipping agencies in Manila."

In reply, Vir-jen counter proposed a 25 percent increase. Only after Kyoei Tanker Co., Ltd., declined to increase the
lumps sum amount given monthly to Vir-jen was the decision to terminate the respondents' employment formulated.

The facts show that Virjen Initiated the discussions which led to the demand for increased . The seamen made a
proposal and the petitioner organized with a counter-proposal. The ship had not vet gone to Australia or any ITF
controlled port. There was absolutely no mention of any strike. much less a threat to strike. The seamen had done in
act which under Philippine law or any other civilized law would be termed illegal, oppressive, or malicious. Whatever
pressure existed, it was mild compared to accepted valid modes of labor activity.
We reiterate our ruling in Wallem. t.hqw

Petitioner claims that the dismissal of private respondents was justified because
the latter threatened the ship authorities in acceding to their demands, and this
constitutes serious misconduct as contemplated by the Labor Code. This
contention is not well-taken. The records fail to establish clearly the commission
of any threat, But even if there had been such a threat, respondents' behavior
should not be censured because it is but natural for them to employ some means
of pressing their demands for petitioner, who refused to abide with the terms of
the Special Agreement, to honor and respect the same, They were only acting in
the exercise of their rights, and to deprive them of their form of expression is
contrary to law and public policy. ...

Our dismissing the petition is premised on the assumption that the Ministry of Labor and Employment and all its
agencies exist primarily for the workinginan's interests and, of course, the nation as a whole. The points raised by the
Solicitor-General in his comments refer to the issue of allowing what the petitioner importunes under the argument of
"killing the hen which lays the golden eggs." This is one of policy which should perhaps be directed to the Batasang
Pambansa and to our country's other policy makers for more specific legislation on the matter, subject to the
constitutional provisions protecting labor, promoting social justice, and guaranteeing non-abridgement of the freedom
of speech, press, peaceable assembly and petition. We agree with the movants that there is no showing of any
cause, which under the Labor Code or any current applicable law, would warrant the termination of the respondents'
services before the expiration of their contracts. The Constitution guarantees State assurance of the rights of workers
to security of tenure. (Sec. 9, Article II, Constitution). Presumptions and provisions of law, the evidence on record, and
fundamental State policy all dictate that the motions for reconsideration should be granted.

WHEREFORE, the motions for reconsideration are hereby GRANTED. The petition is DISMISSED for lack of merit.
The decision of the National Labor Relations Commission is AFFIRMED. No costs.

SO ORDERED. 1wph1.t

Fernando, C.J., Guerrero, Abad Santos, Plana, Escolin and Relova, JJ., concur.

Separate Opinions

DE CASTRO, J., concurring:

Being the ponente of the Wallem case, upon whose ruling the decision of the Court en banc in this case is mainly
made to rest, at least insofar as said Court now finds that the respondent seamen have not committed any
misconduct which would constitute a just cause for the termination of their services just after three months of the 12-
month term of their contract, a brief explanation why I voted in the Second Division in favor of the petitioner company
in the instant case, and not the respondent seamen, as I did in the Wallem case, is obviously called for.

During our deliberations in the Division, it was made clear that in the instant case,' threat was employed by the
seamen against the company or shipowners to obtain consent to the 50% raise of wages as proposed by the seamen
upon being informed that they would touch on ITF-controlled ports. I joined my colleagues in the Second Division in
concurring in the decision penned by Justice Barredo, now retired, in the belief that threat was indeed committed,
constituting a just cause for termination of the services of the seamen with still nine months to go of their 12-month
contract with the petitioner. As the facts are more thoroughly and accurately presented and discussed in the decision
so brilliantly written by Justice Gutierrez, I am persuaded that on the basis of the ruling of the Wallem case, a mistake
was committed in finding the existence of a just cause for the instant and unexpected termination of the services of
the seamen.
The facts of this case show that to the proposal of the seamen for a 50% increase, made because they were
informed that they would touch on ITF-controlled ports, the company countered with an offer of only 25% raised The
proposal of 5% was much lower than the rates which the ITF would surely force upon the company When the
company made a counter proposal of 25% raise the seamen accepted. The trip went on smoothly until upon arriving
at a port which afforded haven and safety to the shipowner, the latter suddenly, and with imperious finality, terminated
the services of the seamen and repatriated them to Manila. These are the simple facts that call for the application of
the law, mainly the provisions of the Labor Code. That law is none other than what is indicated in how the Walem
case was decided in vindication of how the Seamen were given a raw deal in being lulled into a false sense of
security in their employment contract only to be rudely terminated and ordered repatriated.

