Conflicting Findings of Facts: The Sentosa Nurses Cases

By Rico Foz*

“The State shall afford full protection to labor, local and overseas.”*
(Section 3, Art. XIII, Philippine Constitution)

The New York Supreme Court Appellate Division issued on January 13, 2009 its decision prohibiting the Suffolk County District Attorney from prosecuting the Avalon 10 nurses and their labor lawyer. It made findings of facts that conflicted with findings of facts made by Philippine government agencies in related cases. The Philippine agencies’ findings did not rule in favor of former Sentosa nurses. The New York court decision did. This discrepancy has led not a few from the Filipino-American community to ask: “Can we really expect the Philippine government to uphold the dignity and fundamental human rights of labor? Or shall we look instead to a foreign court to render justice to Filipino migrant workers?”

Background

Back in 2006, the former Sentosa nurses filed complaints against Sentosa Recruitment Agency (SRA), its Philippine-based recruiter, and its nursing home-principals for misrepresentation in the recruitment process and for contract-substitution. The nurses submitted to the Philippine Overseas Employment Administration (POEA) documentary as well as testimonial evidence to the effect that their recruiter had misrepresented to them the nature of their employment in the United States. They argued that their recruiter had represented that each nurse would be directly-hired by his or her respective contracting employer. The contracting employers were the various nursing home facilities accredited by the POEA as SRA’s principals. Each nurse and a particular nursing home-employer signed a three-year employment agreement. Upon the nurses’ arrival in the United States, they were not offered employment by their respective contracting employers. Instead, they found employment with Prompt Nursing Employment Agency, doing business as Sentosa Services. The nurses learned to their surprise that Francris Luyun, SRA’s proprietor, was himself working in New York as the international recruiter for Prompt/Sentosa Services. Prompt/Sentosa Services thereafter assigned the nurses to work at various nursing home facilities managed by Sentosa Care, LLC, a healthcare management company owned by Bent Philipson.

The nurses likewise filed money claims and constructive dismissal complaints against SRA’s principals before the National Labor Relations Commission (NLRC). They also filed illegal recruitment complaints before the Philippine Department of Justice (DOJ) against Luyun, SRA and its officers, and Philipson.

The POEA Decision

The POEA dismissed the complaints filed by the nurses in Elmer Jacinto et al. v. Sentosa Recruitment Agency et al., POEA Case No. RV-06-05-0713 and DAE-06-05-0551.

It found the following facts to have been allegedly “established by the records”:

1. “ Sentosa Recruitment Agency is a duly licensed recruitment agency of this Administration.

2. There is a Recruitment Agreement between Sentosa Recruitment Agency and Sentosa Care LLC.

3. Sentosa Care LLC has individual Special Power of Attorneys from each of its affiliates, authorizing Sentosa Care LLC to represent the affiliate in any transaction relative to the recruitment of Filipino workers, and all of it business operations.

4. Each of the affiliates, to which Sentosa Care LLC has individual Special Power of Attorney, are all identified and listed in the official website of the Sentosa Recruitment Agency and Sentosa Care LLC.

5. The notice/information as published in the official website of Sentosa Recruitment Agency is for the Filipino nurses to work in the biggest privately owned healthcare group in downstate New York – Sentosa Care Group – also referring to the Sentosa Care LLC.

6. Complainants were deployed with the Sentosa Care Group using EB-3 visas, obtained by Sentosa Recruitment Agency, totally at no cost to the complainants.”

The POEA ruled that “as to alleged misrepresentation relating to publication of false information, this Administration finds that no such false information was published in flyers or advertised in the websites that will constitute the alleged misrepresentation.” It reasoned that “Sentosa Care LLC as the managing company … entered into a Recruitment Agreement with Sentosa Recruitment Agency for and in behalf of each affiliated companies who in turn executed individual special power of attorneys in favor of Bent Philipson as Managing Partner and Chief Operating Officer of Sentosa Care LLC.”

