Sto. Tomas vs. Salac

Sections 6, 7, 9, and 10 of R.A. 8042 are constitutional exercises of police power, and the solidary liability of corporate officers and directors under Section 10 is not automatic but requires a finding that they were remiss in directing the affairs of the company, such as sponsoring or tolerating illegal activities.

R.A. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, was enacted on June 7, 1995 to set the government's policies on overseas employment and establish a higher standard of protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in distress. The law contained deregulation provisions (Sections 29 and 30) mandating the phase-out of POEA's regulatory functions within five years, definitions and penalties for illegal recruitment (Sections 6 and 7), a special venue rule for criminal actions arising from illegal recruitment (Section 9), and a money claims provision imposing joint and solidary liability on corporate officers and directors of recruitment agencies (Section 10). Various parties—recruitment agencies, OFW advocates, and government officials—challenged or defended these provisions in different courts, leading to consolidated proceedings before the Supreme Court.

On June 7, 1995, Congress enacted R.A. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, which set the government's policies on overseas employment and established a higher standard of protection for migrant workers, their families, and overseas Filipinos in distress. Among its provisions, Sections 29 and 30 commanded the Department of Labor and Employment (DOLE) to begin deregulating within one year the business of handling the recruitment and migration of overseas Filipino workers and to phase out within five years the regulatory functions of the Philippine Overseas Employment Administration (POEA). Section 6 defined the crime of illegal recruitment and enumerated the acts constituting it, distinguishing between non-licensees or non-holders of authority and licensed recruiters. Section 7 prescribed penalties for prohibited acts, including imprisonment of not less than six years and one day but not more than twelve years and a fine of not less than ₱200,000 nor more than ₱500,000, with life imprisonment and a fine of not less than ₱500,000 nor more than ₱1,000,000 if the illegal recruitment constituted economic sabotage. Section 9 allowed the filing of criminal actions arising from illegal recruitment before the RTC of the province or city where the offense was committed or where the offended party actually resides. Section 10, in its second paragraph, held the corporate officers, directors, and partners of recruitment and placement agencies jointly and solidarily liable with the corporation or partnership for money claims and damages awarded to workers.

On August 21, 1995, respondent Philippine Association of Service Exporters, Inc. (PASEI) filed a petition for declaratory relief and prohibition before the RTC of Manila, seeking to annul Sections 6, 7, and 9 of R.A. 8042 for being unconstitutional. PASEI also sought to annul a portion of Section 10. The RTC of Manila, after hearing, declared Section 6 unconstitutional on the ground that its definition of illegal recruitment was vague as it failed to distinguish between licensed and non-licensed recruiters, giving undue advantage to non-licensed recruiters in violation of the right to equal protection. The RTC also declared Section 7 unconstitutional, reasoning that its sweeping application of penalties failed to distinguish as to the seriousness of the acts committed, and invalidated Section 9 on the ground that allowing offended parties to file criminal cases in their place of residence negated the general rule on venue, which is jurisdictional in penal laws and violates due process. The RTC likewise held the last sentence of the second paragraph of Section 10 unconstitutional, finding that absent sufficient proof that corporate officers and directors had knowledge of and allowed the illegal recruitment, automatic liability would violate their right to due process.

Meanwhile, on January 8, 2002, respondents Rey Salac, Willie D. Espiritu, Mario Montenegro, Dodgie Belonio, Lolit Salinel, and Buddy Bonnevie filed a petition for certiorari, prohibition, and mandamus before the RTC of Quezon City, Branch 96, seeking to nullify DOLE Department Order 10 and POEA Memorandum Circular 15, prohibit the DOLE, POEA, and TESDA from implementing the same and from further issuing rules regulating the recruitment and placement of OFWs, and to enjoin compliance with the deregulation policy under Sections 29 and 30. On March 20, 2002, the RTC granted the petition and ordered the government agencies to deregulate. In a parallel case, on February 12, 2002, respondents Asian Recruitment Council Philippine Chapter, Inc. (Arcophil) and others filed a similar petition before the RTC of Quezon City, Branch 220, which on March 12, 2002 granted the petition and enjoined the government agencies from exercising regulatory functions. The government officials filed petitions with the Supreme Court in G.R. 152642 and G.R. 152710, and on May 23, 2002, the Court issued TROs enjoining both RTC branches from enforcing their decisions.

