Money Claims (Paragraph 5, Section 10 of RA 8042)

Serrano v. Gallant Maritime Services, Inc., GR No. 167614, 24 March 2009 (Austria-Martinez)
Facts: Complainant Serrano was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc. under a POEA-approved contract as a Chief Officer for 12 months. On the date of his departure, he was constrained to accept a downgraded employment contract for the position of Second Officer upon the assurance that he would be made Chief Officer by the end of the following month. Because he was not made Chief Officer as promised, he refused to stay on as Second Officer and was repatriated to the Philippines with 9 months and 23 days remaining in his employment contract. He then filed a complaint for constructive dismissal and for payment of money claims with the Labor Arbiter against Gallant and Marlow. The LA declared Serranos dismissal as illegal and awarded him the amount equivalent to 3 months worth of salary for the unexpired portion of his term, following Paragraph 5, Section 10 of RA 8042. On appeal, the NLRC only corrected the LAs computation of the lump-sum salary awarded to Serrano, but affirmed the LA judgment in all other respects. Serrano moved for partial reconsideration and assailed the constitutionality of Section 10 of RA 8042. The CA subsequently affirmed the NLRC but skirted the constitutional issue raised by Serrano. Issue: W/N the clause or for 3 months for every year of the unexpired term, whichever is less, found in Section 10 (5) of RA 8042, violates Section 18 of Article II (The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.), Section 1 of Article III (due process and equal protection clauses), and Section 3 of Article XIII (The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.) of the 1987 Philippine Constitution. Ruling: YES, VIOLATIVE OF ARTICLE III SECTION 1 OF THE PHILIPPINE CONSTITUTION. The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixedterm employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest through the least restrictive means. When the challenge to a statute is premised on the perpetuation of prejudice against persons favored by the Constitution with special protectionsuch as the

working class or a section thereofthe Court may recognize the existence of a suspect classification and subject the same to a strict judicial scrutiny. The subject clause has a discriminatory intent against, and invidious impact on, OFWs at three 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. Under the first level, a review of previous jurisprudence shows that the subject clause classifies OFWs into two categories. The first category includes OFWs with fixedperiod employment contracts of less than one year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to only three months per year of the unexpired portion of their contracts. This disparity becomes more aggravating when jurisprudence prior to the effectivity of RA 8042 is taken into account, wherein illegally dismissed OFWs, no matter how long the period of their employment contracts, were entitled to their salaries for the entire unexpired portions of their contracts. The enactment of the subject clause in RA 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed OFWs based on their employment periods, in the process singling out one category whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of having their monetary awards limited to their salaries for three months or for the unexpired portion thereof, whichever is less, but all the while sparing the other category from such prejudice, simply because the latters unexpired contracts fall short of one year. With respect to the second level, the subject clause applies in cases when the unexpired portion of the contract period is at least one year, which arithmetically requires that the original contract period be more than one year. Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for more than one year: those who are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the subject clause, and their monetary benefits limited to their salaries for 3 months only. With respect to the third level: Prior to RA 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of RA 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of 2

one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment. Lastly, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve. In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest that would justify the perpetuation of the discrimination against OFWs under the subject clause. There can never be a justification for any form of government action that alleviates the burden of one sector, but imposes the same burden on another sector, especially when the favored sector is composed of private businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands. The idea that private business interest can be elevated to the level of a compelling state interest is odious. Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis--vis their foreign principals, there are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs. Petition granted. The clause or for three months for every year of the unexpired term, whichever is less, in the fifth paragraph of Section 10 of RA 8042 is declared unconstitutional. Subject clause being unconstitutional, Serrano is entitled to his salaries for the entire unexpired period of 9 months and 23 days of his contract, pursuant to law and jurisprudence prior to the enactment of RA 8042. To Filipino workers, the rights guaranteed under Section 18, Article II and Section 3, Article XIII translate to economic security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances. Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law. And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches but also on the judiciary to translate this pledge into a living reality. Social justice calls for the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and respect by the courts of justice except when they run afoul of the Constitution. The deference stops where the classification violates a fundamental right, or prejudices persons accorded special protection by the Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of constitutional guarantees, and require

a stricter and more exacting adherence to constitutional limitations. Rational basis should not suffice. Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be based on the rational basis test, and the legislative discretion would be given deferential treatment. But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice against persons favored by the Constitution with special protection, judicial scrutiny ought to be more strict.