The POEA found that “Sentosa Recruitment Agency is the local agency of the direct foreign principal which is the Sentosa Care LLC and its affiliated companies. It is not Prompt Nursing Employment Agency, Sentosa Services and Home Care Center, Inc. The fact that they receive their salaries from the aforementioned three entities does not make them their employers because the Sentosa Care Group is merely outsourcing the services of these entities for its payroll, purchasing and other administrative operations and all the facilities under respondent Sentosa Care closely coordinate with the outsourcing company on its operations.”

It ruled that “the fact that the complainants were made to work for a facility different from that appearing in their OECs and in their POEA approved contracts does not make for a case of misrepresentation. What is more important to consider is the fact that all the facilities from where they were made to work are all affiliated companies managed by Sentosa Care LLC and they are all duly registered with POEA as affiliates.”

It further ruled that “complainants failed to prove that because of their assignment to a healthcare facility different from that appearing in their DOLE approved contract there was diminution of their benefits and privileges.”

The NLRC Decision

The nurses’ money claims and constructive dismissal complaints were assigned to the Executive Labor Arbiter, who, on January 24, 2008, dismissed the complaints (Juliet Anilao et al. v. Sentosa Recruitment Agency et al., NLRC OFW Case Nos. (L) 06-05-01397-00 and (L) 06-12-03784-00).

The Executive Labor Arbiter made the following findings:

1. “…(E)xcept for the last batch of complainants, who gave two or four days notice, all other complainants tendered their respective resignations en mass, either before or after their respective shifts to take effect immediately. In short, there was no sufficient notice given to their employer.

2. Under the employment contracts, the employees, herein complainants, agree to be employed for three years. It is also stipulated that after three (3) years of employment, the employer and the employees agree to give each other two (2) weeks notice of intent before terminating their employment.

3. If, under their agreement for employment, the parties have agreed to give each others at least two (2) weeks notice of intent before terminating their employment after the three years expiration of their contract, with more reason that the complainants-employees should have given their employer sufficient time inorder to find their replacement inasmuch as the nurses pre-terminated their employment contracts.

4. Under art. 285 (a) of the Labor Code, as amended, it is necessary that service of notice of the termination or resignation letter to the employer must be made at least one (1) month in advance….Unfortunately, this was not observed by the complainants, thus constituting a clear violation of the aforequoted provision of the Labor Code. All told, complainants herein who tendered their voluntary resignation cannot claim that they were constructively dismissed.”

The DOJ Decision

Like the POEA and the NLRC, the Philippine DOJ, in Elmer Jacinto et al. v. Bent Philipson et al., I.S. Nos. 2006-472, summarily dismissed the illegal recruitment complaints. It found, thus:

“… (T)here was no substantive alteration in the employment contracts signed by the complainants to sustain findings of illegal recruitment against the respondents. It is clear that what happened was that respondents for one reason or another, failed to fully comply and fully implement the stipulations entered into by both parties. Respondents’ failure to fully comply with the stipulations in their contracts or the alleged breach of their contracts may warrant an action which is civil in nature, but definitely, not a criminal action.”

The NY Supreme Court Appellate Division’s Decision

The Appellate Division of the New York Supreme Court, in issuing the extraordinary writ of prohibition in the case of Matter of Vinluan v Doyle, __A.D.3d __, 2009 WL 93065 (2d. Dept. Jan. 13, 2009), made the following findings of facts:

1. The nurses “were recruited to work in the United States by the Sentosa Recruitment Agency, a Philippine-based company that hires nurses for several nursing care facilities in New York”.

2. “Each of the nurses signed an employment contract with the specific nursing homes for which they had been selected to work.”

3. “When the nurses arrived in the United States, they learned that they would be working for an employment agency instead of the specific nursing homes they had signed contracts with.”

4. “The nurses alleged that almost immediately, … issues arose concerning the terms of their employment, and the promises made to them in the Philippines were breached.”