On December 4, 2008, the Republic informed the Court that on April 10, 2007, former President Gloria Macapagal-Arroyo signed into law R.A. 9422, which expressly repealed Sections 29 and 30 of R.A. 8042 and adopted the policy of close government regulation of the recruitment and deployment of OFWs. On August 20, 2009, respondents Salac, et al. told the Court that they agreed with the Republic's view that the repeal rendered the issues they raised moot and academic.

Separately, the Cuaresma spouses filed a claim for death and insurance benefits and damages against Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon Services, Inc. (White Falcon) for the death of their daughter Jasmin Cuaresma while working as a staff nurse in Riyadh, Saudi Arabia. The Labor Arbiter dismissed the claim, crediting the Cuaresmas' receipt of insurance benefits from OWWA and the Saudi Arabian authorities' finding that Jasmin committed suicide. On appeal, the NLRC found Becmen and White Falcon jointly and severally liable, relying on the Cabanatuan City Health Office's autopsy finding that Jasmin died of criminal violence and rape. The Court of Appeals affirmed on June 28, 2006. On April 7, 2009, the Supreme Court found Jasmin's death not work-related and deleted the award of actual damages, but held Becmen's corporate directors and officers solidarily liable for the company's failure to investigate the true nature of her death, awarding the Cuaresmas ₱2,500,000 as moral damages, ₱2,500,000 as exemplary damages, attorney's fees of 10% of the total monetary award, and cost of suit. On July 16, 2009, Becmen's corporate directors and officers—Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio, and Eddie De Guzman—filed a motion for leave to intervene, questioning the constitutionality of the last sentence of the second paragraph of Section 10, R.A. 8042. The Court allowed the intervention on September 9, 2009. There was no mention of any evidence in the record that these intervenors were personally involved in their company's particular actions or omissions in Jasmin's case.

• Presumption of Constitutionality: Petitioners (the Republic and government officials) maintained that R.A. 8042 is a police power measure intended to regulate the recruitment and deployment of OFWs, aimed at curbing the injustices and abuses suffered by OFWs, and that every statute enjoys the presumption of constitutionality in the absence of a clear and unmistakable showing to the contrary.
• Validity of Section 6: Petitioners argued that Section 6's definition of illegal recruitment is clear and unambiguous and actually makes a distinction between licensed and non-licensed recruiters, contrary to the RTC of Manila's finding.
• Validity of Section 7: Petitioners contended that Congress was within its prerogative to determine what individual acts are equally reprehensible and deserving of the same penalties, consistent with the State policy of according full protection to labor, and that it is not within the power of the Court to question the wisdom of that choice.
• Validity of Section 9: Petitioners argued that there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6, as Section 15(a), Rule 110 of the Rules of Criminal Procedure expressly allows exceptions provided by law.
• Validity of Section 10: Petitioners maintained that the solidary liability of corporate directors and officers under Section 10 is not automatic, requiring a finding that they were remiss in directing the affairs of the company, such as sponsoring or tolerating illegal activities.
• Mootness of Deregulation Cases: Petitioners informed the Court that R.A. 9422 had expressly repealed Sections 29 and 30 of R.A. 8042, rendering the deregulation issues moot and academic.

• Vagueness of Section 6: Respondent PASEI argued that Section 6's definition of illegal recruitment is unconstitutionally vague because it fails to distinguish between licensed and non-licensed recruiters, giving undue advantage to non-licensed recruiters in violation of the right to equal protection of licensed operators.
• Disproportionate Penalties under Section 7: PASEI contended that Section 7's sweeping application of penalties failed to make any distinction as to the seriousness of the acts committed, unreasonably penalizing less condemnable acts such as failure to render a report or obstructing inspection with imprisonment of up to life imprisonment if committed by at least three persons.
• Due Process Violation under Section 9: PASEI argued that allowing offended parties to file criminal cases in their place of residence negates the general rule on venue of criminal cases, which is jurisdictional in penal laws, and violates the right to due process.
• Automatic Liability under Section 10: Intervenors Gumabay, et al. argued that the last sentence of the second paragraph of Section 10, which holds corporate directors and officers jointly and solidarily liable with their company, is unconstitutional because absent sufficient proof that such officers had knowledge of and allowed the illegal recruitment, making them automatically liable violates their right to due process.
• Deregulation Enforcement: Respondents Salac, et al. and Arcophil, et al. sought to nullify DOLE and POEA issuances regulating OFW recruitment and to compel the government to comply with the deregulation policy mandated under Sections 29 and 30 of R.A. 8042.