In the Wallem case, the seamen pressed their demand for the enforcement of a special agreement entered into by
the shipowner or company with the ITF. For this act, their services were terminated and they were repatriated by their
employer shipping company. What the First Division said in favor of the seamen, is in my opinion, the correct ruling
which We should reaffirm in the instant case. Thus t.hqw

Petitioner claims that the dismissal of private respondent was justified because the latter
threatened the ship authorities in acceding to their demands, and this constitutes serious
misconduct as contemplated by the Labor Code. This contention is not welltaken. But even en if
there had been such a threat, respondents' behavior should not be censured because it is but
natural for them to employ some means of pressing their demands on petitioner, who refused to
abide with the terms of the Special Agreement, to honor and respect the same. They were only
acting in the exercise of their rights, and to deprive them of their freedom of expression is contrary
to law and public policy. There is no serious misconduct to speak of in the case at bar which would
justify respondents' dismissal just because of their firmness in their demand for the fulfillment by
petitioner of its obligation it entered into without any coercion, specially on the part of private
respondents. (Emphasis supplied).

This above ruling is the law on the matter and, in my opinion. controlling on the case at bar. Whatever policy may
prove more beneficial to the cause of labor in general, as is sought to be offered as argument in support of the
Second Division decision, is not a proper ground for making said policy prevail over the applicable law or
jurisprudence, Questions of policy are better left to the Batasan Pambansa. We should confine ourselves to applying
the law as it is. In so doing, We are not allowed to apply it to suit, or to respond to, the demands of what We may
deem the better policy than what the law clearly intends. The policy is the law, and the law is the policy. We might be
treading on forbidden ground to bend the law to what We perceive to be a desirable policy.

Courts are called upon only to apply the law. Does the law permit the termination of the services of the seamen in
violation of their contract except only upon a just cause? This is the only question to be answered in this case. The
answer is given with eloquent persuasiveness in the decision in which I concur wholeheartedly.

Teehankee, Makasiar, Aquino, ,Concepcion, Jr. and Melencio-Herrera, JJ., took no part.

Separate Opinions

DE CASTRO, J., concurring:

Being the ponente of the Wallem case, upon whose ruling the decision of the Court en banc in this case is mainly
made to rest, at least insofar as said Court now finds that the respondent seamen have not committed any
misconduct which would constitute a just cause for the termination of their services just after three months of the 12-
month term of their contract, a brief explanation why I voted in the Second Division in favor of the petitioner company
in the instant case, and not the respondent seamen, as I did in the Wallem case, is obviously called for.
During our deliberations in the Division, it was made clear that in the instant case,' threat was employed by the
seamen against the company or shipowners to obtain consent to the 50% raise of wages as proposed by the seamen
upon being informed that they would touch on ITF-controlled ports. I joined my colleagues in the Second Division in
concurring in the decision penned by Justice Barredo, now retired, in the belief that threat was indeed committed,
constituting a just cause for termination of the services of the seamen with still nine months to go of their 12-month
contract with the petitioner. As the facts are more thoroughly and accurately presented and discussed in the decision
so brilliantly written by Justice Gutierrez, I am persuaded that on the basis of the ruling of the Wallem case, a mistake
was committed in finding the existence of a just cause for the instant and unexpected termination of the services of
the seamen.