5. “The nurses resigned from their employment either at the end of their shift, or in advance of their next shift, using an identical form letter which they had agreed upon together.”

6. “Following an investigation, on September 28, 2006, the Education Department closed the nurses’ cases, concluding that they had not committed professional misconduct because none of them had resigned in mid-shift, and no patients were deprived of nursing care since the facility was able to obtain appropriate coverage.”

7. “The prosecution has the practical effect of exposing the nurses to criminal penalty for exercising their right to leave their employment at will.”

POEA and NY Appellate Division’s Decisions

The POEA decision admits that the nurses individually signed employment agreements with accredited nursing home principals of SRA. It however concludes that the actual employer was Sentosa Care Group or Sentosa Care, LLC, the healthcare management company. The nursing employment agency (Prompt/Sentosa Services) was allegedly only a payroll company. That the nurses were made to work in facilities different from their contracting employers was inconsequential as their actual worksite-facilities were likewise facilities affiliated with Sentosa Care Group (or Sentosa Care, LLC).

The NY Court’s decision likewise found the nurses to have entered into employment agreements with specific nursing home facilities. It differs from the POEA decision in that it understands the non-provision by the contracting employers of employment to the contracted nurses as a “breach” of the employment agreements. It found Prompt/Sentosa Services as the at-will employer of the nurses. As at-will employees, the nurses had the right to resign at anytime, except in the middle of their work shifts. Prosecuting the nurses for exercising their right to resign as at-will employees impermissibly criminalizes their protected labor activity in violation of the 13th Amendment.

Critique on the POEA Decision

The POEA decision finds its fulcrum on the alleged findings of fact that there was a recruitment agreement between SRA and Sentosa Care, LLC, and that Sentosa Care, LLC has a special power of attorney from each of its affiliated nursing home facilities. The nurses’ lawyers claim that neither the recruitment agreement nor the special power of attorneys was submitted during the proceedings. The findings are simply not supported by the records of the case. Even assuming these findings to be grounded in reality, the fact remains that each nurse entered into an employment agreement with a nursing home facility-principal of SRA. The nurses did not sign up with Sentosa Care Group. Each one of them was induced to be recruited by SRA’s representation that each recruit would be directly-hired by his/her contracting employer. They were not informed that they would be working for Sentosa Care Group. In fact, Sentosa Care Group or Sentosa Care, LLC is not even an accredited principal of SRA.

POEA conveniently dismissed the nurses’ contention that Prompt/Sentosa Services was their actual employer, and not merely a payroll company. The decision did not bother to discuss the elements of employer-employee relationship. It ignored the voluminous documentary evidence submitted by the nurses proving their having been employed, not by a nursing home facility nor by Sentosa Care, LLC, but by Prompt Nursing Employment Agency/Sentosa Services.

The Role of Prompt Nursing Employment Agency

In its brazen attempt not to find employer-employee relationship between the nurses, on one hand, and Prompt or Sentosa Services, on the other hand, the POEA characterized Prompt/Sentosa Services’ role as merely that of a payroll company. Documentary evidence was however submitted by SRA itself that belied this finding. SRA submitted a copy of the Complaint filed by Sentosa’s Philipson in Nassau County Supreme Court entitled Sentosa Care, LLC et al. vs Anilao et al., Index No. 006079/06. Prompt Nursing Employment Agency is one of the named plaintiffs in this civil case. Pertinent paragraphs of the Complaint support the nurses’ contention that Prompt, in collusion with SRA, violated POEA rules and regulations on illegal recruitment.

Paragraphs 12, 16, 17, 18 and 19 of the Complaint state, thus:

“ x x x.

12. Prompt is a New York corporation with its principal place of business located at 204 Broadway, Brooklyn, NY 11211, engaged in the recruitment and placement of nurses and other healthcare workers with employers.

x x x.

