MSCI-NACUSIP Local Chapter, petitioner, vs. NATIONAL WAGES AND PRODUCTIVITY COMMISSION and MONOMER SUGAR CENTRAL, INC., respondents.  G.R. No. 125198.  March 3, 1997


On January 11, 1990, Asturias Sugar Central, Inc. (ASCI), executed a Memorandum of Agreement with Monomer Trading Industries, Inc. (MTII), whereby MTII shall acquire the assets of ASCI by way of a Deed of Assignment provided that an entirely new organization in place of MTII shall be organized, which new corporation shall be the assignee of the assets of ASCI. Thus, a new corporation was organized and incorporated on February 15, 1990 under the corporate name Monomer Sugar Central, Inc. (MSCI), the private respondent herein.

MSCI applied for exemption from the coverage of Wage Order No. RO VI-01 issued by the Regional Tripartite Wages and Productivity Board VI (Board) on the ground that it is a distressed employer. MSCI submitted its audited financial statements and income tax returns duly stamped “received” by the BIR and the SEC.

The petitioner MSCI-NACUSIP Local Chapter (Union), in opposition, maintained that MSCI is not distressed; that respondent applicant has not complied with the requirements for exemption; and that the financial statements submitted by MSCI do not reflect the true and valid financial status of the company, etc.

The Board denied MSCI’s application for exemption based on the finding that the applicant’s losses of P3,400,738.00 for the period February 15, 1990 to August 31, 1990 constitute an impairment of only 5.25% of its paid-up capital of P64,688,528.00, cannot be said to be sufficient to meet the required 25% loss in order to qualify for the exemption, as provided in NWPC Guidelines No. 01, Series of 1992.  An appeal was brought before the public respondent NATIONAL WAGES AND PRODUCTIVITY COMMISSION (Commission). The Commission reversed and set aside the orders of the Board, and granted MSCI’s application for exemption from Wage Order No. RO VI-01, for a period of 1 yr from its effectivity. Hence this Petition for Certiorari under Rule 65 by the Petitioner.


What is the correct paid-up capital of MSCI for the period covered by the application for exemption — P5 million or P64,688,528.00? (Would it qualify MSCI as a distressed employer and thus be entitled to exemption from compliance with Wage Order No. RO VI-01)


NWPC Guidelines No. 01, Series of 1992 as well as the new NWPC Guidelines No. 01, Series of 1996, define Capital as referring to paid-up capital at the end of the last full accounting period, in the case of corporations; or total invested capital at the beginning of the period under review, in the case of partnerships and single proprietorships. To have a clear understanding of what paid-up capital is,  a referral to Sections 12 and 13 of the Corporation Code would be  helpful:

“Sec. 12.       Minimum capital stock required of stock corporations. — Stock corporations incorporated under this Code shall not be required to have any minimum authorized capital stock except as otherwise specifically provided for by special law, and subject to the provisions of the following section.”

“Sec. 13.       Amount of capital stock to be subscribed and paid for purposes of incorporation. — At least 25% of the authorized capital stock as stated in the articles of incorporation must be subscribed at the time of incorporation, and at least 25% percent of the total subscription must be paid upon subscription, the balance to be payable on a date or dates fixed in the contract of subscription without need of call, or in the absence of a fixed date or dates, upon call for payment by the board of directors: Provided, however, That in no case shall the paid-up capital be less thanP5,000.00”

Paid-up capital is that portion of the authorized capital stock which has been both subscribed and paid. In the case at bar, MSCI was organized and incorporated on February 15, 1990 with an authorized capital stock of P60 million, P20 million of which was subscribed. Of theP20 million subscribed capital stock, P5 million was paid-up. 

The argument of the Board that the value of the assets of ASCI transferred to MSCI as well as the loans or advances made by MTII to MSCI should have been taken into consideration in computing the paid-up capital of MSCI is unmeritorious. Not all funds or assets received by the corporation can be considered paid-up capital, for this term has a technical signification in Corporation Law. Such must form part of the authorized capital stock of the corporation, subscribed and then actually paid up.

The loans and advances of MTII to respondent MSCI cannot be treated as investments, unless the corresponding shares of stocks are issued. But as it turned out, such loans and advances were in fact treated as liabilities of MSCI to MTII as shown in its 1990 audited financial statements. The treatment by the Board of these loans as part of MSCI’s capital stock without satisfying certain mandatory requirements is prohibited under Sec 38 of the Corporation Code which provides:

“Power to increase or decrease capital stock; incur, create or increase bonded indebtedness. No corporation shall increase or decrease its capital stock or incur, create or increase any bonded indebtedness unless approved by a majority vote of the board of directors and, at a stockholders’ meeting duly called for the purpose, two-thirds (2/3) of the outstanding capital stock shall favor the increase or diminution of the capital stock, or the incurring, creating or increasing of any bonded indebtedness. Written notice of the proposed increase or diminution of the capital stock or of the incurring, creating, or increasing of any bonded indebtedness and of the time and place of the stockholders’ meeting at which the proposed increase or diminution of the capital stock or the incurring or increasing of any bonded indebtedness is to be considered, must be addressed to each stockholders at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally.”

The above requirements, which are condition precedents before the capital stock of a corporation may be increased, were not observed in this case. Henceforth, the paid-up capital stock of MSCI for the period covered by the application for exemption still stood at P5 million. The losses, therefore, amounting to P3,400,738.00 for the period Feb 15, 1990 to Aug 31, 1990 impaired MSCI’s paid-up capital of P5M by as much as 68%.  MSCI is qualified as a distressed employer. Respondent Commission thus acted well within its jurisdiction in granting MSCI full exemption from Wage Order No. RO VI-01 as a distressed employer.

WHEREFORE, the petition is DISMISSED.


G.R. No. 155731             September 3, 2007

LOLITA LOPEZ, petitioner,
BODEGA CITY (Video-Disco Kitchen of the Philippines) and/or ANDRES C. TORRES-YAP, respondents.

Respondent Bodega City (Bodega City) is a corporation duly registered and existing under and by virtue of the laws of the Republic of the Philippines, while respondent Andres C. Torres-Yap (Yap) is its owner/ manager. Petitioner was the “lady keeper” of Bodega City tasked with manning its ladies’ comfort room.