Yap v. Thenamaris Ships Management and Intermare Maritime Agencies, Inc., GR No. 179532, 30 May 2011 (Nachura)
Facts: Complainant Yap was hired as an electrician of M/T Seascout by Intermare in behalf of its principal, Vulture Shipping Ltd. for a duration of 12 months. While Yaps contract was still effective, the ship was sold for scrapping. The employees, including Yap, were informed that they had a choice whether to be transferred to other vessels or just go home. Yap received seniority bonus, vacation bonus, extra bonus, along with scrapping bonus, but with respect to the payment of his wage, he refused to accept the payment of one-month basic wage, insisting that he was entitled to the payment of the unexpired portion of his contract because he was illegally dismissed. He also stated that the opted for immediate transfer but none was made. Intermare and Thenamaris alleged that Yaps employment contract was validly terminated due to the sale of the vessel and no arrangement was made for Yaps transfer to Thenamaris other vessels. Thus, Yap filed with the Labor Arbiter a complaint for illegal dismissal with damages and attorneys fees. The LA ruled in Yaps favor, finding that he was constructively and illegally dismissed, and that Thenamaris and Intermare were in bad faith when they assured Yap of re-embarkation. It then stated that Yap was entitled to the unexpired portion of his contract, which was a period of nine months. The NLRC affirmed the LAs findings of constructive and illegal dismissal, and on the bad faith on the part of Thenamaris and Intermare, but it held that instead of an award of salaries corresponding to nine months, Yap was only entitled to salaries for three months as provided under Section 10 of RA 8042. Upon Yaps motion for partial reconsideration, the NLRC modified its ruling, stating that Yap was indeed entitled to his salary corresponding to the unexpired portion of his contract. The CA then modified the NLRCs ruling, stating that Yap was only entitled to three months worth of basic salary. While the case was pending on appeal with the Supreme Court, the Supreme Court ruled on Serrano v. Gallant Maritime Services that the clause or for three months for every year of the expired term, whichever is less is unconstitutional. Issue: W/N the Serrano ruling should be applied to the present case. Ruling: YES. As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it had not been passed at all. The general rule is supported by Article 7 of the Civil Code, which provides: Art. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or practice to the contrary. The doctrine of operative fact serves as an exception to the aforementioned general rule. It only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration. This doctrine is

applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Following Serrano, this case should not be included in the aforementioned exception. After all, it was not the fault of Yap that he lost his job due to an act of illegal dismissal committed by Thenamaris and Intermare. To rule otherwise would be iniquitous to Yap and other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFWs security of tenure which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law. Yap awarded salaries for the entire unexpired portion of his employment contract consisting of nine months. As a rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all.

Regulation of Recruitment and Placement Activities (Arts. 25-35)

Sagun v. Sunace International Management Services, GR No. 179242, 23 February 2011 (Nachura)
Facts: Complainant Sagun filed before the POEA a complaint for the alleged violation of Articles 32 and 34(a) & (b) of the Labor Code against Sunace, alleging that she applied with the latter for the position of caretaker in Taiwan and was charged P30,000.00 in cash, P10,000.00 in the form of a promissory note, and NT$60,000.00 through salary deduction, in violation of the prohibition on excessive placement fees. She additionally claimed that she was promised to be employed as a caretaker but, at the job site, she worked as a domestic helper, and at the same time, in a poultry farm. Sunace, on the other hand, denied Saguns claims, maintaining that it only collected the amount authorized by the POEA and for which the corresponding official receipt was issued, and stressed that it did not furnish or publish any false notice or information or document in relation to recruitment or employment as it was duly received, passed upon, and approved by the POEA. The POEA Administrator dismissed the complaint for lack of merit, because complainant failed to establish facts showing a violation of Article 32, since it was proven that the amount received by Sunace as placement fee was covered by an official receipt; or of Article 34(a) as it was not shown that Sunace charged excessive fees; and of Article 34(b) simply because Sunace processed Saguns papers as caretaker, the position she applied and was hired for. The Secretary of Labor then overturned the POEA decision and held Sunace liable for collection of excessive placement fees in violation of Article 34(a). It imposed the penalty of suspension of its license for two months, or in lieu thereof, the penalty of fine in the amount of P20,000.00. It was also ordered to refund Sagun the excess of the placement fee exacted from her. The Office of the President affirmed the Secretary of Labor, saying that it was immaterial that no evidence was presented to show the overcharging since the issuance of a receipt could not be expected. The CA then reversed the OP decision for lack of sufficient evidence. It then affirmed the POEA decision. Issue: W/N Sunace is liable for collection of excess placement fee from Sagun. Ruling: NO. In proceedings before administrative and quasi-judicial agencies, the quantum of evidence required to establish a fact is substantial evidence, or that level of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. To show the amount it collected as placement fee from Sagun, Sunace presented an acknowledgement receipt showing that Sagun paid and Sunace received P20,840.00. This notwithstanding, Sagun claimed that she paid more than this amount. In support of her allegation, she presented a photocopy of a promissory note she executed, and testified on the purported deductions made by her foreign employer. In the promissory note, Sagun promised to pay Sunace the amount of P10,000.00 that she borrowed for only two weeks. Sagun also explained that her foreign employer deducted from her salary a total amount of 7