16. Representatives of Prompt traveled to the Philippines and recruited the Nurses, many of whom had little or no experience working as nurses, to work at the Sentosa Facilities.

17. Among other things, Prompt financed the Nurses’ travel expenses to come to the United States, provided them with housing for two months at no cost, provided them with several weeks of orientation, training, financed the licensing process with the New York Department of Education and financed the immigration process to enable them to enter, work and remain in the United States.

18. Prompt informed the Nurses in advance that they would be expected to work --- initially at a reduced rate of compensation which would be increased from time to time.

19. Upon commencement of their employment, the Nurses were also given health care coverage, two weeks vacation and an extra week to study and prepare for licensing tests.

x x x.”

The judicial admissions by Prompt that it traveled to the Philippines and recruited nurses manifestly reveal its true role. As a “recruitment and placement” agency, it colluded with SRA, which was owned by its own employee/independent contractor Francris Luyun, to recruit Filipino nurses and assign them elsewhere, which in this case, would be the various Sentosa-afiliated facilities. Prompt was not merely a payroll company. It actually employed the recruited nurses whom it “placed” or assigned to work at the various Sentosa facilities.

At the outset, SRA and Luyun knew that the recruited nurses would not be working for the contracting nursing home-employers. SRA and Luyun knew that the nurses would be working for a nursing agency – Prompt/Sentosa Services. Luyun clearly misrepresented this fact to the detriment of the nurse-recruits.

Furthermore, by Prompt’s judicial admission, the POEA should have found that SRA and Prompt violated POEA rules and regulations concerning who can recruit in the Philippines. Prompt/Sentosa Services is neither a licensed recruitment agency in the Philippines nor an accredited principal of SRA. Why should it recruit or be allowed to recruit then in the Philippines? Prompt’s recruitment activities in the Philippines constituted a flagrant violation of Philippine recruitment rules and regulations.

NLRC and NY Appellate Division Decisions

Like the POEA decision, the NLRC decision did not bother to analyze whether or not Prompt/Sentosa Services was indeed the actual employer of the nurses. It unjustifiably presumed that the nursing home facilities that contracted with the nurses were the employers of the nurses. That was precisely the bone of contention. The nurses complained that they were not employed by the contracting nursing home facilities. They argued they were employed by Prompt/Sentosa Services. The Executive Labor Arbiter, however, did not analyze the documentary evidence submitted that proved the existence of employer-employee relationship between Prompt/Sentosa Services and the nurses. She ruled that the nurses were the ones who preterminated their employment agreements when they resigned from their jobs. She even went on to say that the nurses had the obligation to give at least one month notice of their intention to resign from their jobs.

The NY court decision, however, found that terms of the nurses’ employment contracts were breached. When the nurses found employment with the nursing employment agency, they entered into an “employment at will” relationship with the agency. The Appellate Division ruled that they had the right to resign anytime, so long as it was not in the middle of their shifts. Clearly, they had no obligation to give any notice at all, much more so a one-month notice. It must be emphasized that New York State is an “employment-at-will” state (http://www.labor.state.ny.us/workerprotection/laborstandards/faq.shtm).

The DOJ and NY Court Decisions

The DOJ remarkably found that the contracting nursing home facilities “failed to fully comply and fully implement the stipulations entered” into with the nurses. Although it acknowledged the nurses may have a civil cause of action against their contracting employers, the DOJ ruled that the contracts were not substantially altered as to constitute the crime of illegal recruitment.

The Appellate Division did not discuss the issue of substantial alterations to the employment contracts. It did however find that terms of the employment contracts were “breached”.