In a letter signed by Yap dated February 10, 1995, petitioner was made to explain why the concessionaire agreement between her and respondents should not be terminated or suspended in view of an incident that happened on February 3, 1995, wherein petitioner was seen to have acted in a hostile manner against a lady customer of Bodega City who informed the management that she saw petitioner sleeping while on duty.

Yap informed petitioner that because of the incident that happened respondents had decided to terminate the concessionaire agreement between them.

Petitioner filed a complaint for illegal dismissal against respondents contending that she was dismissed from her employment without cause and due process.

In their answer, respondents contended that no employer-employee relationship ever existed between them and petitioner; that the latter’s services rendered within the premises of Bodega City was by virtue of a concessionaire agreement she entered into with respondents.

Labor Arbiter rendered judgment finding that petitioner was an employee of respondents and that the latter illegally dismissed her.3



Whether or not petitioner is an employee of respondents.


In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was for a valid cause.13 However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established.14

In filing a complaint before the Labor Arbiter for illegal dismissal based on the premise that she was an employee of respondent, it is incumbent upon petitioner to prove the employee-employer relationship by substantial evidence.15

The NLRC and the CA found that petitioner failed to discharge this burden, and the Court finds no cogent reason to depart from their findings.

The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing and Parts Corp.,16 to wit:

To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the last one is the most important. The so-called “control test” is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.17

To prove the element of payment of wages, petitioner presented a petty cash voucher showing that she received an allowance for five (5) days.18 The CA did not err when it held that a solitary petty cash voucher did not prove that petitioner had been receiving salary from respondents or that she had been respondents’ employee for 10 years.

Indeed, if petitioner was really an employee of respondents for that length of time, she should have been able to present salary vouchers or pay slips and not just a single petty cash voucher. The Court agrees with respondents that petitioner could have easily shown other pieces of evidence such as a contract of employment, SSS or Medicare forms, or certificates of withholding tax on compensation income; or she could have presented witnesses to prove her contention that she was an employee of respondents. Petitioner failed to do so.

Anent the element of control, petitioner’s contention that she was an employee of respondents because she was subject to their control does not hold water.

Petitioner failed to cite a single instance to prove that she was subject to the control of respondents insofar as the manner in which she should perform her job as a “lady keeper” was concerned.

It is true that petitioner was required to follow rules and regulations prescribing appropriate conduct while within the premises of Bodega City. However, this was imposed upon petitioner as part of the terms and conditions in the concessionaire agreement embodied in a 1992 letter of Yap addressed to petitioner.

Petitioner does not dispute the existence of the letter; neither does she deny that respondents offered her the subject concessionaire agreement. However, she contends that she could not have entered into the said agreement with respondents because she did not sign the document evidencing the same.

Petitioner is likewise estopped from denying the existence of the subject concessionaire agreement. She should not, after enjoying the benefits of the concessionaire agreement with respondents, be allowed to later disown the same through her allegation that she was an employee of the respondents when the said agreement was terminated by reason of her violation of the terms and conditions thereof.

The principle of estoppel in pais applies wherein — by one’s acts, representations or admissions, or silence when one ought to speak out — intentionally or through culpable negligence, induces another to believe certain facts to exist and to rightfully rely and act on such belief, so as to be prejudiced if the former is permitted to deny the existence of those facts.24

Hence, going back to the element of control, the concessionaire agreement merely stated that petitioner shall maintain the cleanliness of the ladies’ comfort room and observe courtesy guidelines that would help her obtain the results they wanted to achieve. There is nothing in the agreement which specifies the methods by which petitioner should achieve these results.

Lastly, the Court finds that the elements of selection and engagement as well as the power of dismissal are not present in the instant case.

It has been established that there has been no employer-employee relationship between respondents and petitioner. Their contractual relationship was governed by the concessionaire agreement embodied in the 1992 letter. Thus, petitioner was not dismissed by respondents. Instead, as shown by the letter of Yap to her dated February 15, 1995,37 their contractual relationship was terminated by reason of respondents’ termination of the subject concessionaire agreement, which was in accordance with the provisions of the agreement in case of violation of its terms and conditions.

In fine, the CA did not err in dismissing the petition for certiorari filed before it by petitioner.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.




A.M. No. 10-9-15-SC               February 12, 2013


The Court is asked to pass upon the request of former Chief Justice Artemio V. Panganiban (CJ Panganiban) to include as creditable government service the period from January 1962 to December 1965 when he served the Department of Education (DepEd), its Secretary, and the Board of National Education (BNE) to enable him to meet the present service requirement of fifteen (15) years for entitlement to retirement benefits.

When CJ Panganiban reached the compulsory age of retirement on

December 7, 2006, he was credited with eleven (11) years, one (1) month and twenty-seven (27) days or 11.15844 years of government service. The Office of Administrative Services (OAS) did not include in the computation his 4-year service as Legal Counsel to the DepEd and its then Secretary, Alejandro R. Roces (Former Education Secretary Roces), and as Consultant to the BNE in a concurrent capacity, from January 1962 to December 1965, on the ground that consultancy “is not considered government service pursuant to Rule XI (Contract of Services/Job Orders) of the Omnibus Rules Implementing Book V of Executive Order No. 292.”1 Having failed to meet the twenty (20) years length of service then required under Republic Act (R.A.) No. 910,2 the OAS considered him eligible to receive only the 5-year lump sum payment under said law.

On January 10, 2010, then President Gloria Macapagal-Arroyo approved R.A. 9946,3 which not only reduced the requisite length of service under R.A. 910 from twenty (20) years to fifteen (15) years to be entitled to the retirement benefits with lifetime annuity, but provided also for a survivorship clause, among others.

The Court finds merit in CJ Panganiban’s request.

A careful perusal of the actual functions and responsibilities of CJ Panganiban as outlined in his compliance with attached Sworn Statements of Former Education Secretary Roces and Retired Justice Pardo reveal that he performed actual works and was assigned multifarious tasks necessary and desirable to the main purpose of the DepEd and the BNE.