NT$60,000.00. She claimed that the P10,000.00 covered by the promissory note was never obtained as a loan but as part of the placement fee collected by Sunace. Moreover, she alleged that the salary deductions made by her foreign employer still formed part of the placement fee collected by Sunace. Although a receipt is not conclusive evidence, an exhaustive review of the records of this case fails to disclose any other evidence sufficient and strong enough to overturn the acknowledgement embodied in Sunaces receipt as to the amount it actually received from Sagun. Having failed to adduce sufficient rebuttal evidence, Sagun is bound by the contents of the receipt issued by Sunace. The subject receipt remains as the primary or best evidence. To be sure, mere general allegations of payment of excessive placement fees cannot be given merit as the charge of illegal exaction is considered a grave offense which could cause the suspension or cancellation of the agencys license. They should be proven and substantiated by clear, credible, and competent evidence. Petition denied for lack of merit. While the Constitution is committed to the policy of social justice and to the protection of the working class, it should not be presumed that every dispute will automatically be decided in favor of labor.

Apprenticeship (Arts. 57-72)

Atlanta Industries v. Sebolino, GR No. 187320, 26 January 2011 (Brion)
Facts: Complainants Sebolino, Costales, Almoite, and Sagun, along with several others, filed complaints for illegal dismissal, regularization, underpayment, nonpayment of wages, and other money claims against Altanta Industries, Inc., which is a domestic corporation engaged in the manufacture of steel pipes. The complainants allege that they were already regular employees of Atlanta even before they entered into two separate, subsequent apprenticeship agreements with the said company. The first apprenticeship agreement was for a period of 5 months, after the expiration of which they entered into a second apprenticeship agreement with Atlanta for the training of a second skill. Now, they claim to have been illegally dismissed when the apprenticeship agreements expired. The Labor Arbiter ruled that the dismissal was indeed illegal and awarded the workers backwages, wage differentials, holiday pay, and service incentive leave pay. While the case was on appeal with the NLRC, Costales and Almoite, together with other workers allegedly entered into a compromise agreement wherein the workers were to be paid by Atlanta a specified amount as settlement and to acknowledge them as regular employees. The NLRC approved the said compromise agreement, withdrew the finding of illegal dismissal with respect to Sebolino and Sagun, and denied all the other claims. The CA overturned the NLRC decision and found that the complainants were already employees of Atlanta even before they entered into the apprenticeship agreements; that the said apprenticeship agreements were executed in violation of the law and the rules; that the positions occupied by the complainants are usually necessary and desirable in the companys main business; and that the compromise agreement entered into by Costales and Almoite were not binding because they did not sign the agreement. Issues and Ruling: 1. W/N a second apprenticeship agreement is valid. NO. Even if the companys need to train its employees through apprenticeship is recognized, only the first apprenticeship agreement may be considered for the purpose. With the expiration of the first agreement and the retention of the employees, Atlanta had, to all intents and purposes, recognized the completion of their training and their acquisition of a regular employee status. To foist upon them the second apprenticeship agreement for a second skill which was not even mentioned in the agreement itself, is a violation of the Labor Codes rules and regulations and is an act manifestly unfair to the employees, to say the least. 2. W/N complainants were illegally dismissed. YES. The fact that the complainants were already rendering service to the company when they were made to undergo apprenticeship renders the apprenticeship agreements

irrelevant. This reality is highlighted by the finding that the complainants occupied positions that are usually necessary and desirable in Atlantas usual business or trade, which characterize them as regular employees under Article 280 of the Labor Code. Thus, when they were dismissed without just or authorized cause, without notice, and without the opportunity to be heard, their dismissal was illegal under the law. Petition denied for lack of merit. CA decision affirmed.

