Case Summary (G.R. No. 161757)
Key Dates
- Contract effective: February 1, 1997 (one‑year contract).
- Original contract expiration: February 1, 1998.
- Complainant’s return to the Philippines: February 4, 2000.
- Complaint filed with NLRC: February 14, 2000.
- Summons to Sunace for mandatory conference: February 15, 2000 (conference set for February 28, 2000).
- Position Paper of complainant filed: April 6, 2000.
- Labor Arbiter decision: October 9, 2000 (ordered Sunace and owner to pay NT91,950.00 equivalent plus 10% attorney’s fees).
- NLRC Resolution affirming Labor Arbiter: April 30, 2002.
- Court of Appeals denial of certiorari: November 12, 2002 (reconsideration denied January 14, 2004).
- Supreme Court decision reversing prior rulings and dismissing the complaint: January 25, 2006.
Applicable Law and Constitutional Basis
Because the Supreme Court decision was rendered in 2006, the case is governed by the 1987 Philippine Constitution. The analysis and disposition were grounded principally on agency and contract doctrines under the New Civil Code (cited: Articles 1311 and 1924 are relied upon in the decision), and doctrinal principles concerning imputed knowledge between principals and agents as developed in Philippine jurisprudence.
Factual Background and Claim
Divina alleged that, under the original one‑year contract and an alleged two‑year extension entered into while in Taiwan, income tax and savings deductions were made for 1997, 1998, and 1999. She claimed that 1998 and 1999 deductions were not refunded. After her return to the Philippines, she filed a complaint before the NLRC asserting wrongful detention and underpayment, seeking refund of withheld amounts and related reliefs. Sunace responded denying liability, asserting either that deductions had been refunded or were lawful under Taiwanese law, and initially claimed the two‑year extension was without its knowledge and consent, attaching documents including a purported Waiver/Quitclaim and Affidavit of Desistance.
Positions of the Parties
- Complainant (Divina): Sought refund of unrefunded deductions (tax and savings) for the years 1998 and 1999, asserting these arose under the extended employment relationship.
- Petitioner (Sunace): Asserted (1) it was not liable for alleged withheld savings because such amounts were already returned; (2) it had no liability for the extension because the two‑year extension was entered into without Sunace’s knowledge or consent; (3) deductions were consistent with Taiwanese law and thus outside Sunace’s control; and (4) documents (Waiver/Quitclaim and Affidavit) negated liability. Sunace reserved the right to file supplemental pleadings.
Labor Arbiter’s Findings and Rationale
The Labor Arbiter rejected Sunace’s disclaimer of knowledge and its reliance on the Waiver/Quitclaim and Affidavit of Desistance. The Arbiter found that continuing communications between Sunace and broker Edmund Wang undermined Sunace’s claim of non‑consent to the extension and reasoned that, because Sunace did not formally notify the POEA of objection to the extension, it was presumed to have consented and thus was liable for consequences of the extension. The Arbiter also struck down the out‑of‑court settlement documents for failing to show consideration and for not having been entered with the Labor Arbiter’s approval as required for settlements in pending labor cases. The Arbiter ordered Sunace and its owner (in personal capacity and as agent of Hang Rui Xiong/Edmund Wang) to pay NT91,950.00 (peso equivalent) plus 10% attorney’s fees.
NLRC and Court of Appeals Decisions
The NLRC affirmed the Labor Arbiter’s decision. The Court of Appeals, in an early denial of certiorari, agreed with the view that Sunace was “continually communicating with” the foreign employer (as the CA put it) and that, as agent of the foreign principal, Sunace could not profess ignorance of the contract extension; the CA held that the act of the principal extending employment necessarily bound the agent. The CA concluded that grave abuse of discretion was not shown in the NLRC’s affirmation.
Supreme Court’s Reassessment of the Evidence (Telefax)
The Supreme Court carefully examined the sole communication relied upon to support a finding of continuous communication: a telefax from the Taiwanese broker Edmund Wang to Sunace dated February 21, 2000. The fax, on its face, reported only that the employer had told the broker that the complainant had already taken back her savings and that no money had been deducted from her salary, and that the employer would check again if needed. The Court emphasized that this message did not demonstrate Sunace’s knowledge of, or consent to, any contractual extension executed after February 1, 1998. The Court also observed that the fax was sent after summons had been issued to Sunace (i.e., in the context of litigation), thus plausibly being merely informational rather than evidencing prior consent to an extension.
Legal Analysis — Imputed Knowledge and Agency Doctrine
The Supreme Court found that the CA had misapplied the doctrine of imputed knowledge. The doctrine imputes an agent’s knowledge to the principal (i.e., knowledge of the agent is attributed to the principal), not the reverse. The CA’s reasoning—that as agent Sunace could not claim ignorance of the principal’s act—inverted the doctrine: it effectively attempted to impute the principal’s knowledge to the agent. The Court held that absent proof that Sunace itself knew of and consented to the extension, the principle of imputed knowledge did not render Sunace liable for the foreign principal’s unilateral acts. The Court relied on established jurisprudence to support the correct application of the imputed‑knowledge doctrine.
Legal Analysis — Contractual Effect and Agency Revocation
The Supreme Court applied Article 1311 of the Civil Code to affirm the general rule that contracts take effect only between the parties and their assigns/heirs, except where rights or obligations are legally transmissible. Because the extension was an agreement between the foreign principal and the domestic worker, Sunace was not automatically bound unless it had assented or its agency continued to cover such negotiations. Further, the Court relied on Article 1924 of the Civil Code, which provides that agency is revoked when the principal directly manages the business entrusted to the agent by dealing directly with third persons. The Court interpreted the evidence to show an implied revocation of S
Case Syllabus (G.R. No. 161757)
Facts of the Case
- Petitioner is Sunace International Management Services, Inc. (Sunace), a corporation duly organized and existing under Philippine law.
