Trans Action Overseas Corporation vs. Secretary of Labor

The power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested in the POEA and the Secretary of Labor, pursuant to Article 35 of the Labor Code, as amended, and the cancellation of a recruitment license may rest on that statutory provision alone, independent of the POEA Schedule of Penalties.

Trans Action Overseas Corporation is a private fee-charging employment agency authorized to engage in overseas placement and recruitment of workers. Private respondents are individuals who sought employment as domestic helpers in Hong Kong through petitioner's employees. The legal framework governing overseas employment was reorganized through Executive Order No. 797 and Executive Order No. 247, which established the Philippine Overseas Employment Administration (POEA) and vested it with the functions formerly exercised by the Overseas Employment Development Board (OEDB), the National Seamen Board (NSB), and the overseas employment function of the Bureau of Employment Services (BES). Article 35 of the Labor Code, as amended, confers upon the Secretary of Labor the power to suspend or cancel any license or authority to recruit employees for overseas employment.

From July 24 to September 9, 1987, Trans Action Overseas Corporation, a private fee-charging employment agency, conducted recruitment activities in Iloilo City for alleged job vacancies in Hong Kong. Private respondents sought employment as domestic helpers through petitioner's employees, namely Luzviminda Aragon, Ben Hur Domincil, and his wife Cecille Domincil. The applicants paid placement fees ranging from ₱1,000.00 to ₱14,000.00, but petitioner failed to deploy them. Their demands for refund proved unavailing, prompting them to file complaints against petitioner for violation of Articles 32 and 34(a) of the Labor Code, as amended.

Petitioner denied having received the amounts allegedly collected from respondents. It averred that Aragon, whose only duty was to pre-screen and interview applicants, and the spouses Domincil were not authorized to collect fees from the applicants, and accordingly it could not be held liable for the money claimed. Petitioner maintained that it had even warned respondents not to give any money to unauthorized individuals. POEA Regional Extension Unit Coordinator Edgar Somes testified that although he was aware petitioner collected fees from respondents, the latter insisted on making payments on the assumption that it could hasten their deployment abroad. Somes added that Mrs. Honorata Manliclic, a representative of petitioner tasked to oversee the conduct of interviews, told him she was leaving behind presigned receipts to Aragon as she could not stay in Iloilo City for the screening. Manliclic denied this version and argued that it was Somes who instructed her to leave the receipts behind, claiming it was perfectly acceptable to collect fees.

On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered an order finding petitioner liable for twenty-eight counts of violation of Article 32 and five counts of Article 34(a) of the Labor Code, with a corresponding aggregate suspension period of sixty-six months. Because any suspension amounting to twelve months merits cancellation under the schedule of penalties, petitioner's license to participate in overseas placement and recruitment was ordered cancelled. Petitioner's motion for reconsideration was denied on January 30, 1992, and the cancellation order was reinstated.

• Jurisdiction over License Cancellation: Petitioner contended that the POEA has the exclusive and original jurisdiction to hear and decide illegal recruitment cases, including the authority to cancel recruitment licenses. It theorized that when the POEA absorbed the powers of the OEDB, NSB, and the overseas employment function of the BES pursuant to E.O. No. 797 and E.O. No. 247, Article 35 of the Labor Code, as amended, was rendered ineffective.
• Validity of Schedule of Penalties: Petitioner alternatively argued that the cancellation order based on the 1987 POEA Schedule of Penalties is invalid for non-compliance with the Revised Administrative Code of 1987 regarding its registration with the U.P. Law Center.

• Jurisdiction to Cancel License: Whether the Secretary of Labor and Employment has jurisdiction to cancel or revoke the license of a private fee-charging employment agency, or whether such power belongs exclusively to the POEA.
• Validity of the Schedule of Penalties: Whether the 1987 POEA Schedule of Penalties is invalid for non-registration with the U.P. Law Center under the Revised Administrative Code of 1987, such that it cannot serve as basis for the cancellation order.

• Jurisdiction to Cancel License: Yes. The power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested in the POEA and the Secretary of Labor, pursuant to Article 35 of the Labor Code, as amended.
• Validity of the Schedule of Penalties: No invalidity found. The cancellation of petitioner's license was based on Article 35 of the Labor Code itself, not on the 1987 POEA Schedule of Penalties, which merely detailed the administrative sanctions for enumerated prohibited acts.