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Non-Diminution Rule (Art. 100)

Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor UnionNLU, GR No. 188949, 26 July 2010 (Nachura)
Facts: Central Azucarera de Tarlac, in compliance with PD No. 851, had been granting its employees the mandatory thirteenth month pay since 1975. The formulas used were: 13th Month Pay = Total Basic Salary / 12 Total Basic Salary = Basic Monthly Salary + First Eight Hours Overtime Pay on Sunday and Legal/Special Holiday + Night Premium Pay + Vacation and Sick Leaves for each Year These formulas were used from 1975 until 2006, despite the fact that in 1976, the Supplementary Rules and Regulations Implementing PD 851 clarified that overtime pay, earnings, and other remuneration that are not part of the basic salary shall not be included in the computation of the 13th-month pay. In November 2004, Centrals Labor Union staged a strike. During the pendency of the strike, Central declared a temporary cessation of operations. In December 2005, all the striking union members were allowed to return to work. Subsequently, Central declared another temporary cessation of operation for April and May of 2006. The suspension of operations was lifted on June 2006, but the rank-and-file employees were allowed to report for work on a 15-day-per-month rotation basis that lasted until September 2006. In December 2006, Central gave the employees their 13th-month pay based on the employees total earnings during the year, divided by 12. The Labor Union objected to the computation, stating that Central did not adhere to the usual computation of the 13th-month pay. It claimed that the divisor should have been 8 instead of 12, because the employees worked only for 8 months in 2006. The union also asserted that there were some instances wherein the 13th-month pay was actually less than their basic monthly pay. Central insists that the difference in the computation of the 13th-month pay was due to an error that was only discovered and rectified only after almost 30 years. It insists that the length of time during which an employer has performed a certain act beneficial to the employees does not prove that such an act was not done in error, and that for the claim of mistake to be negated, there must be a clear showing that the employer had freely, voluntarily, and continuously performed the act, knowing that he is under no obligation to do so. It asserts that such voluntariness was absent in this case. Issue: W/N Central is permitted to change the formula for the 13th-month pay, which results to the reduction of the amounts being received by the workers, after almost 30 years of its implementation. Ruling: NO. The practice of Central in giving the 13th-month pay based on the employees gross annual earnings which included the basic monthly salary, premium pay for work on 11

rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty years, and has ripened into a company policy or practice which cannot be unilaterally withdrawn. Article 100 of the Labor Code, otherwise known as the NonDiminution Rule, mandates that benefits given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error. Centrals argument that the grant of the benefit was not voluntary and was due to error in the interpretation of what is included in the basic salary deserves scant consideration. No doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employees. Central only changed its formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the management and employees erupted. Centrals act of changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith. Furthermore, Central cannot use the argument that it is suffering from financial losses to claim exemption from the coverage of the law on 13th-month pay, or to spare it from its erroneous unilateral computation of the 13th-month pay of its employees. Under Section 7 of the Rules and Regulations Implementing PD No. 851, distressed employers shall qualify for exemption from the requirement of the decree only upon prior authorization by the Secretary of Labor. In this case, no such prior authorization has been obtained by Central, thus, it is not entitled to claim such exemption. In 1987, the Revised Guidelines on the Implementation of the 13th-Month Pay Law was issued, and it specifically stated that the minimum 13th-month pay required by law shall not be less than one-twelfth of the total basic salary earned by an employee within a calendar year. Furthermore, the term basic salary of an employee for the purpose of computing the 13th-month pay was interpreted to include all remuneration on earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part o the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and costof-living allowances. However, these salary related benefits should be included as part of the basic salary in the computation of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.

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Labor Contracting (Arts. 106-109)