The facts of this case show that to the proposal of the seamen for a 50% increase, made because they were
informed that they would touch on ITF-controlled ports, the company countered with an offer of only 25% raised The
proposal of 5% was much lower than the rates which the ITF would surely force upon the company When the
company made a counter proposal of 25% raise the seamen accepted. The trip went on smoothly until upon arriving
at a port which afforded haven and safety to the shipowner, the latter suddenly, and with imperious finality, terminated
the services of the seamen and repatriated them to Manila. These are the simple facts that call for the application of
the law, mainly the provisions of the Labor Code. That law is none other than what is indicated in how the Walem
case was decided in vindication of how the Seamen were given a raw deal in being lulled into a false sense of
security in their employment contract only to be rudely terminated and ordered repatriated.

In the Wallem case, the seamen pressed their demand for the enforcement of a special agreement entered into by
the shipowner or company with the ITF. For this act, their services were terminated and they were repatriated by their
employer shipping company. What the First Division said in favor of the seamen, is in my opinion, the correct ruling
which We should reaffirm in the instant case. Thus t.hqw

Petitioner claims that the dismissal of private respondent was justified because the latter
threatened the ship authorities in acceding to their demands, and this constitutes serious
misconduct as contemplated by the Labor Code. This contention is not welltaken. But even en if
there had been such a threat, respondents' behavior should not be censured because it is but
natural for them to employ some means of pressing their demands on petitioner, who refused to
abide with the terms of the Special Agreement, to honor and respect the same. They were only
acting in the exercise of their rights, and to deprive them of their freedom of expression is contrary
to law and public policy. There is no serious misconduct to speak of in the case at bar which would
justify respondents' dismissal just because of their firmness in their demand for the fulfillment by
petitioner of its obligation it entered into without any coercion, specially on the part of private
respondents. (Emphasis supplied).

This above ruling is the law on the matter and, in my opinion. controlling on the case at bar. Whatever policy may
prove more beneficial to the cause of labor in general, as is sought to be offered as argument in support of the
Second Division decision, is not a proper ground for making said policy prevail over the applicable law or
jurisprudence, Questions of policy are better left to the Batasan Pambansa. We should confine ourselves to applying
the law as it is. In so doing, We are not allowed to apply it to suit, or to respond to, the demands of what We may
deem the better policy than what the law clearly intends. The policy is the law, and the law is the policy. We might be
treading on forbidden ground to bend the law to what We perceive to be a desirable policy.

Courts are called upon only to apply the law. Does the law permit the termination of the services of the seamen in
violation of their contract except only upon a just cause? This is the only question to be answered in this case. The
answer is given with eloquent persuasiveness in the decision in which I concur wholeheartedly.

Separate Opinions

DE CASTRO, J., concurring:

Being the ponente of the Wallem case, upon whose ruling the decision of the Court en banc in this case is mainly
made to rest, at least insofar as said Court now finds that the respondent seamen have not committed any
misconduct which would constitute a just cause for the termination of their services just after three months of the 12-
month term of their contract, a brief explanation why I voted in the Second Division in favor of the petitioner company
in the instant case, and not the respondent seamen, as I did in the Wallem case, is obviously called for.

During our deliberations in the Division, it was made clear that in the instant case,' threat was employed by the
seamen against the company or shipowners to obtain consent to the 50% raise of wages as proposed by the seamen
upon being informed that they would touch on ITF-controlled ports. I joined my colleagues in the Second Division in
concurring in the decision penned by Justice Barredo, now retired, in the belief that threat was indeed committed,
constituting a just cause for termination of the services of the seamen with still nine months to go of their 12-month
contract with the petitioner. As the facts are more thoroughly and accurately presented and discussed in the decision
so brilliantly written by Justice Gutierrez, I am persuaded that on the basis of the ruling of the Wallem case, a mistake
was committed in finding the existence of a just cause for the instant and unexpected termination of the services of
the seamen.

The facts of this case show that to the proposal of the seamen for a 50% increase, made because they were
informed that they would touch on ITF-controlled ports, the company countered with an offer of only 25% raised The
proposal of 5% was much lower than the rates which the ITF would surely force upon the company When the
company made a counter proposal of 25% raise the seamen accepted. The trip went on smoothly until upon arriving
at a port which afforded haven and safety to the shipowner, the latter suddenly, and with imperious finality, terminated
the services of the seamen and repatriated them to Manila. These are the simple facts that call for the application of
the law, mainly the provisions of the Labor Code. That law is none other than what is indicated in how the Walem
case was decided in vindication of how the Seamen were given a raw deal in being lulled into a false sense of
security in their employment contract only to be rudely terminated and ordered repatriated.

