General Milling Corporation vs. Torres

The Secretary of Labor possesses the discretionary authority under Article 40 of the Labor Code, read in conjunction with Article 12 thereof and Section 6(c), Rule XIV, Book I of the Implementing Rules, to determine whether the employment of a non-resident alien would redound to the national interest, and may deny or revoke an alien employment permit if the employer fails to establish that no competent, able, and willing Filipino is available for the position.

The case arises from the regulatory framework governing the employment of non-resident aliens in the Philippines under the Labor Code, specifically involving the basketball industry where local coaches' associations sought to protect employment opportunities for Filipino coaches against foreign competition.

• Petitioner Earl Timothy Cone is a United States citizen who was initially issued Alien Employment Permit No. M-0689-3-535 by the DOLE National Capital Region on 1 May 1989 as sports consultant and assistant coach for petitioner General Milling Corporation (GMC).
• On 27 December 1989, GMC and Cone entered into a contract of employment for Cone to coach GMC's basketball team.
• On 15 January 1990, the Commission on Immigration and Deportation approved Cone's application for a change of admission status from temporary visitor to pre-arranged employee.
• On 9 February 1990, GMC requested renewal of Cone's alien employment permit and sought permission to employ him as a full-fledged coach, which the DOLE Regional Director granted on 15 February 1990, issuing Alien Employment Permit No. M-02903-881 valid until 25 December 1990.
• Private respondent Basketball Coaches Association of the Philippines (BCAP) appealed the issuance of the permit to the Secretary of Labor.
• On 23 April 1990, Secretary Ruben D. Torres issued a decision ordering the cancellation of Cone's employment permit on the ground that GMC failed to show that no person in the Philippines was competent, able, and willing to perform the services, and that the hiring would redound to the national interest.
• GMC filed a Motion for Reconsideration and two Supplemental Motions for Reconsideration, which Acting Secretary Bienvenido E. Laguesma denied in an Order dated 8 June 1990.
• Petitioners filed a Petition for Certiorari on 14 June 1990 alleging grave abuse of discretion and the nullity of Section 6(c), Rule XIV, Book I of the Omnibus Rules.
• During the pendency of the petition, petitioners manifested that the Secretary of Labor reversed his earlier decision and issued a new Employment Permit to Cone, seeking to withdraw the petition as moot and academic.

• The Secretary of Labor gravely abused his discretion in revoking Cone's alien employment permit.
• Section 6(c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is null and void for being ultra vires, as Article 40 of the Labor Code does not explicitly empower the Secretary to determine if employment of an alien would redound to the national interest.
• The Secretary failed to notify petitioners of the appeal filed by BCAP, violating procedural due process.
• Hiring a foreign coach is an employer's prerogative that should not be restricted by the alien employment permit requirement.
• The revocation violates the equal protection clause because other foreign coaches, such as Norman Black, are allowed to work in the Philippines.
• The revocation constitutes an impairment of the obligations of contract between GMC and Cone.
• The Secretary should have deferred to the findings of the Commission on Immigration and Deportation regarding the necessity of employing Cone.

• The Solicitor General argued that no equal protection violation exists because Norman Black is a long-time resident of the Philippines and thus not subject to Article 40 of the Labor Code, which applies only to non-resident aliens like Cone.
• The Labor Code specifically empowers the Secretary of Labor to determine the availability of local workers competent to perform the services for which the alien is desired.
• The distinction between resident and non-resident aliens under immigration law justifies differential treatment.
• Provisions of the Labor Code relating to alien employment are matters affected with public policy and are deemed written into contracts.

• Procedural Issues:
  • Whether the Secretary of Labor committed grave abuse of discretion in revoking the alien employment permit without prior notice to petitioners of the appeal filed by BCAP.
  • Whether the petition has become moot and academic in light of the Secretary's subsequent issuance of a new employment permit to Cone.
• Substantive Issues:
  • Whether Section 6(c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is valid and constitutional despite not being explicitly found in Article 40 of the Labor Code.
  • Whether the Secretary of Labor has the authority to determine whether the employment of a non-resident alien would redound to the national interest.
  • Whether the revocation violates the equal protection clause of the Constitution.
  • Whether the revocation constitutes an impairment of contractual obligations.
  • Whether the Secretary of Labor is bound by the findings of the Commission on Immigration and Deportation regarding the necessity of employing the alien.

• Procedural:
  • The Court held that the Secretary of Labor did not commit grave abuse of discretion. The alleged failure to notify petitioners of the appeal was cured when petitioners were allowed to file their Motion for Reconsideration before the Secretary.
  • Although the case became potentially moot when petitioners manifested that the Secretary issued a new permit, the Court exercised its discretion to resolve the issues to prevent future similar controversies and because the basis for the Secretary's reversal did not appear in the record.
• Substantive:
  • Section 6(c), Rule XIV, Book I of the Omnibus Rules is valid. The permissive language of Article 40 ("may be issued") indicates that the Secretary has discretionary authority, which includes assessing whether employment redounds to the national interest as informed by Article 12's statement of objectives.
  • The equal protection claim fails because Cone, as a non-resident alien, is constitutionally and legally distinct from resident aliens like Norman Black under immigration law; Article 40 applies only to non-resident aliens.
  • There is no impairment of contract because provisions of the Labor Code and its Implementing Rules regarding alien employment permits existed prior to the contract and are deemed written into contracts as matters affected with public policy.
  • The Secretary of Labor, not the Commission on Immigration and Deportation, has jurisdiction under the Labor Code to determine the availability of competent local workers.

• Police Power and Contracts — Provisions of applicable laws, especially those relating to matters affected with public policy, are deemed written into contracts, and private parties cannot contract away applicable provisions of law.
• Equal Protection and Valid Classification — The classification between resident aliens and non-resident aliens under immigration law is a valid distinction that justifies differential treatment under the Labor Code; Article 40 applies only to non-resident aliens.
• Discretionary Authority of Administrative Agencies — The permissive language ("may") in Article 40 of the Labor Code grants the Secretary of Labor discretionary authority to issue employment permits, which includes the power to set conditions and assess national interest implications.

• "It is firmly settled that provisions of applicable laws, especially provisions relating to matters affected with public policy, are deemed written into contracts."
• "Private parties cannot constitutionally contract away the otherwise applicable provisions of law."
• "The permissive language employed in the Labor Code indicates that the authority granted involves the exercise of discretion on the part of the issuing authority."

• De Leon v. Commission on Elections — Cited for the principle that procedural defects such as failure to notify parties may be cured by subsequent opportunities to be heard, such as the filing of motions for reconsideration.
• Pakistan International Airways Corporation v. Hon. Blas F. Ople — Cited for the doctrine that provisions of law are deemed written into contracts.
• Commissioner of Internal Revenue v. United States Lines Co. — Cited for the same doctrine regarding laws being deemed written into contracts.
• Javier v. Commission on Elections — Cited for the principle that courts may decide cases even if they have become moot and academic when the issues raised are of public importance and capable of repetition yet evading review.

• Article 40 of the Labor Code — Governs the employment permit requirements for non-resident aliens, requiring a determination of the non-availability of competent local workers before issuance.
• Article 12 of the Labor Code — States the objectives of the Labor Code, including facilitating free choice of employment and regulating the employment of aliens in conformity with the national interest.
• Section 6(c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code — Authorizes the Secretary of Labor to issue employment permits based on an assessment of whether the employment would redound to the national interest.