Philippine Airlines Inc. v. Ligan, GR No. 146408, 30 April 2009 (CarpioMorales)
Facts: Philippine Airlines and Synergy Services Corporation entered into an Agreement as principal and contractor, respectively, whereby Synergy undertook to provide loading, unloading, delivery of baggage and cargo and other related services to and from PALs aircraft at the Mactan Station. The Agreement expressly provided that Synergy was an independent contractor and that there would be no employer-employee relationship between Synergy and/or its employees on the one hand, and PAL on the other. Synergy assigned Ligan and the other respondents to PAL following the execution of the Agreement on 15 July 1991. On 3 March 1992, the respondents filed complaints before the NLRC for underpayment, non-payment of premium pay for holidays, premium pays for rest days, service incentive leave pay, 13th month pay and allowances, and for regularization of employment status with PAL against Synergy, PAL, and their respective officials. Benedicto Auxtero, on the other hand, filed a complaint against Synergy and PAL for illegal dismissal and reinstatement with full backwages. All the complaints were consolidated. The LA found Synergy to be an independent contractor and dismissed responde nts complaint for regularization, but granted their money claims. On appeal, the NLRC declared that Synergy was a labor-only contractor and ordered PAL to accept respondents as its regular employees. Only PAL assailed the NLRC decision. The CA affirmed the NLRC. Issue: Whether Synergy is a mere labor-only contractor or a legitimate contractor. Ruling: Synergy is a LABOR-ONLY CONTRACTOR. According to Article 106 of the Labor Code, there is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. From the records of the case, it is gathered that the work performed by almost all of the respondentsloading and unloading of baggage and cargo of passengersis directly related to the main business of PAL. And the equipment used by respondents as station loaders, such as trailers and conveyors, are owned by PAL. The records also show that PAL failed to present evidence that Synergy had sufficient capital to engage in legitimate contracting. More significantly, however, is that respondents worked alongside PALs regular employees who were performing identical work. For labor-only contracting to exist, Section 5 of D.O. No. 18-02 requires any of two elements to be present:

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(i)

(ii)

The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal, or The contractor does not exercise the right to control over the performance of the work of the contractual employee.

Even if only one of the two elements is present, then there is labor-only contracting. While PAL claims that it was Synergys supervisors who actually supervised respondents, it failed to present evidence thereon. It did not even specify who the Synergy supervisors assigned at the workplace were. PAL moreover admitted that it fixes the respondents work schedule as their work was dependent on the frequency of plane arrivals. As the NLRC found, PALs managers and supervisors approved respondents weekly work assignments, and respondents and other regular PAL employees were all referred to as station attendants of PALs cargo operation and airfreight services. Since respondents performed tasks which are usually necessary and desirable in PALs air transportation business, they should be deemed its regular employees and Synergy as a labor-only contractor. Court affirms the ruling of the NLRC and CA, ordering PAL to accept respondents as its regular employees and to give each of them salaries, allowances, and other employment benefits and privileges of a regular employee under the pertinent Collective Bargaining Agreement. One who claims to be an independent contractor has to prove that he contracted to do the work according to his own methods and without being subject to the employers control except only as to the results. An express provision in the Service Agreement that the contractor is an independent contractor and there would be no employer-employee relationship between contractor and its employees on one hand, and principal on the other hand is not legally binding and conclusive as contractual provisions are not valid determinants of the existence of such relationship. It is the totality of facts and surrounding circumstances of the case which is determinative of the parties relationship.

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STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP MANAGEMENT vs SULPECIO MEDEQUILLO, JR PEREZ, J.: FACTS: On 6 March 1995, Sulpecio Madequillo filed a complaint before the Adjudication Office of POEA Stolt-Nielsen for illegal dismissal under a first contract and for failure to deploy under a second contract. Sulpecio alleged that:

1.

On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama as Third Assistant Engineer on board the vessel Stolt Aspiration for a period of nine (9) months; He would be paid with a monthly basic salary of $808.00 and a fixed overtime pay of $404.00 or a total of $1,212.00 per month during the employment period commencing on 6 November 1991; On 8 November 1991, he joined the vessel MV Stolt Aspiration; On February 1992 or for nearly three (3) months of rendering service and while the vessel was at Batangas, he was ordered by the ships master to disembark the vessel and repatriated back to Manila for no reason or explanation; Upon his return to Manila, he immediately proceeded to the petitioners office where he was transferred employment with another vessel named MV Stolt Pride under the same terms and conditions of the First Contract; On 23 April 1992, the Second Contract was noted and approved by the POEA; The POEA, without knowledge that he was not deployed with the vessel, certified the Second Employment Contract on 18 September 1992.

2.

3.

4.

5.

6.

7.

Despite the commencement of the Second Contract on 21 April 1992, petitioners failed to deploy him with the vessel MV Stolt Pride; 9. He made a follow-up with the petitioner but the same refused to comply with the Second Employment Contract.
8.

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10. On 22 December 1994, he demanded for his passport, seamans book and other

employment documents. However, he was only allowed to claim the said documents in exchange of his signing a document;
11. He was constrained to sign the document involuntarily because without these

documents, he could not seek employment from other agencies.

