TRANSACTION OVERSEAS CORPORATION, PETITIONER, VS. THE HONORABLE SECRETARY OF LABOR, ROSELLE CASTIGADOR, JOSEFINA MAMON, JENELYN CASA, PEACHY LANIOG, VERDELINA BELGIRA, ELMA FLOR…

Trans Action Overseas Corporation versus the Secretary of Labor

The Case

This is a special civil action for certiorari brought by Trans Action Overseas Corporation, a private fee-charging employment agency, against the Secretary of Labor and Employment and several individual complainants. The agency asks the Supreme Court to annul the orders of the Labor Undersecretary — later affirmed by the Secretary — which found it liable for illegal collection of placement fees and cancelled its license to recruit workers for overseas employment. The case matters because it settles a question of administrative jurisdiction: who may cancel or revoke the license of a recruitment agency, the Philippine Overseas Employment Administration alone, or the Secretary of Labor as well. It is a staple in labor law and administrative law examinations on the enforcement powers of the Department of Labor and Employment.

Procedural History

The complaints were filed with the Department of Labor and Employment by the private respondents against the petitioner for violation of Articles 32 and 34 of the Labor Code. On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered an order holding the agency liable for twenty-eight counts of violation of Article 32 and five counts of violation of Article 34, paragraph a, imposing an aggregate suspension of sixty-six months, and, because the schedule of penalties provides that any suspension reaching twelve months merits cancellation, ordering the license of the agency cancelled effective immediately. The agency moved for a temporary lifting of the cancellation, which was provisionally granted pending resolution of its motion for reconsideration. On January 30, 1992, the motion for reconsideration was denied for lack of merit and the order of cancellation was reinstated. The agency then elevated the matter to the Supreme Court by petition for certiorari, contending that the Secretary acted with grave abuse of discretion.

Facts

From July 24 to September 9, 1987, Trans Action Overseas Corporation scoured Iloilo City for possible recruits for alleged job vacancies in Hongkong. The private respondents sought employment as domestic helpers through the agency's employees, Luzviminda Aragon and Ben Hur Domincil with his wife Cecille. The applicants paid placement fees ranging from one thousand pesos to fourteen thousand pesos, but the agency failed to deploy them. Their demands for refund proved unavailing, so they instituted complaints for violation of Articles 32 and 34 of the Labor Code.

The agency denied receiving the amounts, averring that Aragon's only duty was to pre-screen and interview applicants, and that she and the spouses Domincil were not authorized to collect fees. It even claimed to have warned the applicants not to give money to unauthorized individuals. The evidence, however, showed that a representative of the agency tasked to oversee the interviews had left presigned receipts behind with Aragon, although that representative denied it and blamed the regional coordinator for the instruction.

On April 5, 1991, Undersecretary Confesor issued the order finding the agency liable and cancelling its license. After the provisional lifting and the eventual denial of its motion for reconsideration, the agency brought the matter to the Supreme Court.

Issues

• Whether or not the Secretary of Labor and Employment has jurisdiction to cancel or revoke the license of a private fee-charging employment agency, or whether that power belongs exclusively to the Philippine Overseas Employment Administration.
• Whether or not the 1987 POEA Schedule of Penalties is ineffective for non-compliance with the requirement of registration with the U.P. Law Center under the Revised Administrative Code of 1987, and thus cannot serve as basis for penalizing the agency.

Applicable Provisions

Article 35 of the Labor Code, as amended, provides:

Article 35. Suspension and or Cancellation of License or Authority. The Minister of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment Development Board, and the National Seamen Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions.

This is the central provision, because it expressly vests the power to suspend or cancel a recruitment license in the Secretary of Labor, and the Court relies on it to uphold the cancellation.

Article 32 of the Labor Code, as amended, provides:

Article 32. Fees to be paid by workers. Any person applying with a private fee-charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees.

This is the provision the agency violated when it collected placement fees from applicants who were never deployed.

Article 34 of the Labor Code, as amended, provides:

Article 34. Prohibited practices. It shall be unlawful for any individual, entity, 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, or to make a worker pay any amount greater than that actually received by him as a loan or advance.

This is the second provision violated, and it supplies the basis for the penalties imposed on the agency.

Ruling

On the first issue, the Court ruled that the power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested in the Philippine Overseas Employment Administration and the Secretary of Labor. The Court rejected the theory that the creation of the POEA under the executive orders rendered Article 35 ineffective. It explained that the Secretary's power under Article 35 is complemented by the authority, conferred by Section 36, not only to restrict and regulate recruitment and placement activities but also to promulgate rules and regulations to carry out the objectives of the law. Pursuant to that rule-making power, the Secretary gave the POEA authority to conduct proceedings for suspension or cancellation, and to recommend cancellation to the Minister. The Court held that the power conferred upon the Secretary was echoed in the definition of a non-licensee in People versus Diaz, whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary.

On the second issue, the Court agreed with the Secretary that the non-filing of the 1987 POEA Schedule of Penalties with the U.P. Law Center did not render it ineffective. The schedule was issued pursuant to Article 34 of the Labor Code; it merely amplified and particularized the various violations and clarified the penalties for them. It contains only a listing of offenses and does not prescribe additional rules governing overseas employment. More importantly, the Court held that the license was cancelled on the authority of Article 35 of the Labor Code, and not pursuant to the schedule of penalties.

Doctrine

First, the power to suspend or cancel a license or authority to recruit employees for overseas employment is concurrently vested in the Philippine Overseas Employment Administration and the Secretary of Labor and Employment, by virtue of Article 35 of the Labor Code, as amended. The creation of the POEA did not divest the Secretary of that power.

Second, a schedule of penalties issued pursuant to Article 34 of the Labor Code that merely lists offenses and particularizes administrative sanctions is not a rule or regulation requiring registration with the U.P. Law Center to be effective; and in any event, a cancellation of license may stand on the authority of Article 35 itself.

Third, a private fee-charging employment agency that collects placement fees from applicants who are never deployed violates Articles 32 and 34 of the Labor Code, and the Secretary may impose the sanctions of suspension and cancellation.

Disposition

The petition was dismissed and the decision of the Secretary of Labor dated April 5, 1991, was affirmed, with no costs.

Remember This

The one line to memorize: the power to suspend or cancel a recruitment license is concurrently vested in the POEA and the Secretary of Labor under Article 35 of the Labor Code. Examiners use this case to test jurisdiction over license cancellation and the effect of unregistered administrative penalty schedules.