Former Education Secretary Roces certified that:

Under the old Administrative Code (Act No. 2657),10 a government “employee” includes any person in the service of the Government or any branch thereof of whatever grade or class. A government “officer,” on the other hand, refers to officials whose duties involve the exercise of discretion in the performance of the functions of government, whether such duties are precisely defined or not. Clearly, the law, then and now, did not require a specific job description and job specification. Thus, the absence of a specific position in a governmental structure is not a hindrance for the Court to give weight to CJ Panganiban’s government service as legal counsel and consultant.

Justice Brion views the Court’s favorable disposition of CJ Panganiban’s request for lifetime annuity as another case of flip-flopping, believing that the Court already denied former Chief Justice Panganiban’s request for full retirement benefits under R.A. No. 910 and would, thus, be making a complete turnabout even as CJ Panganiban makes a request for the second time and for the same previously-denied services.16

Justice Brion, however, is mistaken in his belief that the Court is reversing itself in this case. There is no flip-flopping situation to speak of since this is the first instance that the Court En Banc is being asked to pass upon a request concerning the computation of CJ Panganiban’s creditable service for purposes of adjusting his retirement benefits. It may be recalled that Deputy Clerk of Court and OAS Chief Atty. Eden T. Candelaria had simply responded to a query made by CJ

The Supreme Court has unquestionably followed the practice of liberal treatment in passing upon retirement claims of judges and justices, thus: (1) waiving the lack of required length of service in cases of disability or death while in actual service19 or distinctive service; (2) adding accumulated leave credits to the actual length of government service in order to qualify one for retirement; (3) tacking post-retirement service in order to complete the years of government service required; (4) extending the full benefits of retirement upon compassionate and humanitarian considerations;20 and (5) considering legal counselling work for a government body or institution as creditable government service.

The generous extent of the Court’s liberality in granting retirement benefits is obvious in Re: Justice Efren I. Plana:21

It may also be stressed that under the beneficient provisions of Rep. Act 910, as amended, a Justice who reaches age 70 is entitled to full retirement benefits with no length of service required. Thus, a 69 year old lawyer appointed to the bench will get full retirement benefits for the rest of his life upon reaching age 70, even if he served in the government for only one year. Justice Plana served the government with distinction for 33 years, 5 months, and 11 days, more than 5 years of which were served as a Justice of the Court of Appeals of this Court.

In the instant case, no liberal construction is even necessary to resolve the merits of CJ Panganiban’s request. The Court need only observe consistency in its rulings.

WHEREFORE, the Court resolves to GRANT former Chief Justice Artemio V. Panganiban’s request for a re-computation of his creditable government service to include the 4-year period from January 1962 to December 1965 that he served as Legal Counsel to the Department of Education and its then Secretary and Consultant to the Board of National Education, as duly attested to by retired Justice Bernardo P. Pardo and then Secretary of Education himself, Alejandro R. Roces.

ACCORDINGLY, the Office of Administrative Services is hereby DIRECTED to re-compute former Chief Justice Artemio V. Panganiban’s creditable government service and his corresponding retirement benefits.




G.R. No. 187730               June 29, 2010

RODOLFO GALLO y GADOT, Accused-Appellant,

FACTS: Originally, accused-appellant Gallo and accused Fides Pacardo (“Pacardo”) and Pilar Manta (“Manta”), together with Mardeolyn Martir (“Mardeolyn”) and nine (9) others [including herein accused-appellant, were charged with syndicated illegal recruitment and eighteen (18) counts of estafa committed against eighteen complainants.

NOTE: Basta ang nanyari, the trial proceeded while some of the accused were at large. Some cases were provisionally dismissed due to non-appearance. Pacardo and Manta were acquitted. While herein accused-appellant (GALLO) was convicted for syndicated illegal recruitment. Hence, this appeal by Gallo alone.

In Criminal Case No. 02-206293, the information charges the accused-appellant, together with the others, as follows:

The undersigned accuses xxx of a violation of Section 6(a), (l) and (m) of Republic Act 8042, otherwise known as the Migrant Workers and Overseas Filipino Workers Act of 1995, committed by a syndicate and in large scale,

When arraigned GALLO pleaded not guilty; pre-trial was terminated and trial ensued, thereafter.

VERSION OF THE PROSECUTION: Dela Caza was introduced by Eleanor Panuncio to accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean national at the office of MPM International Recruitment and Promotion Agency (“MPM Agency”) located in Malate, Manila; Other accused were introduced as board members, officers  and employees of MPM.

Accused-appellant Gallo then introduced himself as a relative of Mardeolyn and informed Dela Caza that the agency was able to send many workers abroad. Together with Pacardo and Manta, he also told Dela Caza about the placement fee of One Hundred Fifty Thousand Pesos (PhP 150,000) with a down payment of Forty-Five Thousand Pesos (PhP 45,000) and the balance to be paid through salary deduction; Dela Caza, together with the other applicants, were briefed.

With accused-appellant’s assurance that many workers have been sent abroad, as well as the presence of the two (2) Korean nationals and upon being shown the visas procured for the deployed workers, Dela Caza was convinced to part with his money. Thus, on May 29, 2001, he paid Forty-Five Thousand Pesos (PhP 45,000) to MPM Agency through accused-appellant Gallo.

Two (2) weeks after paying MPM Agency, Dela Caza went back to the agency’s office in Malate, Manila only to discover that the office had moved to a new location at Batangas Street, Brgy. San Isidro, Makati. He proceeded to the new address and found out that the agency was renamed to New Filipino Manpower Development & Services, Inc. (“New Filipino”).

Dela Caza decided to withdraw his application and recover the amount he paid; Gallo even denied any knowledge about the money. After two (2) more months of waiting in vain to be deployed, Dela Caza and the other applicants decided to take action.

VERSION OF THE DEFENSE: For his defense, accused-appellant denied having any part in the recruitment of Dela Caza. In fact, he testified that he also applied with MPM Agency for deployment to Korea as a factory worker; in order to facilitate the processing of his papers, he agreed to perform some tasks for the agency, such as taking photographs of the visa and passport of applicants, running errands and performing such other tasks assigned to him, without salary except for some allowance. He said that he only saw Dela Caza one or twice at the agency’s office when he applied for work abroad. Lastly, that he was also promised deployment abroad but it never materialized.