Stolts contentions: (1) the first employment contract between them and Sulpecio is different from and independent of the second contract subsequently executed upon repatriation of respondent to Manila. (2) under the POEA Contract, actual deployment of the seafarer is a suspensive condition for the commencement of the employment
.

ISSUE: (1) W/N the 1st employment contract is different from and independent from the 2 nd? NO. there was novation of the 1st contract when Sulpecio entered the 2nd. (2) W/N the action for recovery of damages prescribed? YES (3) W/N employment commences upon the actual deployment of seafearers? YES (4) How will the seafarer be compensated by reason of the unreasonable

non-deployment of the petitioners?

HELD:

(1) Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order foer novation to take place, the concurrence of the following requisites is indispensable:
1. There must be a previous valid obligation, 2. There must be an agreement of the parties concerned to a new contract, 3. There must be the extinguishment of the old contract, and 4. There must be the validity of the new contract.19

There was a novation of the first employment contract.

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With the finding that respondent was still employed under the first contract when he negotiatedwith petitioners on the second contract, novation became an unavoidable conclusion.
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(2) The recovery of damages under the first contract was already time-barred.
Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may initiate money claims under the 1st contract commenced on the date of his repatriation. xxx The start of the three (3) year prescriptive period must therefore be reckoned on February 1992, which by Medequillo Jr.s own admission was the date of his repatriation to Manila. It was at this point in time that Medequillo Jr.s cause of action already accrued under the first contract. He had until February 1995 to pursue a case for illegal dismissal and damages arising from the 1st contract. With the filing of his ComplaintAffidavit on March 6, 1995, which was clearly beyond the prescriptive period, the cause of action under the 1st contract was already time-barred.
(3)

Actual deployment of the seafarer is a suspensive condition for the commencement of the employment. However, even without actual deployment, the perfected contract gives rise to obligations on the part of petitioners. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
29 30

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

Thus, even if by the standard contract employment commences only upon actual departure of the seafarer, this does not mean that the seafarer has
17

no remedy in case of non-deployment without any valid reason. Parenthetically, the contention of the petitioners of the alleged poor performance of respondent while on board the first ship MV Stolt Aspiration cannot be sustained to justify the non-deployment, for no evidence to prove the same was presented.
33

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

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

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

18

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

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

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

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

19

JOEB M. ALIVIADO vs.PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC.

FACTS:
Petitioners worked as merchandisers of P&G from various dates.

They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a time.5 They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.6 SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice.7 P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors.8 To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.9 In December 1991, petitioners filed a complaint10 against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended11 to include the matter of their subsequent dismissal. Petitioners Arguments Petitioners insist that they are employees of P&G. They claim that they were recruited by the salesmen of P&G and were engaged to undertake merchandising chores for P&G long before the existence of Promm-Gem and/or SAPS. They further claim that when the latter had its so-called re-alignment program, petitioners were instructed to fill up application forms and report to the agencies which P&G created.18 Petitioners further claim that P&G instigated their dismissal from work as can be gleaned from its letter19 to SAPS dated February 24, 1993, informing the latter that their Merchandising Services Contract will no longer be renewed. Petitioners further assert that Promm-Gem and SAPS are labor-only contractors providing services of manpower to their client. They insist that since they had been engaged to perform activities which are necessary or desirable in the usual business or trade of P&G, then they are its regular employees.20 P&Gs Arguments: 1)P&G further argues that there is no employment relationship between it and petitioners. It was Promm-Gem or SAPS that (selected petitioners and engaged their services; paid their salaries; wielded the power of dismissal; and had the power of control over their conduct of work.

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2)P&G also contends that the Labor Code neither defines nor limits which services or activities may be validly outsourced. Thus, an employer can farm out any of its activities to an independent contractor, regardless of whether such activity is peripheral or core in nature. It insists that the determination of whether to engage the services of a job contractor or to engage in direct hiring is within the ambit of management prerogative.