• Jurisdiction to Cancel License: Article 35 of the Labor Code, as amended, expressly vests in the Secretary of Labor the power to suspend or cancel any license or authority to recruit employees for overseas employment for violations of applicable rules, laws, and regulations. The Court found that the creation of the POEA through E.O. No. 797 and E.O. No. 247 did not render Article 35 ineffective. In Eastern Assurance and Surety Corp. vs. Secretary of Labor, the Court had already recognized that the Secretary of Labor possesses the authority under Article 35 to apply sanctions of suspension and cancellation, and further possesses rule-making power under Article 36 to regulate recruitment activities. Pursuant to that rule-making power, the Secretary of Labor delegated to the POEA the authority to conduct proceedings for suspension or cancellation, and the POEA Administrator was empowered to recommend cancellation to the Secretary. In People vs. Diaz, the Court likewise recognized that a license may be suspended, revoked, or cancelled by either the POEA or the Secretary. The Court accordingly ruled that the power is concurrently vested in both bodies, and petitioner's theory that Article 35 was rendered ineffective by the POEA's creation was rejected.

• Validity of the Schedule of Penalties: The Court agreed with Secretary Confesor's explanation that the POEA Revised Rules on the Schedule of Penalties was issued pursuant to Article 34 of the Labor Code, as amended, and merely amplified and particularized the various violations of POEA rules, clarifying and specifying the penalties therefor. The schedule contains only a listing of offenses and does not prescribe additional rules governing overseas employment. Under the circumstances, the cancellation of petitioner's license rested on the authority of Article 35 of the Labor Code, as amended, and not on the 1987 POEA Revised Rules on Schedule of Penalties, rendering petitioner's challenge to the latter's validity moot as a basis for the cancellation.

• Concurrent Jurisdiction over Recruitment License Sanctions — The power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested in the POEA and the Secretary of Labor and Employment. Article 35 of the Labor Code, as amended, expressly confers this power on the Secretary of Labor, and the creation of the POEA did not divest the Secretary of that authority. The POEA's authority derives from the Secretary's rule-making power under Article 36, pursuant to which the Secretary delegated to the POEA the conduct of proceedings for suspension or cancellation, with the POEA Administrator empowered to recommend cancellation to the Secretary.

• Nature of the POEA Schedule of Penalties — The POEA Revised Rules on the Schedule of Penalties, issued pursuant to Article 34 of the Labor Code, merely amplifies and particularizes violations of POEA rules and specifies the administrative sanctions imposable. It does not prescribe additional rules and regulations governing overseas employment but only details penalties for enumerated prohibited acts. A cancellation of a recruitment license may therefore rest on Article 35 of the Labor Code itself, independent of the Schedule of Penalties.

• "The power to suspend or cancel any license or authority to recruit employees for overseas employment is vested upon the Secretary of Labor and Employment." — This passage states the textual basis of the Secretary's authority under Article 35 of the Labor Code, anchoring the Court's ruling on concurrent jurisdiction.

• "In view of the Court's disposition on the matter, we rule that the power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested with the POEA and the Secretary of Labor." — This is the ratio decidendi on the jurisdictional issue, establishing the doctrine of concurrent authority that resolves the petitioner's primary contention.

• "Under the circumstances, the license of the respondent agency was cancelled on the authority of Article 35 of the Labor Code, as amended, and not pursuant to the 1987 POEA Revised Rules on Schedule of Penalties." — This passage resolves the alternative issue by clarifying the statutory basis for the cancellation, rendering the challenge to the Schedule of Penalties immaterial.

• Eastern Assurance and Surety Corp. vs. Secretary of Labor, 181 SCRA 110 (1990) — Controlling precedent. The Court therein recognized that the Secretary of Labor has the power under Article 35 to apply sanctions of suspension and cancellation, and under Article 36 the authority to regulate recruitment activities and promulgate implementing rules, pursuant to which the Secretary delegated proceedings authority to the POEA.

• People vs. Diaz, 259 SCRA 441 (1996) — Followed. The Court therein acknowledged that a license or authority may be suspended, revoked, or cancelled by either the POEA or the Secretary of Labor, supporting the doctrine of concurrent jurisdiction.

• Article 32, Labor Code — Provides that any person applying with a private fee-charging employment agency shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment, and that such fee shall be covered with an appropriate receipt. Petitioner was found liable for twenty-eight counts of violation of this article for collecting placement fees without deploying the applicants.

• Article 34(a), Labor Code — Prohibits any individual, entity, licensee, or holder of authority from charging or accepting, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor. Petitioner was found liable for five counts of violation of this provision.

• Article 35, Labor Code (as amended) — Vests in the Secretary of Labor the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations, applicable laws, General Orders, and Letters of Instructions. The Court held that this provision remained effective notwithstanding the creation of the POEA, and the cancellation of petitioner's license rested on this statutory authority.

• Executive Order No. 797 — Created the POEA. Petitioner argued that the POEA's creation rendered Article 35 ineffective; the Court rejected this theory.

• Executive Order No. 247 — Reorganized the POEA and mandated it to assume the functions of the OEDB, NSB, and the overseas employment function of the BES. The Court found that this reorganization did not divest the Secretary of Labor of the power conferred by Article 35.

Regalado, Puno, Mendoza, and Torres, Jr., JJ., concurred.