DEVELOPMENT OF THE CASE: RTC rendered its Decision convicting the accused of syndicated illegal recruitment and estafa; CA affirmed; accused-appellant filed a timely appeal before this Court.

ISSUE: WON accused-appellant is guilty of illegal recruitment committed by a syndicate and estafa.


The appeal has no merit.

Accused-appellant avers that he cannot be held criminally liable for illegal recruitment because he was neither an officer nor an employee of the recruitment agency. He alleges that the trial court erred in adopting the asseveration of the private complainant that he was indeed an employee because such was not duly supported by competent evidence.

We disagree.

To commit syndicated illegal recruitment, three elements must be established: (1) the offender undertakes either any activity within the meaning of “recruitment and placement” defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers;8 and (3) the illegal recruitment is committed by a group of three (3) or more persons conspiring or confederating with one another.9 When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is committed against three (3) or more persons individually or as a group, it is considered an offense involving economic sabotage.

After a thorough review of the records, we believe that the prosecution was able to establish the elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never licensed by the POEA to recruit workers for overseas employment.

Even with a license, however, illegal recruitment could still be committed under Section 6 of Republic Act No. 8042 (“R.A. 8042”), otherwise known as the Migrants and Overseas Filipinos Act of 1995 (See Notes).

In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042. Testimonial evidence presented by the prosecution clearly shows that, in consideration of a promise of foreign employment, accused-appellant received the amount of Php 45,000.00 from Dela Caza. When accused-appellant made misrepresentations concerning the agency’s purported power and authority to recruit for overseas employment, and in the process, collected money in the guise of placement fees, the former clearly committed acts constitutive of illegal recruitment.

Essentially, Dela Caza appeared very firm and consistent in positively identifying accused-appellant as one of those who induced him and the other applicants to part with their money. His testimony showed that accused-appellant made false misrepresentations and promises in assuring them that after they paid the placement fee, jobs in Korea as factory workers were waiting for them and that they would be deployed soon.

On the contrary, his active participation in the illegal recruitment is unmistakable. The fact that he was the one who issued and signed the official receipt belies his profession of innocence.

This Court likewise finds the existence of a conspiracy between the accused-appellant and the other persons in the agency who are currently at large, resulting in the commission of the crime of syndicated illegal recruitment. Verily, the active involvement of each in the recruitment scam was directed at one single purpose – to divest complainants with their money on the pretext of guaranteed employment abroad.


The prosecution likewise established that accused-appellant is guilty of the crime of estafa as defined under Article 315 paragraph 2(a) of the Revised Penal Code (See notes)

The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse of confidence, or (b) by means of deceit; and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party or third person.

All these elements are present in the instant case: the accused-appellant, together with the other accused at large, deceived the complainants into believing that the agency had the power and capability to send them abroad for employment; that there were available jobs for them in Korea as factory workers; that by reason or on the strength of such assurance, the complainants parted with their money in payment of the placement fees; that after receiving the money, accused-appellant and his co-accused went into hiding by changing their office locations without informing complainants; and that complainants were never deployed abroad. As all these representations of the accused-appellant proved false, paragraph 2(a), Article 315 of the Revised Penal Code is thus applicable.1avvphi1

Defense of Denial Cannot Prevail over Positive Identification

APPEAL Denied.



  • Contents of the Information

That in or about and during the period comprised between November 2000 and December, 2001, inclusive, in the City of Manila, Philippines, the said accused conspiring and confederating together and helping with one another, representing themselves to have the capacity to contract, enlist and transport Filipino workers for employment abroad, did then and there willfully and unlawfully, for a fee, recruit and promise employment/job placement abroad to xxxx in Korea as factory workers and charge or accept directly or indirectly from said xxxx as placement fees in connection with their overseas employment, which amounts are in excess of or greater than those specified in the schedule of allowable fees prescribed by the POEA Board Resolution No. 02, Series 1998, and without valid reasons and without the fault of the said complainants failed to actually deploy them and failed to reimburse the expenses incurred by the said complainants in connection with their documentation and processing for purposes of their deployment.

  • Sec. 6 of RA 8042

Sec. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall, likewise, include the following act, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance;

x x x x

(l) Failure to actually deploy without valid reason as determined by the Department of Labor and Employment; and

(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage.

  • nature of conspiracy in the context of illegal recruitment:

Conspiracy to defraud aspiring overseas contract workers was evident from the acts of the malefactors whose conduct before, during and after the commission of the crime clearly indicated that they were one in purpose and united in its execution. Direct proof of previous agreement to commit a crime is not necessary as it may be deduced from the mode and manner in which the offense was perpetrated or inferred from the acts of the accused pointing to a joint purpose and design, concerted action and community of interest. As such, all the accused, including accused-appellant, are equally guilty of the crime of illegal recruitment since in a conspiracy the act of one is the act of all.

  • ART. 315, RPC

Art. 315. Swindling (estafa). – Any person who shall defraud another by any means mentioned hereinbelow…

x x x x

  1. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions; or by means of other similar deceits.



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

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

FACTS: 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. 

Motion to quash filed by respondent: 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. ” 

Motion at first was denied but was subsequently granted. The prosecution is now before us on certiorari. 

ISSUE: 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.


Petitioner’s contention: 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; 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.

Respondent argues: 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.

Neither interpretation is acceptable.

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.

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.

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.

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 their own countrymen.

WHEREFORE, informations against the private respondent reinstated.





G.R. NO. 156764


Paloma worked with PAL from September 1957, rising from the ranks to retire, after 35 years of continuous service, as senior vice president for finance. In March 1992, or 9 months before Paloma retired on November 30, 1992, PAL was privatized.
By way of post-employment benefits, PAL paid Paloma the total amount of PhP 5,163,325.64 which represented his separation/retirement gratuity and accrued vacation leave pay. The leave benefits Paloma claimed being he is entitled to refer to his 450-day accrued sick leave credits which PAL allegedly only paid the equivalent of 18 days. He anchored his entitlement on EO 1077 dated January 9, 1986, and his having accumulated a certain number of days of sick leave credits, as acknowledged in a letter of Alvia R. Leaño, then an administrative assistant in PAL. Leaño’s letter substantially states that Paloma only acquired 230 days sick leave credit because it is the maximum days laid down in PAL’s policy. Had there been no ceiling as mandated by Company policy, Paloma’s sick leave credits would have totaled 450 days to date.