ISSUES: (1) whether P&G is the employer of petitioners? Some petitioners , having been recruited and supplied by SAPS41 -- which engaged in labor-only contracting -- are considered as the employees of P&G. Other petitioners having worked under, and been dismissed by Promm-Gem, are considered the employees of Promm-Gem, not of P&G. a) whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors? Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate independent contractor. (2) whether petitioners were illegally dismissed? YES, Illegally dismissed. (3) whether petitioners are entitled for payment of actual, moral and exemplary damages as well as litigation costs and attorneys fees. HELD: 1) a) There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 18-02,24 distinguishes between legitimate and labor-only contracting: xxxx Section 3. Trilateral Relationship in Contracting Arrangements. Section 5. Prohibition against labor-only contracting (Art 248 LC) "

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x x x x (Underscoring supplied.) Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal25 and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii) The contractor does not exercise the right to control over the performance of the work of the contractualemployee. (Underscoring supplied) In the instant case, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02. The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not merely contractual or project, employees.32 This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks of contractual employees. This, furthermore, negates on the part of Promm-Gem bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order.33 On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only P31,250.00. There is no other evidence presented to show how much its working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets. ---Furthermore, the petitioners have been charged with the merchandising and promotion of the products of P&G, an activity that has already been considered by the Court as doubtlessly directly related to the manufacturing business,38 which is the principal business of P&G. Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the principal business of P&G, we find that the former is engaged in "labor-only contracting". "Where labor-only contracting exists, the Labor Code itself establishes an employeremployee relationship between the employer and the employees of the labor-only

22

contractor."39 The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.40 2) In cases of regular employment, the employer shall not terminate the services of an employee except for a just43 or authorized44 cause. In the instant case, the termination letters given by Promm-Gem to its employees uniformly specified the cause of dismissal as grave misconduct and breach of trust. Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant.46 To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employees duties; and (c) must show that the employee has become unfit to continue working for the employer.47 In other words, in order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent.48 In the instant case, petitioners-employees of Promm-Gem may have committed an error of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so. As such, we find them guilty of only simple misconduct for assailing the integrity of Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave, as that existing in the instant case, cannot be a valid basis for dismissing an employee. Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A breach of trust is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.49 Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. As such, he must be invested with confidence on delicate matters, such as custody, handling or care and protection of the property and assets of the employer. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer.50 In the instant case, the petitioners-employees of Promm-Gem have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to continue to work as merchandisers for Promm-Gem. All told, we find no valid cause for the dismissal of petitioners-employees of PrommGem.

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While Promm-Gem had complied with the procedural aspect of due process in terminating the employment of petitioners-employees, it failed to comply with the substantive aspect of due process as the acts complained of neither constitute serious misconduct nor breach of trust. Hence, the dismissal is illegal. With regard to the petitioners placed with P&G by SAPS, they were given no written notice of dismissal. The records show that upon receipt by SAPS of P&Gs letter terminating their "Merchandising Services Contact" effective March 11, 1993, they in turn verbally informed the concerned petitioners not to report for work anymore. The concerned petitioners related their Neither SAPS nor P&G dispute the existence of these circumstances. Parenthetically, unlike Promm-Gem which dismissed its employees for grave misconduct and breach of trust due to disloyalty, SAPS dismissed its employees upon the initiation of P&G. It is evident that SAPS does not carry on its own business because the termination of its contract with P&G automatically meant for it also the termination of its employees services. It is obvious from its act that SAPS had no other clients and had no intention of seeking other clients in order to further its merchandising business. From all indications SAPS, existed to cater solely to the need of P&G for the supply of employees in the latters merchandising concerns only. Under the circumstances prevailing in the instant case, we cannot consider SAPS as an independent contractor. Going back to the matter of dismissal, it must be emphasized that the onus probandi to prove the lawfulness of the dismissal rests with the employer.53 In termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and valid cause.54 In the instant case, P&G failed to discharge the burden of proving the legality and validity of the dismissals of those petitioners who are considered its employees. Hence, the dismissals necessarily were not justified and are therefore illegal. 3) Moral and exemplary damages are recoverable where the dismissal of an employee was attended by bad faith or fraud or constituted an act oppressive to labor or was done in a manner contrary to morals, good customs or public policy.55 With regard to the employees of Promm-Gem, there being no evidence of bad faith, fraud or any oppressive act on the part of the latter, we find no support for the award of damages. As for P&G, the records show that it dismissed its employees through SAPS in a manner oppressive to labor. The sudden and peremptory barring of the concerned petitioners from work, and from admission to the work place, after just a one-day verbal notice, and for no valid cause bellows oppression and utter disregard of the right to due process of the concerned petitioners. Hence, an award of moral damages is called for. Lastly, under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, inclusive of allowances, and other benefits or their monetary equivalent from the time the compensation was withheld up to the time of actual reinstatement.57Hence, all the petitioners, having been illegally dismissed are entitled to reinstatement without loss of seniority rights and with full back wages and other benefits from the time of their illegal dismissal up to the time of their actual reinstatement.