In the Wallem case, the seamen pressed their demand for the enforcement of a special agreement entered into by
the shipowner or company with the ITF. For this act, their services were terminated and they were repatriated by their
employer shipping company. What the First Division said in favor of the seamen, is in my opinion, the correct ruling
which We should reaffirm in the instant case. Thus t.hqw

Petitioner claims that the dismissal of private respondent was justified because the latter
threatened the ship authorities in acceding to their demands, and this constitutes serious
misconduct as contemplated by the Labor Code. This contention is not welltaken. But even en if
there had been such a threat, respondents' behavior should not be censured because it is but
natural for them to employ some means of pressing their demands on petitioner, who refused to
abide with the terms of the Special Agreement, to honor and respect the same. They were only
acting in the exercise of their rights, and to deprive them of their freedom of expression is contrary
to law and public policy. There is no serious misconduct to speak of in the case at bar which would
justify respondents' dismissal just because of their firmness in their demand for the fulfillment by
petitioner of its obligation it entered into without any coercion, specially on the part of private
respondents. (Emphasis supplied).

This above ruling is the law on the matter and, in my opinion. controlling on the case at bar. Whatever policy may
prove more beneficial to the cause of labor in general, as is sought to be offered as argument in support of the
Second Division decision, is not a proper ground for making said policy prevail over the applicable law or
jurisprudence, Questions of policy are better left to the Batasan Pambansa. We should confine ourselves to applying
the law as it is. In so doing, We are not allowed to apply it to suit, or to respond to, the demands of what We may
deem the better policy than what the law clearly intends. The policy is the law, and the law is the policy. We might be
treading on forbidden ground to bend the law to what We perceive to be a desirable policy.

Courts are called upon only to apply the law. Does the law permit the termination of the services of the seamen in
violation of their contract except only upon a just cause? This is the only question to be answered in this case. The
answer is given with eloquent persuasiveness in the decision in which I concur wholeheartedly.

G.R. No. 109808 March 1, 1995

ESALYN CHAVEZ, petitioner,

vs.
HON. EDNA BONTO-PEREZ, HON. ROGELIO T. RAYALA, HON. DOMINGO H. ZAPANTA, HON. JOSE N.
SARMIENTO, CENTRUM PROMOTIONS PLACEMENT CORPORATION, JOSE A. AZUCENA, JR., and TIMES
SURETY & INSURANCE COMPANY, INC. respondents.
PUNO, J.:

One of the anguished cries in our society today is that while our laws appear to protect the poor, their interpretation is
sometimes anti-poor. In the case at bench, petitioner, a poor, uncounselled entertainment dancer signed a contract
with her Japanese employer calling for a monthly salary of One Thousand Five Hundred U.S. Dollars (US$1,500) but
later had to sign an immoral side agreement reducing her salary below the minimum standard set by the POEA.
Petitioner invoked the law to collect her salary differentials, but incredibly found public respondent straining the
seams of our law to disfavor her. There is no greater disappointment to the poor like petitioner than to discover the
ugly reality behind the beautiful rhetoric of laws. We will not allow this travesty.

This is a petition for certiorari to review the Decision of the National Labor Relations Commission (NLRC), 1 dated
December 29, 1992, which affirmed the Decision of public respondent Philippine Overseas Employment
Agency (POEA) Administrator Jose N. Sarmiento, dated February 17, 1992, dismissing petitioner's
complaint for unpaid salaries amounting to Six Thousand Dollars (US$6,000.00).

The facts are undisputed.