Paloma filed before the Arbitration Branch of NLRC a Complaint for Commutation of Accrued Sick Leaves Totaling 392 days. Paloma alleged having accrued sick leave credits of 450 days commutable upon his retirement pursuant to EO 1077 which allows retiring government employees to commute, without limit, all his accrued vacation and sick leave credits. And of the 450-day credit, Paloma added, he had commuted only 58 days, leaving him a balance of 392 days of accrued sick leave credits for commutation.

Labor Arbiter (LA) ordered PAL to pay Paloma, the sum of P675,000.00 representing 162 accumulated sick leave credits, plus attorney’s fees . LA held that PAL is not covered by the civil service system and, accordingly, its employees, like Paloma, cannot avail themselves of the beneficent provision of EO 1077. This executive issuance applies only to government officers and employees covered by the civil service, exclusive of the members of the judiciary whose leave and retirement system is covered by a special law. However, the labor arbiter ruled that Paloma is entitled to a commutation of his alternative claim for 202 accrued sick leave credits less 40 days for 1990 and 1991. Thus, the grant of commutation for 162 accrued leave credits.

Both parties appealed to NLRC.NLRC dismissed the appeal and affirmed the decision of the LA. Both parties filed MR. NLRC, found Paloma to have accumulated sick leave credits of 230 days, modified its earlier decision. PAL went to the CA on a petition for certiorari under Rule 65. CA favored PAL. Paloma filed for MR, CA vacated and set aside its former decision. And reinstated NLRC decision with modification that the sum granted to Paloma shall earn legal interest. But CA allowed a 230-day sick leave commutation, up from the 162 days only.

Paloma and PAL appealed the CA’s Amended Decision to SC.


WON EO 1077, before PAL’s privatization, applies to its employees, and corollarily, whether or not Paloma is entitled to a commutation of his accrued sick leave credits.


No. EO 1077 (Revising the Computation of Creditable Vacation and Sick Leaves of Government Officers and Employees), provides:

“Section 1. Any officer [or] employee of the government who retires or voluntary resigns or is separated from the service through no fault of his own and whose leave benefits are not covered by special law, shall be entitled to the commutation of all the accumulated vacation and/or sick leaves to his credit, exclusive of Saturdays, Sundays, and holidays, without limitation as to the number of days of vacation and sick leaves that he may accumulate.”

Contention of Paloma is without merit. PAL never ceased to be operated as a private corporation, and was not subjected to the Civil Service Law

Through the years, PAL functioned as a private corporation and managed as such for profit. Their personnel were never considered government employees. Civil service law and rules and regulations have not been made to apply to PAL and its employees. Of governing application to them was the Labor Code.

Paloma cannot be accorded the benefits of EO 1077 which was issued to narrow the gap between the leave privileges between the members of the judiciary, on one hand, and other government officers and employees in the civil service, on the other.  It is the 1987 Constitution, which delimits the coverage of the civil service, that should govern this case because it is the Constitution in place at the time the case was decided, even if, incidentally, the cause of action accrued during the effectivity of the 1973 Constitution.

Paloma, while with PAL, was never a government employee covered by the civil service law. As such, he did not acquire any vested rights on the retirement benefits accorded by EO 1077. What governs Paloma’s entitlement to sick leave benefits and the computation and commutation of creditable benefits is not EO 1077 but PAL’s company policy on the matter.

To elaborate the decision of the lower tribunals, the labor arbiter granted 162 days commutation, while the NLRC allowed the commutation of the maximum 230 days. The CA, while seemingly affirming the NLRC’s grant of 230 days commutation, actually decreed a 162-day commutation. These are all lacking legal basis, for PAL’s company policy upon which either disposition was predicated did not provide for a commutation of the first 230 days accrued sick leave credits employees may have upon their retirement. NLRC and the CA, by their act of allowing commutation to cash, erred because they read in the policy something not written or intended therein. Indeed, no law provides for commutation of unused or accrued sick leave credits in the private sector. Commutation is allowed by way of voluntary endowment by an employer through a company policy or by a CBA. None of such medium is present in the case at bar and it would be inappropriate if the Court fills up the vacuum.

In the absence of any provision in the applicable company policy authorizing the commutation of the 230 days accrued sick leave credits existing upon retirement, Paloma may not, as a matter of enforceable right, insist on the commutation of his sick leave credits to cash.

WHEREFORE, the petition under G.R. No. 148415 is hereby DISMISSED for lack of merit, while the petition under G.R. No. 156764 is hereby GIVEN DUE COURSE.



G.R. No. 173198

June 1, 2011

FACTS: The RTC rendered a Decision finding Ocden guilty beyond reasonable doubt of the crimes of illegal recruitment in large scale and three counts of estafa.

(This is based from complaints of several persons accusing her of promising to the applicants  employment to a stuffed toy factory in Italy, wherein she asks for 70k from each as placement fee. After the applicants pay, they will be sent to Zamboanga on the assurance that they will be first sent to Malaysia for easier processing of their visas, and then to Italy, which never materialized.

Ocden asserts that she was also just an applicant for overseas employment; and that she was receiving her co-applicants’ job applications and other requirements, and accepting her co-applicants’ payments of placement fees, because she was designated as the applicants’ leader by Ramos, the real recruiter. )

Aggrieved by the above decision, Ocden filed with the RTC a Notice of Appeal. Ocden’s appeal was sent to the Court of Appeals.  The appellate court promulgated its Decision, dismissing the appeal and affirming Ocden’s conviction.

Hence, this appeal


HELD: WHEREFORE, the instant appeal of accused-appellant Dolores Ocden is DENIED.