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G.R. No. 172642

June 13, 2012

ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P. DULAY, Petitioner, vs. ABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC., Respondents. FACTS: Nelson R. Dulay was employed by GCI, a subsidiary of co-petitioner [herein co-respondent] Aboitiz Jebsen Maritime Inc. since 1986. He initially worked as an ordinary seaman and later as bosun on a contractual basis. From September 3, 1999 up to July 19, 2000, Nelson was detailed in petitioners vessel, the MV Kickapoo Belle. On August 13, 2000, or 25 days after the completion of his employment contract, Nelson died due to acute renal failure secondary to septicemia. At the time of his death, Nelson was a bona fide member of the Associated Marine Officers and Seamans Union of the Philippines (AMOSUP), GCIs collective bargaining agent. Nelsons widow, Merridy Jane, thereafter claimed for death benefits through the grievance procedure of the Collective Bargaining Agreement (CBA) between AMOSUP and GCI. However, on January 29, 2001, the grievance procedure was "declared deadlocked" as petitioners refused to grant the benefits sought by the widow. On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration Board in General Santos City against GCI for death and medical benefits and damages. On March 8, 2001, Joven Mar, Nelsons brother, received P20,000.00 from [respondents] pursuant to article 20(A)2 of the CBA and signed a "Certification" acknowledging receipt of the amount and releasing AMOSUP from further liability. Merridy Jane contended that she is entitled to the aggregate sum of Ninety Thousand Dollars ($90,000.00) pursuant to the CBA. DULAYs contention: Section 10 of Republic Act (R.A.) 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, vests jurisdiction on the appropriate branches of the NLRC to entertain disputes regarding the interpretation of a collective bargaining agreement involving migrant or overseas Filipino workers. Such Section amended Article 217 (c) of the Labor Code which, in turn, confers jurisdiction upon voluntary arbitrators over interpretation or implementation of collective bargaining agreements and interpretation or enforcement of company personnel policies. Aboitizs contention: Article 217, paragraph (c) as well as Article 261 of the Labor Code remain to be the governing provisions of law with respect to unresolved grievances arising from the interpretation and implementation of collective bargaining agreements. Under these provisions of law, jurisdiction remains with voluntary arbitrators. ISSUE: W/N Labor Arbiter has jurisdiction? NO, the voluntary arbitrator has jurisdiction over the instant case. HELD:

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It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a careful reading of this special law would readily show that there is no specific provision thereunder which provides for jurisdiction over disputes or unresolved grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042, which is cited by petitioner, simply speaks, in general, of "claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages." On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or implementation of collective bargaining agreements. Stated differently, the instant case involves a situation where the special statute (R.A. 8042) refers to a subject in general, which the general statute (Labor Code) treats in particular.5 In the present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned. The Court agrees with the CA in holding that this issue clearly involves the interpretation or implementation of the said CBA. Thus, the specific or special provisions of the Labor Code govern. It may not be amiss to point out that the abovequoted provisions of the CBA are in consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that "[f]or OFWs with collective bargaining agreements, the case shall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code." The Court notes that the said Omnibus Rules and Regulations were promulgated by the Department of Labor and Employment (DOLE) and the Department of Foreign Affairs (DFA) and that these departments were mandated to consult with the Senate Committee on Labor and Employment and the House of Representatives Committee on Overseas Workers Affairs. In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels, promulgated by the Philippine Overseas Employment Administration (POEA), provides as follows: Section 29. Dispute Settlement Procedures. In cases of claims and disputes arising from this employment, the parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at their option submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by the parties, the same shall be appointed from the accredited voluntary arbitrators of the National Conciliation and Mediation Board of the Department of Labor and Employment. The Philippine Overseas Employment Administration (POEA) shall exercise original and exclusive jurisdiction to hear and decide disciplinary action on cases, which are administrative in character, involving or arising out of violations of recruitment laws, rules and regulations involving employers, principals, contracting partners and Filipino seafarers. (Emphasis supplied)

27

It is only in the absence of a collective bargaining agreement that parties may opt to submit the dispute to either the NLRC or to voluntary arbitration. It is elementary that rules and regulations issued by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great respect.8 Such rules and regulations partake of the nature of a statute and are just as binding as if they have been written in the statute itself.9 In the instant case, the Court finds no cogent reason to depart from this rule.
1wphi1

Consistent with this constitutional provision, Article 211 of the Labor Code provides the declared policy of the State "[t]o promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes."

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