On December 1, 1988, petitioner, an entertainment dancer, entered into a standard employment contract for
overseas Filipino artists and entertainers with Planning Japan Co., Ltd., 2 through its Philippine representative,
private respondent Centrum Placement & Promotions Corporation. The contract had a duration of two (2)
to six (6) months, and petitioner was to be paid a monthly compensation of One Thousand Five Hundred
Dollars (US$1,5000.00). On December 5, 1888, the POEA approved the contract. Subsequently,
petitioner executed the following side agreement with her Japanese employer through her local manager,
Jaz Talents Promotion:

Date: Dec. 10, 1988

SUBJECT: Salary Deduction

MANAGERIAL COMMISSION

DATE OF DEPARTURE: _________________

ATTENTION: MR. IWATA

I, ESALYN CHAVEZ, DANCER, do hereby with my own free will and voluntarily have the honor to
authorize your good office to please deduct the amount of TWO HUNDRED FIFTY
DOLLARS ($250) from my contracted monthly salary of SEVEN HUNDRED FIFTY DOLLARS
($750) as monthly commission for my Manager, Mr. Jose A. Azucena, Jr.

That, my monthly salary (net) is FIVE HUNDRED DOLLARS ($500).

(sgd. by petitioner) 3

On December 16, 1988, petitioner left for Osaka, Japan, where she worked for six (6) months, until June 10, 1989.
She came back to the Philippines on June 14, 1989.

Petitioner instituted the case at bench for underpayment of wages with the POEA on February 21, 1991. She prayed
for the payment of Six Thousand U.S. Dollars (US$6,000.00), representing the unpaid portion of her basic salary for
six months. Charged in the case were private respondent Centrum Promotions and Placement Corporation, the
Philippine representative of Planning Japan, Co., Inc., its insurer, Times Surety and Insurance Co., Inc., and Jaz
Talents Promotion.

The complaint was dismissed by public respondent POEA Administrator on February 17, 1992. He ratiocinated,inter
alia:
 . . . Apparently and from all indications, complainant (referring to petitioner herein) was satisfied
and did not have any complaint (about) anything regarding her employment in Japan until after
almost two (2) years (when) she filed the instant complaint on February 21, 1991. The records
show that after signing the Standard Employment Contract on December 1, 1988, she entered into
a side agreement with the Japanese employer thru her local manager, Jaz Talents Promotion
consenting to a monthly salary of US$750.00 which she affirmed during the conference of May 21,
1991. Respondent agency had no knowledge nor participation in the said agreement such that it
could not be faulted for violation of the Standard Employment Contract regarding the stipulated
salary. We cannot take cognizance of such violation when one of the principal party (sic) thereto
opted to receive a salary different from what has been stipulated in their contract, especially so if
the contracting party did not consent/participate in such arrangement. Complainant (petitioner)
cannot now demand from respondent agency to pay her the salary based (on) the processed
Employment Contract for she is now considered in bad faith and hence, estopped from claiming
thereto thru her own act of consenting and agreeing to receive a salary not in accordance with her
contract of employment. Moreover, her self-imposed silence for a long period of time worked to her
own disadvantage as she allowed laches to prevail which barred respondent from doing something
at the outset. Normally, if a person's right (is) violated, she/he would immediately react to protect
her/his rights which is not true in the case at bar.

The term laches has been defined as one's negligence or failure to assert his right in due time or
within reasonable time from the accrual of his cause of action, thus, leading another party to
believe that there is nothing wrong with his own claim. This resulted in placing the negligent party in
estoppel to assert or enforce his right. . . . Likewise, the Supreme Court in one case held that not
only is inaction within reasonable time to enforce a right the basic premise that underlies a valid
defense of laches but such inaction evinces implied consent or acquiescence to the violation of the
right . . .

Under the prevailing circumstances of this case, it is outside the regulatory powers of the
Administration to rule on the liability of respondent Jaz Talents Promotions, if any, (it) not being a
licensed private agency but a promotion which trains entertainers for abroad.

xxx xxx xxx

(Citations omitted.)

On appeal, the NLRC upheld the Decision, thus:

We fail to see any conspiracy that the complainant (petitioner herein) imputes to the respondents.
She has, to put it bluntly, not established and/or laid the basis for Us to arrive at a conclusion that
the respondents have been and should be held liable for her claims.

The way We see it, the records do not at all indicate any connection between respondents Centrum
Promotion & Placement Corporation and Jaz Talents Promotion.