• Mootness of Deregulation Cases: Whether the repeal of Sections 29 and 30 of R.A. 8042 by R.A. 9422 rendered the petitions in G.R. 152642 and 152710 moot and academic.
• Vagueness of Section 6: Whether Section 6 of R.A. 8042, defining illegal recruitment, is unconstitutionally vague for failing to distinguish between licensed and non-licensed recruiters.
• Validity of Penalties under Section 7: Whether Section 7 of R.A. 8042, prescribing penalties for illegal recruitment, violates the right to equal protection by imposing uniform penalties without distinguishing the seriousness of the acts committed.
• Constitutionality of Alternative Venue under Section 9: Whether Section 9 of R.A. 8042, allowing the filing of criminal actions for illegal recruitment at the offended party's place of residence, violates due process and the general rule on venue of criminal cases.
• Constitutionality of Solidary Liability under Section 10: Whether the last sentence of the second paragraph of Section 10 of R.A. 8042, holding corporate officers and directors jointly and solidarily liable with their company for money claims and damages, is unconstitutional for violating due process.

• Mootness of Deregulation Cases: Yes. The petitions in G.R. 152642 and 152710 were dismissed as moot and academic, R.A. 9422 having expressly repealed Sections 29 and 30 of R.A. 8042, and respondents having agreed that the repeal rendered the issues moot.
• Vagueness of Section 6: No. Section 6 is constitutional; its definition of illegal recruitment is clear and unambiguous and actually distinguishes between licensed and non-licensed recruiters.
• Validity of Penalties under Section 7: No. Section 7 is constitutional; Congress was within its prerogative to fix uniform penalties for the enumerated acts, consistent with the State policy of according full protection to labor.
• Constitutionality of Alternative Venue under Section 9: No. Section 9 is constitutional; it is a valid statutory exception to the general rule on venue, expressly allowed by Section 15(a), Rule 110 of the Rules of Criminal Procedure.
• Constitutionality of Solidary Liability under Section 10: No. The provision is constitutional, but the solidary liability of corporate officers and directors is not automatic; it requires a finding that they were remiss in directing the affairs of the company, such as sponsoring or tolerating illegal activities.

• Mootness of Deregulation Cases: R.A. 9422, signed into law on April 10, 2007, expressly repealed Sections 29 and 30 of R.A. 8042 and adopted the policy of close government regulation of the recruitment and deployment of OFWs. On August 20, 2009, respondents Salac, et al. agreed with the Republic's view that the repeal rendered the issues moot and academic. The Court found no reason to disagree, as the repeal of the very provisions at issue eliminated any live controversy requiring adjudication. The two cases were accordingly dismissed.

• Vagueness of Section 6: The RTC of Manila found Section 6 unconstitutionally vague for failing to distinguish between licensed and non-licensed recruiters. The Court rejected this finding, holding that Section 6 is clear and unambiguous and actually makes the distinction. By its terms, persons who engage in canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers without the appropriate government license or authority are guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in the section. Recruiters with the appropriate license or authority, on the other hand, are guilty of illegal recruitment only if they commit any of the wrongful acts enumerated in Section 6. The definition thus differentiates the two classes of recruiters and does not give undue advantage to non-licensed recruiters.

• Validity of Penalties under Section 7: The RTC of Manila invalidated Section 7 for imposing uniform penalties without distinguishing the seriousness of the acts committed. The Court held that in fixing uniform penalties for each of the enumerated acts under Section 6, Congress was within its prerogative to determine what individual acts are equally reprehensible, consistent with the State policy of according full protection to labor. It is not within the power of the Court to question the wisdom of this choice. The legislative policy was further stressed by R.A. 10022, enacted in July 2010, which increased the penalties. The Court noted that the law considered the unsettling fact that OFWs work outside the country's borders and beyond its immediate protection, and must therefore be protected from conscienceless individuals willing to ship them out without clear assurance of fair and humane treatment. The State, under its police power, may prescribe regulations to secure the general welfare of the people and protect them against deception and fraud.