After a thorough review of the records of the case, we find nothing on record that would justify a reversal of Ocden’s conviction.

Illegal recruitment in large scale

Ocden contends that the prosecution failed to prove beyond reasonable doubt that she is guilty of the crime of illegal recruitment in large scale.  Other than the bare allegations of the prosecution witnesses, no evidence was adduced to prove that she was a non-licensee or non-holder of authority to lawfully engage in the recruitment and placement of workers.  No certification attesting to this fact was formally offered in evidence by the prosecution.

Ocden’s aforementioned contentions are without merit.

Article 13, paragraph (b) of the Labor Code defines and enumerates the acts which constitute recruitment and placement:

(b) “Recruitment and placement” refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising for 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.

The amendments to the Labor Code introduced by RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, broadened the concept of illegal recruitment and provided stiffer penalties, especially for those that constitute economic sabotage, i.e., illegal recruitment in large scale and illegal recruitment committed by a syndicate.  Pertinent provisions of Republic Act No. 8042 are reproduced below:

SEC. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:


            (m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage.   

            x x x x


It is well-settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression that he had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in order to be employed. As testified to by Mana-a, Ferrer, and Golidan, Ocden gave such an impression through the following acts:

(1) Ocden informed Mana-a, Ferrer, and Golidan about the job opportunity in Italy and the list of necessary requirements for application;

(2) Ocden required Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, to attend the seminar conducted by Ramos at Ocden’s house in Baguio City;

(3) Ocden received the job applications, pictures, bio-data, passports, and the certificates of previous employment (which was also issued by Ocden upon payment of P500.00), of Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard;

(4) Ocden personally accompanied Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, for their medical examinations in Manila;

(5) Ocden received money paid as placement fees by Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, and even issued receipts for the same; and (6) Ocden assured Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, that they would be deployed to Italy.   

It is not necessary for the prosecution to present a certification that Ocden is a non-licensee or non-holder of authority to lawfully engage in the recruitment and placement of workers.  Section 6 of Republic Act No. 8042 enumerates particular acts which would constitute illegal recruitment “whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority.”  Among such acts, under Section 6(m) of Republic Act No. 8042, is the “[f]ailure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault.”

Since illegal recruitment under Section 6(m) can be committed by any person, even by a licensed recruiter, a certification on whether Ocden had a license to recruit or not, is inconsequential.  Ocden committed illegal recruitment as described in said provision by receiving placement fees from Mana-a, Ferrer, and Golidan’s two sons, Jeffries and Howard, evidenced by receipts Ocden herself issued; and failing to reimburse/refund to Mana-a, Ferrer, and Golidan’s two sons the amounts they had paid when they were not able to leave for Italy, through no fault of their own.


  1. Under the last paragraph of Section 6, Republic Act No. 8042, illegal recruitment shall be considered an offense involving economic sabotage if committed in a large scale, that is, committed against three or more persons individually or as a group.

In People v. Hu, we held that a conviction for large scale illegal recruitment must be based on a finding in each case of illegal recruitment of three or more persons, whether individually or as a group.  While it is true that the law does not require that at least three victims testify at the trial, nevertheless, it is necessary that there is sufficient evidence proving that the offense was committed against three or more persons.

  1. Section 7(b) of RA 8042 prescribes a penalty of life imprisonment and a fine of not less than P500,000.00 nor more than P1,000,000.00 if the illegal recruitment constitutes economic sabotage.  
  2. The very same evidence proving Ocden’s liability for illegal recruitment also established her liability for estafa.  

It is settled that a person may be charged and convicted separately of illegal recruitment under RA 8042 in relation to the Labor Code, and estafa under Article 315, paragraph 2(a) of the RPC.  It follows that one’s acquittal of the crime of estafa will not necessarily result in his acquittal of the crime of illegal recruitment in large scale, and vice versa.

The penalty for estafa depends on the amount of defraudation.  





G.R. No. 86773 February 14, 1992


FACTS: This is a petition for certiorari to annul and set aside the decision of the NLRC sustaining the labor arbiter, in holding herein petitioners liable to pay private respondent the amount of P126,458.89 plus interest thereon computed from May 16, 1986 until full payment thereof is made, as separation pay and other post-employment benefits.

On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate an a probationary basis by the SEAFDEC-AQD and was appointed Senior External Affairs Officer on January 5, 1983 with a monthly basic salary of P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed to the position of Professional III and designated as Head of External Affairs Office with the same pay and benefits.

SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development Center, organized through an agreement entered into in Bangkok, Thailand on December 28, 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country

On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to private respondent informing him that due to the financial constraints being experienced by the department, his services shall be terminated at the close of office hours on May 15, 1986 and that he is entitled to separation benefits equivalent to one (1) month of his basic salary for every year of service plus other benefits.

Upon petitioner SEAFDEC-AQD’s failure to pay private respondent his separation pay, the latter filed on March 18, 1987 a complaint against petitioners for non-payment of separation benefits plus moral damages and attorney’s fees with the Arbitration Branch of the NLRC

Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction over the case inasmuch as the SEAFDEC-AQD is an international organization and that private respondent must first secure clearances from the proper departments for property or money accountability before any claim for separation pay will be paid, and which clearances had not yet been obtained by the private respondent.

LABOR ARBITER: ordered petitioner to pay the benefits claimed

NLRC: affirmed the LA.

PETITIONER CONTENDS that: SEAFDEC-AQD is immune from suit owing to its international character and the complaint is in effect a suit against the State which cannot be maintained without its consent.

ISSUE: WON the petitioner is within the scope of application of Philippine labor laws (WON SEAFDEC is immuned from suit)

HELD: Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent NLRC.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located.

In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical personality independent of the municipal law of the State where they are situated. As such, according to one leading authority “they must be deemed to possess a species of international personality of their own.” (Salonga and Yap, Public International Law, 83 [1956 ed.])

One of the basic immunities of an international organization is immunity from local jurisdiction, i.e.,that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in there operations or even influence or control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states.

WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the courts or local agency of the Philippine government, the questioned decision and resolution of the NLRC dated July 26, 1988 and January 9, 1989, respectively, are hereby REVERSED and SET ASIDE for having been rendered without jurisdiction.