There is, therefore, no merit in the appeal. Hence, We affirmed. 4

Dissatisfied with the NLRC's Decision, petitioner instituted the present petition, alleging that public respondents
committed grave abuse of discretion in finding: that she is guilty of laches; that she entered into a side contract on
December 10, 1988 for the reduction of her basic salary to Seven Hundred Fifty U.S. Dollars (US$750.00) which
superseded, nullified and invalidated the standard employment contract she entered into on December 1, 1988; and
that Planning Japan Co., Ltd. and private respondents are not solidarily liable to her for Six Thousand US Dollars
(US$6,000.00) in unpaid wages. 5

The petition is meritorious.

Firstly, we hold that the managerial commission agreement executed by petitioner to authorize her Japanese
Employer to deduct Two Hundred Fifty U.S. Dollars (US$250.00) from her monthly basic salary is void because it is
against our existing laws, morals and public policy. It cannot supersede the standard employment contract of
December 1, 1988 approved by the POEA with the following stipulation appended thereto:

It is understood that the terms and conditions stated in this Employment Contract are in
conformance with the Standard Employment Contract for Entertainers prescribed by the POEA
under Memorandum Circular No. 2, Series of 1986. Any alterations or changes made in any part of
this contract without prior approval by the POEA shall be null and void; 6 (Emphasis supplied.)

The stipulation is in line with the provisions of Rule II, Book V and Section 2(f), Rule I, Book VI of the 1991 Rules and
Regulations Governing Overseas Employment, thus:

Book V, Rule II

Sec. 1. Employment Standards. The Administration shall determine, formulate and review
employment standards in accordance with the market development and welfare objectives of the
overseas employment program and the prevailing market conditions.

Sec. 2. Minimum Provisions for Contract. The following shall be considered the minimum
requirements for contracts of employment:

a. Guaranteed wages for regular working hours and overtime pay for services
rendered beyond regular working hours in accordance with the standards
established by the Administration;

xxx xxx xxx

Sec. 3. Standard Employment Contract. The administration shall undertake development and/or
periodic review of region, country and skills specific employment contracts for landbased workers
and conduct regular review of standard employment contracts (SEC) for seafarers. These contracts
shall provide for minimum employment standards herein enumerated under Section 2, of this Rule
and shall recognize the prevailing labor and social legislations at the site of employment and
international conventions. The SEC shall set the minimum terms and conditions of employment. All
employers and principals shall adopt the SEC in connection with the hiring of workers without
prejudice to their adoption of other terms and conditions of employment over and above the
minimum standards of the Administration. (Emphasis supplied.)

and

BOOK VI, RULE I

Sec. 2. Grounds for suspension/cancellation of license.

xxx xxx xxx

f. Substituting or altering employment contracts and other documents approved and verified by the
Administration from the time of actual signing thereof by the parties up to and including the period
of expiration of the same without the Administration's approval.

xxx xxx xxx

(Emphasis supplied.)

Clearly, the basic salary of One Thousand Five Hundred U.S. Dollars (US$1,500.00) guaranteed to petitioner under
the parties' standard employment contract is in accordance with the minimum employment standards with respect to
wages set by the POEA, Thus, the side agreement which reduced petitioner's basic wage to Seven Hundred Fifty
U.S. Dollars (US$750.00) is null and void for violating the POEA's minimum employment standards, and for not
having been approved by the POEA. Indeed, this side agreement is a scheme all too frequently resorted to by
unscrupulous employers against our helpless overseas workers who are compelled to agree to satisfy their basic
economic needs.

Secondly. The doctrine of laches or "stale demands"' cannot be applied to petitioner. Laches has been defined as the
failure or neglect for an unreasonable and unexplained length time to do that which, by exercising due diligence,
could or should have been done earlier, 7 thus giving rise to a presumption that the party entitled to assert it
either has abandoned or declined to assert it. 8 It is not concerned with mere lapse of time; the fact of
delay, standing alone, is insufficient to constitute laches. 9

The doctrine of laches is based upon grounds of public policy which requires, for the peace of society, the
discouragement of stale claims, and is principally a question of the inequity or unfairness of permitting a right or claim
to be enforced or asserted. 10 There is no absolute rule as to what constitutes laches; each case is to be
determined according to its particular circumstances. The question of laches is addressed to the sound
discretion of the court, and since it is an equitable doctrine, its application is controlled by equitable
considerations. It cannot be worked to defeat justice or to perpetrate fraud and injustice. 11