- Respondent-complainant is Divina A. Montehermozo (Divina), who was deployed to Taiwan as a domestic helper under a 12-month contract effective February 1, 1997. [1]
- The deployment was facilitated by a Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd.
- After the one-year contract expired on February 1, 1998, Divina continued working for her Taiwanese employer, Hang Rui Xiong, for two additional years, and then returned to the Philippines on February 4, 2000.
- On or about February 14, 2000, Divina filed a complaint before the NLRC against Sunace, one Adelaide Perez, the Taiwanese broker, and her foreign employer alleging that she was jailed for three months and was underpaid. [2]
- Summons was issued to Sunace on February 15, 2000, directing appearance for a mandatory conference initially scheduled for February 28, 2000. [3]
- Divina filed a Position Paper on April 6, 2000, asserting that under her original one-year contract and the subsequent two-year extension (allegedly with Sunace’s knowledge and consent), the following amounts representing income tax and savings were deducted:
- 1997: Income Tax NT10,450.00; Savings NT23,100.00
- 1998: Income Tax NT9,500.00; Savings NT36,000.00
- 1999: Income Tax NT13,300.00; Savings NT36,000.00
- She alleged that 1997 amounts were refunded but the amounts deducted in 1998 and 1999 were not. [4][5]
- Sunace filed a Verified Answer and Position Paper on April 6, 2000, through Proprietor/General Manager Maria Luisa Olarte, denying liability and contending (inter alia) that:
- Complainant was not entitled to a refund of her "24 months savings" because she had already taken back her savings the previous year; respondent’s employer Jet Crown International Co. Ltd. had confirmed no deductions; a facsimile by Jet Crown was attached as Annex "2". [6]
- There was no basis for tax refund claims or attorney’s fees because Divina completed her one-year contract and was not illegally dismissed; tax deductions complied with Taiwanese law and Sunace had no control over Taiwanese taxation and the NLRC had no jurisdiction to intervene on sovereign taxation. [6]
- Sunace reserved the right to file supplemental pleadings. (Emphasis and underscoring in original.) [6]
- On April 25, 2000, Sunace filed an "answer to complainant's position paper" asserting that the alleged two-year extension of Divina’s contract was without Sunace’s knowledge and consent, and attaching copies of a Waiver/Quitclaim and Release of Responsibility and an Affidavit of Desistance executed by Divina. [7]
- Divina replied with a two-page reply, without refuting Sunace’s disclaimer regarding knowledge of the contract extension and without addressing the Waiver/Quitclaim and Affidavit of Desistance. [8]
Labor Arbiter’s Findings and Rationale
- The Labor Arbiter rejected Sunace’s contention that the two-year extension was without its knowledge and consent, reasoning that Annex "B" (a telefax message) showed continuing communication between Sunace and Edmund Wang and that Sunace had not categorically established non-consent. [9][10]
- The Labor Arbiter stated that Sunace should have written to POEA and notified the complainant, the foreign employer, and the broker to object to any extension; failure to do so led to a presumption of consent and consequent liability for results of the extension. [10]
- The Labor Arbiter also rejected Sunace’s reliance on the Waiver/Quitclaim and Affidavit of Desistance, explaining that:
- Any agreement settling the dispute must be reduced to writing and signed by the parties and their counsel, if any, before the Labor Arbiter; the settlement must be approved by the Labor Arbiter after determining it was voluntarily entered into and its terms explained.
- A compromise agreement reached outside the presence of the Labor Arbiter must be approved by him after confronting the parties and being satisfied of voluntariness and that it is not contrary to law, morals, or public policy.
- Because no consideration was indicated in the documents, they were struck down as contrary to law, morals, and public policy. (Citations omitted.) [11]
- The Labor Arbiter rendered judgment in favor of Divina on October 9, 2000, ordering Sunace and its owner Adelaida Perge, in their personal capacities and as agent of Hang Rui Xiong/Edmund Wang, to jointly and severally pay Divina NT91,950.00 in peso equivalent as refund, plus 10% attorney’s fees, because Divina was compelled to litigate and had to engage counsel. [12][13]
NLRC Resolution
- On appeal, the National Labor Relations Commission, by Resolution dated April 30, 2002, affirmed the Labor Arbiter’s decision. [14]
- The NLRC found that Sunace impliedly consented to the extension of Divina’s contract, noting uninterrupted communication with the private respondent’s foreign employer (sic) and reasoning that as agent of the foreign principal, petitioner could not profess ignorance of such an extension which would bind it. [10][14] (NLRC records excerpts summarized.)
Court of Appeals Proceedings and Resolution
- Sunace filed a petition for certiorari to the Court of Appeals. [15]
- The Court of Appeals dismissed the petition outright by Resolution dated November 12, 2002, concluding that the petition failed to allege facts constitutive of grave abuse of discretion amounting to lack of jurisdiction. [16][17]
- The Court of Appeals stated that it was undisputed that petitioner was continually communicating with the private respondent’s foreign employer (sic) and, as agent of the foreign principal, petitioner could not profess ignorance of the extension because the principal’s act of extending complainant’s employment contract necessarily bound it. [16][17]
- Sunace’s