G.R. No. 147745            April 9, 2003

MARIA BUENA OBRA, petitioner, 
SOCIAL SECURITY SYSTEM (Jollar Industrial Sales and Services Inc.), respondents.

FACTS: Juanito Buena Obra, husband of petitioner, worked as a driver for twenty-four (24) years and five (5) months. His first and second employers were logging companies. Thereafter, he was employed at Jollar Industrial Sales and Services Inc. as a dump truck driver from January 1980 to June 1988. He was assigned to about 4 project within that time frame.

On 27 June 1988, Juanito suffered a heart attack while driving a dump truck inside the work compound, and died shortly thereafter. In the Report of Death submitted by his employer to the Social Security System (SSS), Juanito expired at the Worker’s Quarters at 10:30 a.m., of Myocardial Infarction.

Petitioner Maria M. Buenaobra immediately filed her claim for death benefits under the SSS law. She started receiving her pension in November 1988. Petitioner was, however, unaware of the other compensation benefits due her under Presidential Decree No. 626, as amended, or the Law on Employees’ Compensation. In September 1998, or more than ten (10) years after the death of her husband, that she learned of the benefits under P.D. No. 626 through the television program of then broadcaster Ted Failon who informed that one may claim for Employees Compensation Commission (ECC) benefits if the spouse died while working for the company. Petitioner prepared the documents to support her claim for ECC benefits. On 23 April 1999, she filed with the SSS her claim for funeral benefits under PD 626.

SSS denied the claim of petitioner for funeral benefits ruling that the cause of death of Juanito was not work-connected, absent a causal relationship between the illness and the job. Re-evaluation was also denied. Records were then elevated to the ECC.

ECC dismissed the appeal. It ruled that petitioner failed to show by substantial evidence that her husband’s cause of death was due to, or the risk of contracting his ailment was increased by his occupation and working conditions. Commission also declared that petitioner’s claim has prescribed.

CA dismissed the petition. It ruled that petitioner’s filing of her claim for SSS benefits shortly after Juanito’s death did not suspend the running of the prescriptive period for filing EC claims. It interpreted the aforementioned ECC Resolutions to mean that a claimant must indicate the kind of claim filed before the running of the prescriptive period for filing EC claims may be interrupted. In the case at bar, petitioner indeed filed a claim with SSS. In fact, she has been receiving her pension since November 1988. However, she failed to specify whether the basis of her claim was any contingency which may be held compensable under the EC Program. CA further states that it must be proven by substantial evidence that the risk of contracting the disease which caused the death of the member was increased by the member’s working conditions.

The appellate court then held that the petitioner’s cause of action has prescribed. Petitioner’s husband died on 27 June 1988. She filed her claim for funeral benefits under P.D. No. 626 or the Law on Employees’ Compensation only on 23 April 1999, or more than ten (10) years from his death. The CA applied Art. 1142(2) of the Civil Code (brought within ten (10) years from the time the right of action accrues: (2) Upon an obligation created by law😉


  1. WON the claim has prescribed
  2. WON the illness of the deceased is work-related


  1.  The claim of petitioner for funeral benefits under P.D. No. 626, as amended, has not yet prescribed.

The issue of prescription in the case at bar is governed by P.D. No. 626, or the Law on Employees’ Compensation. Art. 201 of P.D. No. 626 and Sec. 6, Rule VII of the 1987 Amended Rules on Employees’ Compensation both read as follows:

“No claim for compensation shall be given due course unless said claim is filed with the System within three years from the time the cause of action accrued.”

We agree with the petitioner that her claim for death benefits under the SSS law should be considered as the Employees’ Compensation claim itself. This is but logical and reasonable because the claim for death benefits which petitioner filed with the SSS is of the same nature as her claim before the ECC. Furthermore, the SSS is the same agency with which Employees’ Compensation claims are filed. As correctly contended by the petitioner, when she filed her claim for death benefits with the SSS under the SSS law, she had already notified the SSS of her employees’ compensation claim, because the SSS is the very same agency where claims for payment of sickness/disability/death benefits under P.D. No. 626 are filed.

It is true that under the proviso, the employees’ compensation claim shall be filed with the GSIS/SSS within a reasonable time as provided by law. It should be noted that neither statute nor jurisprudence has defined the limits of “reasonable time.” Thus, what is reasonable time depends upon the peculiar facts and circumstances of each case.

Rule 3 of the ECC Rules of Procedure provide Section 4(b)3 – In any of the foregoing cases, the employees’ compensation claim shall be filed with the GSIS or the SSS within a reasonable time as provided by law.

In the case at bar, we also find petitioner’s claim to have been filed within a reasonable time considering the situation and condition of the petitioner. We have ruled that when the petitioner filed her claim for death benefits under the SSS law, her claim for the same benefits under the Employees’ Compensation Law should be considered as filed. The evidence shows that the System failed to process her compensation claim. Under the circumstances, the petitioner cannot be made to suffer for the lapse committed by the System. It is the avowed policy of the State to construe social legislations liberally in favor of the beneficiaries. This court has time and again upheld the policy of liberality of the law in favor of labor.

ART. 4. Construction in favor of labor. – All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

Claims falling under the Employees’ Compensation Act should be liberally resolved to fulfill its essence as a social legislation designed to afford relief to the working man and woman in our society.

  1. The second issue of whether or not the illness of petitioner’s husband, myocardial infarction which was the cause of his death is work-related, must likewise be resolved in favor of the petitioner.

While it is true that myocardial infarction is not among the occupational diseases listed under Annex “A” of the Amended Rules on Employees’ Compensation, the Commission, under ECC Resolution No. 432 dated July 20, 1977, laid down the conditions under which cardio-vascular or heart diseases can be considered as work-related and thus compensable

In the case at bar, the petitioner’s husband’s heart disease falls under the second condition of ECC Resolution No. 432 dated July 20, 1977 which states that the strain of work that brought about the acute attack must be of sufficient severity and must be followed within 24 hours by the clinical signs of a cardiac insult to constitute causal relationship. Petitioner’s husband was driving a dump truck within the company premises where they were stacking gravel and sand when he suffered the heart attack. He had to be taken down from the truck and brought to the workers’ quarters where he expired at 10:30 a.m., just a few minutes after the heart attack, which is much less than the 24 hours required by ECC Resolution No. 432. This is a clear indication that severe strain of work brought about the acute attack that caused his death.