In the case at bench, petitioner filed her claim well within the three-year prescriptive period for the filing of money
claims set forth in Article 291 of the Labor Code. 12 For this reason, we hold the doctrine of laches inapplicable
to petitioner. As we ruled in Imperial Victory Shipping Agency v. NLRC, 200 SCRA 178 (1991):

. . . Laches is a doctrine in equity while prescription is based on law. Our courts are basically courts
of law not courts of equity. Thus, laches cannot be invoked to resist the enforcement of an existing
legal right. We have ruled in Arsenal v. Intermediate Appellate Court . . . that it is a long standing
principle that equity follows the law. Courts exercising equity jurisdiction are bound by rules of law
and have no arbitrary discretion to disregard them. In Zabat, Jr. v. Court of Appeals . . ., this Court
was more emphatic upholding the rules of procedure. We said therein:

As for equity, which has been aptly described as a "justice outside legality," this
applied only in the absence of, and never against, statutory law or, as in this
case, judicial rules of procedure. Aequetas nunguam contravenit legis. The
pertinent positive rules being present here, they should pre-empt and prevail over
all abstract arguments based only on equity.

Thus, where the claim was filed within the three-year statutory period, recovery therefore cannot be
barred by laches. Courts should never apply the doctrine of laches earlier than the expiration of
time limited for the commencement of actions at law.

xxx xxx xxx

(Emphasis supplied. Citations omitted.)

Thirdly, private respondents Centrum and Times as well as Planning Japan Co., Ltd. the agency's foreign principal
are solidarily liable to petitioner for her unpaid wages. This is in accordance with stipulation 13.7 of the parties'
standard employment contract which provides:

13.7. The Employer (in this case, Planning Japan Co., Ltd. ) and its locally (sic)
agent/promoter/representative (private respondent Centrum Promotions & Placement Corporation)
shall be jointly and severally responsible for the proper implementation of the terms and conditions
in this Contract. 13 (Emphasis supplied.)

This solidary liability also arises from the provisions of Section 10(a)(2), Rule V, Book I of the Omnibus
Rules Implementing the Labor Code, as amended, thus:

Sec. 10. Requirement before recruitment. Before recruiting any worker, the private employment
agency shall submit to the Bureau the following documents:
 a) A formal appointment or agency contract executed by a foreign-based employer in favor of the
license holder to recruit and hire personnel for the former . . . . Such formal appointment or
recruitment agreement shall contain the following provisions, among others:

xxx xxx xxx

2. Power of the agency to sue and be sued jointly and solidarily with the principal or foreign based
employer for any of the violations of the recruitment agreement and the contracts of employment.

xxx xxx xxx

(Emphasis supplied.)

Our overseas workers constitute an exploited class. Most of them come from the poorest sector of our society. They
are thoroughly disadvantaged. Their profile shows they live in suffocating slums, trapped in an environment of crime.
Hardly literate and in ill health, their only hope lies in jobs they can hardly find in our country. Their unfortunate
circumstance makes them easy prey to avaricious employers. They will climb mountains, cross the seas, endure
slave treatment in foreign lands just to survive. Out of despondence, they will work under sub-human conditions and
accept salaries below the minimum. The least we can do is to protect them with our laws in our land. Regretfully,
respondent public officials who should sympathize with the working class appear to have a different orientation.

IN VIEW WHEREOF, the petition is GRANTED. The Decisions of respondent POEA Administrator and NLRC
Commissioners in POEA Case No. Adj. 91-02-199 (ER), respectively dated February 17 and December 29, 1992,
and the Resolution of the NLRC, dated March 23, 1993, are REVERSED and SET ASIDE. Private respondents are
held jointly and severally liable to petitioner for the payment of SIX THOUSAND US DOLLARS (US$6,000.00) in
unpaid wages. Costs against private respondents.

SO ORDERED.

Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.

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:

1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-impairment of contracts;

2. 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.