• Constitutionality of Alternative Venue under Section 9: The RTC of Manila invalidated Section 9 on the ground that allowing the filing of criminal actions at the offended party's place of residence negates the general rule on venue, which is jurisdictional in penal laws, and violates due process. The Court held that there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6 that differs from the venue established by the Rules on Criminal Procedure. Section 15(a), Rule 110 of the Rules of Criminal Procedure expressly provides that the criminal action shall be instituted and tried in the court of the municipality or territory where the offense was committed or where any of its essential ingredients occurred, "[s]ubject to existing laws." Section 9 of R.A. 8042, as an exception to the rule on venue, is consistent with the law's declared policy of providing a criminal justice system that protects and serves the best interests of the victims of illegal recruitment.

• Constitutionality of Solidary Liability under Section 10: The Quezon City RTC held the last sentence of the second paragraph of Section 10 unconstitutional, reasoning that absent proof that corporate officers and directors had knowledge of and allowed the illegal recruitment, automatic liability would violate due process. The Court upheld the provision's constitutionality but clarified, relying on MAM Realty Development Corp. vs. National Labor Relations Commission, that the liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of the company, such as sponsoring or tolerating the conduct of illegal activities. In the case of Becmen and White Falcon, while there was evidence that the companies were at fault in not investigating the cause of Jasmin's death, there was no evidence that intervenors Gumabay, et al. were personally involved in their company's particular actions or omissions in Jasmin's case. The Court accordingly reconsidered and set aside the portion of its prior decision holding the intervenors solidarily liable.

• Presumption of Constitutionality — Every statute has in its favor the presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of laws enacted by the Legislative Department. In the absence of a clear and unmistakable case that the statute is unconstitutional, the Court must uphold its validity. The Court applied this doctrine to uphold Sections 6, 7, 9, and 10 of R.A. 8042, finding no constitutional infirmity in any of them.

• Police Power — Police power is that inherent and plenary power of the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society. The State may prescribe such regulations as in its judgment will secure or tend to secure the general welfare of the people, to protect them against the consequence of ignorance and incapacity as well as of deception and fraud. The Court relied on this doctrine to sustain the penalties under Section 7 and the overall regulatory framework of R.A. 8042, noting that OFWs work outside the country's borders and beyond its immediate protection, requiring the law to protect them from conscienceless individuals within its jurisdiction.

• Solidary Liability of Corporate Officers — Not Automatic — The solidary liability of corporate directors and officers under Section 10 of R.A. 8042 is not automatic. To make them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of the company, such as sponsoring or tolerating the conduct of illegal activities. The Court applied this doctrine to set aside the solidary liability of intervenors Gumabay, et al., for lack of any finding that they personally participated in the acts or omissions imputed to their corporation.

• Statutory Exceptions to Venue in Criminal Cases — The general rule on venue of criminal cases, which requires that the action be instituted where the offense was committed or where any of its essential ingredients occurred, is subject to existing laws. Congress may fix alternative venues for specific offenses as exceptions to the general rule, provided the exception is consistent with a legitimate legislative policy. The Court applied this doctrine to uphold Section 9 of R.A. 8042, which allows the filing of illegal recruitment cases at the offended party's place of residence.

• "But 'illegal recruitment' as defined in Section 6 is clear and unambiguous and, contrary to the RTC's finding, actually makes a distinction between licensed and non-licensed recruiters." — This passage states the ratio decidendi for upholding Section 6 against the vagueness challenge, rejecting the lower court's finding that the provision failed to distinguish between the two classes of recruiters.

• "It is not within the power of the Court to question the wisdom of this kind of choice." — This passage articulates the principle of judicial deference to legislative determinations on penalties, a key rationale for upholding Section 7 against the equal protection challenge.

• "To make them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal activities." — This passage defines the controlling doctrine on the non-automatic nature of corporate officers' solidary liability under Section 10, the key clarification that led the Court to set aside the liability of intervenors Gumabay, et al.

• "The rule is settled that every statute has in its favor the presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of the laws enacted by the Legislative Department. Hence, in the absence of a clear and unmistakable case that the statute is unconstitutional, the Court must uphold its validity." — This passage states the canonical formulation of the presumption of constitutionality as applied to R.A. 8042, frequently cited in subsequent jurisprudence on judicial review of legislation.