ECC and the SSS should adopt a liberal attitude in favor of the employee in deciding claims for compensability especially where there is some basis in the facts for inferring a work connection with the illness or injury, as the case may be. It is only this kind of interpretation that can give meaning and substance to the compassionate spirit of the law as embodied in Article 4 of the New Labor Code which states that all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations should be resolved in favor of labor



G.R. No. 150861

January 22, 2008

FACTS: The case stems from a complaint for illegal dismissal and other money claims filed by the Nagkakaisang Manggagawa Ng Powertech Corporation in behalf of its individual members and non-union members against their employer, Powertech.  

The Labor Arbiter rendered a Decision declaring illegal the termination of 20 of petitioners and granting their monetary claims of 2.5M. Powertech appealed to the NLRC.

During its pendency, Gestiada, for himself and on behalf of other petitioners, executed a quitclaim, release and waiver in favor of Powertech in consideration of 150k. (Earlier, Gestiada was appointed by his co-petitioners as their attorney-in-fact.  The appointment was evidenced by an SPA.) The compromise amount was paid to Gestiada by check.

Relying on the quitclaim and release, Powertech filed a motion for the withdrawal of the appeal and cash bond.  The NLRC granted the motion, dismissed the appeal and ordered the release of the cash bond.

The  check of Gestiada, however, bounced due to a stop payment order of Powertech.

Aggrieved, petitioners moved to nullify the release and quitclaim for lack of consideration.  In a Resolution, the NLRC declared the quitclaim, release and waiver void for lack of consideration, reinstated the appeal and ordered Powertech to post a cash or surety bond for the monetary judgment less the amount it had previously posted.

Then, Gestiada terminated the services of their counsel, Atty.  Evangelista and, instead, retained Atty.  Felipe of the Public Attorney’s Office.

A day later, Powertech paid 150k to Gestiada purportedly as compromise amount for all of petitioners.  That same day, Gestiada, through Atty.  Felipe, and Powertech filed a joint MTD with the NLRC based on the compromise agreement.  Atty.  Evangelista opposed the motion, alleging that the compromise agreement is unconscionable, that he was illegally terminated as counsel for the other petitioners without their consent, and that the 150k was received by Gestiada as payment solely for his backwages and other monetary claims.

The NLRC issued a resolution denying the joint MTD. In denying the joint motion to dismiss, the NLRC held that the amount received by Gestiada did not cover the monetary claim of petitioners against Powertech.  For failure of Powertech to post the required cash or surety bond, the NLRC ruled that the Labor Arbiter decision had attained finality.

Undaunted, Powertech elevated the matter to the CA via petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.

The CA rendered a decision in favor of Powertech, ordering that the Resolution of the NLRC declaring the Quitclaim and Release void ab initio and denying the Joint MTD and dismissing the appeal of the petitioners is ANNULLED and SET ASIDE.  

The CA upheld the validity of the compromise agreement between petitioners and Powertech

Petitioners moved to reconsider the CA decision but their motion was denied. Hence, the present recourse.


HELD: WHEREFORE, the petition is GRANTED.  The Decision of the CA is REVERSED and SET ASIDE.  The Resolution of the NLRC is REINSTATED.


We give credence to the admission of Gestiada that he received the 150k as payment for his own backwages.  In his letter to Atty.  Evangelista, Gestiada said that he was pressured by Powertech to sign the waiver and quitclaim for petitioners in order to receive his share in the P2.5 million judgment.  Having no stable job after his dismissal, Gestiada had no other choice but to breach his fiduciary obligation to petitioners.  He succumbed to the pressure of Powertech in signing the waiver, release and quitclaim in exchange for the 150k.  In short, he colluded with Powertech to the detriment of petitioners.

Powertech knew that Gestiada had plenary authority to act for petitioners in the labor case.  It had prior dealings with him.  It also knew that Gestiada was authorized to negotiate for any amount “he may deem just and reasonable” and to sign waivers and quitclaims on behalf of petitioners.  Powertech obviously used that knowledge, capitalized on the vulnerable position of Gestiada in entering into the agreement and took advantage of the situation to the disadvantage of petitioners.

To give effect to the collusion, Gestiada had to get rid of Atty.  Evangelista, who had previously succeeded in nullifying the compromise agreement.  He fired Atty.  Evangelista without cause basing his dismissal on his plenary authority as agent of petitioners.  He then procured the services of another lawyer, Atty.  Felipe.  

In line with Our conclusion that Powertech colluded with Gestiada, the CA gravely erred in upholding the compromise agreement.  The appellate court decision was premised on the compromise agreement being entered into by Powertech and Gestiada in good faith.  It is now clear that there is ample evidence indicating that Powertech was negotiating in bad faith and, worse, it colluded with Gestiada in shortchanging, nay, fraudulently depriving petitioners of their just share in the award.

Collusion is a species of fraud. Article 227 of the Labor Code empowers the NLRC to void a compromise agreement for fraud, thus:

Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties.  The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.[28] (Underscoring supplied)

In fine, We find that the CA erred in upholding the compromise agreement between Powertech and Gestiada.  The NLRC justifiably declared the compromise agreement as void.


Addressing petitioners’ contention on the failure of Powertech to post a surety bond, We agree with the NLRC resolution dismissing its appeal.  Said the NLRC on this point:

An appeal is neither a natural right nor is it part of due process but purely a statutory privilege and may be exercised only in the manner and in accordance with the provisions of law x x x Considering that the Joint MTD remains unacted upon at the time respondents received a copy of Our Resolution… respondents, in accordance with said Resolution and with Article 223 Labor Code and with Section 6, Rule VI, NLRC New Rules of Procedure should have posted a cash and surety bond.  Hence failing to do so the appealed Decision is deemed final and executory…

The posting of a surety bond is mandatory and jurisdictional.