• People vs. Ventura, 114 Phil. 162 (1962) — Cited as authority for the proposition that the State, under its police power, may prescribe regulations to secure the general welfare and protect the people against ignorance, incapacity, deception, and fraud. Followed in upholding the penalties under Section 7 of R.A. 8042.

• Rubi vs. Provincial Board of Mindoro, 39 Phil. 660 (1919) — Cited for the definition of police power as the inherent and plenary power of the State to prohibit all things hurtful to the comfort, safety, and welfare of society. Followed in sustaining the regulatory framework of R.A. 8042.

• MAM Realty Development Corp. vs. National Labor Relations Commission, 314 Phil. 838 (1995) — Cited as controlling authority for the principle that the solidary liability of corporate directors and officers is not automatic but requires a finding that they were remiss in directing the affairs of the company. Followed in setting aside the solidary liability of intervenors Gumabay, et al.

• People vs. Engr. Diaz, 328 Phil. 794 (1996) — Cited in a footnote for the definition of a non-licensee or non-holder of authority as any person, corporation, or entity which has not been issued a valid license or authority to engage in recruitment and placement, or whose license or authority has been suspended, revoked, or cancelled. Used to clarify the scope of Section 6's definition of illegal recruitment.

• Sections 29 and 30, R.A. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) — Mandated the DOLE to formulate a five-year comprehensive deregulation plan on recruitment activities and to phase out the regulatory functions of the POEA. These provisions were the subject of G.R. 152642 and 152710, but were rendered moot by their express repeal through R.A. 9422.

• R.A. 9422 — Signed into law on April 10, 2007, expressly repealed Sections 29 and 30 of R.A. 8042 and adopted the policy of close government regulation of the recruitment and deployment of OFWs. Its enactment rendered the deregulation cases moot and academic.

• Section 6, R.A. 8042 — Defined the crime of illegal recruitment and enumerated the acts constituting it, distinguishing between non-licensees or non-holders of authority and licensed recruiters. Upheld as constitutional; the Court found the definition clear and unambiguous, contrary to the RTC of Manila's finding of vagueness.

• Section 7, R.A. 8042 — Prescribed penalties for illegal recruitment, including imprisonment of six years and one day to twelve years and fines of ₱200,000 to ₱500,000, with life imprisonment and fines of ₱500,000 to ₱1,000,000 for economic sabotage. Upheld as constitutional; Congress was within its prerogative to fix uniform penalties for the enumerated acts.

• Section 9, R.A. 8042 — Allowed the filing of criminal actions arising from illegal recruitment before the RTC where the offense was committed or where the offended party actually resides. Upheld as a valid statutory exception to the general rule on venue, consistent with Section 15(a), Rule 110 of the Rules of Criminal Procedure.

• Section 10, second paragraph, last sentence, R.A. 8042 — Held the corporate officers, directors, and partners of recruitment and placement agencies jointly and solidarily liable with the corporation or partnership for money claims and damages awarded to workers. Upheld as constitutional, but the Court clarified that such liability is not automatic and requires a finding of personal involvement or negligence.

• Section 15(a), Rule 110, Rules of Criminal Procedure — Provided that the criminal action shall be instituted and tried in the court of the municipality or territory where the offense was committed or where any of its essential ingredients occurred, "[s]ubject to existing laws." Cited to support the validity of Section 9's alternative venue as a permissible statutory exception.

• Article 13(f), Presidential Decree No. 442 (Labor Code of the Philippines) — Referenced in Section 6 of R.A. 8042 as the source of the concept of a non-licensee or non-holder of authority for purposes of defining illegal recruitment.

Chief Justice Maria Lourdes P. A. Sereno, Associate Justice Antonio T. Carpio, Associate Justice Presbitero J. Velasco, Jr., Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Arturo D. Brion, Associate Justice Diosdado M. Peralta, Associate Justice Lucas P. Bersamin, Associate Justice Mariano C. Del Castillo, Associate Justice Martin S. Villarama, Jr., Associate Justice Jose Portugal Perez, Associate Justice Jose Catral Mendoza, Associate Justice Bienvenido L. Reyes, and Associate Justice Estela M. Perlas-Bernabe.