When the POEA decided that SRA and its nursing home principals did not violate any POEA rule or regulation, the DOJ deemed it had no choice but to dismiss the illegal recruitment complaints. In so doing, the DOJ miserably failed to rise to the occasion by not finding that SRA misrepresented the nature of the nurses’ employment. SRA’s website and flyers that promised “direct-hire” employment and the employment contracts that stated which “specific nursing homes” as the nurses’ employers, when understood together, clearly represented that a recruited nurse would be directly hired by his/her contracting employer, not by a healthcare management company (Sentosa Care Group or Sentosa Care, LLC), nor by a third-party nursing employment agency (Prompt/Sentosa Services). Proof of the misrepresentation was the fact that the nurses were made agency nurses of Prompt/Sentosa Services. This misrepresentation alone would have been sufficient to find probable cause to accuse SRA and its officers with illegal recruitment.

POEA’s Review of Sentosa Contracts

Inquirer.net reported on January 20, 2009 that the new POEA Administrator, Jennifer Manalili, had reviewed Sentosa contracts after the New York Court came out with its decision in favor of the former Sentosa nurses. She opined that the “liquidated damages” provision of the employment contracts whereby a nurse would pay the employer $25,000 in damages if he/she preterminated the 3-year employment contract “did not seem illegal” and was “reasonable”.

Whether the “liquidated damages” provision was reasonable or not should not have been the issue the POEA Administrator concerned herself with. She should have instead looked at the “parties” of the employment contract and clarified who the “employer” is of a particular nurse. What does the contract say? Does it name “Sentosa Care Group” or “Sentosa Care, LLC” as the “employer” of the nurses? In addition to the “parties” of the employment contracts, the POEA Administrator should have reviewed the Administration’s files if a “Sentosa Care Group” or a “Sentosa Care, LLC” is indeed registered as an accredited principal of SRA.

Sentosa Care Group or Sentosa Care, LLC is not a party to any of the employment agreements signed by any of the nurses. It is likewise not an accredited principal of SRA. Why should Sentosa Care, LLC then be considered by the POEA as the “direct foreign principal” of SRA and the employer of the nurses?

Liquidated Damages or Penalty?

The employment agreements as prepared by SRA provided that the nurses would have to pay twenty five thousand dollars ($25,000) “as liquidated damages penalty” if they were to preterminate their 3-year agreement. If only to belabor the point, the contracting employers were the ones that breached the employment agreements when they did not afford the contracted nurses any employment at all. The nurses were the aggrieved parties to breached contracts. Thus, the aforementioned liquidated damages provision in the employment agreements would be a non-issue insofar as the nurses are concerned.

Furthermore, liquidated damages provisions in the state of New York are unenforceable if they provide for a “penalty” (Vernitron Corp. v CF 48 Associates, 478 N.Y.S.2d, 933, 934). That is precisely how the adhesion contracts prepared by SRA worded the provision – a “penalty”. A liquidated damages provision to be enforceable must provide for graduated damages based upon the degree of breach. Fixing the damages at $25,000 whether the breach occurred a few months after the start of the contract or a few months before the end of a 3-year contract exemplifies the nature of the provision as a penalty. It penalizes a breach in the same amount regardless of when the breach happened relative to the term of the contract. To be enforceable, liquidated damages provisions should set out a specific formula that would result in a reasonable approximation of harm suffered. They should not seek to penalize the breaching party. In the Sentosa contracts, the provision is clearly a penalty, and is therefore unenforceable.

Challenge to the Philippine Secretaries of Labor and of Justice

In light of the recent decision by the NY Appellate Division vis-à-vis the POEA, NLRC and DOJ decisions, we call upon the Philippine Secretary of Labor to reverse the POEA’s decision in Elmer Jacinto et al. v. Sentosa Recruitment Agency et al. The appeal has been sitting on the Secretary’s desk for quite some time now. It is about time to right a wrong. The Labor Secretary must likewise instruct the National Labor Relations Commission (NLRC) to review its findings in Juliet Anilao et al. v. Sentosa Recruitment Agency et al.

We also challenge the Philippine Secretary of Justice to motu propio initiate an investigation into the recruitment activities of SRA and its accredited principals. Not only does SRA misrepresent the nature of employment of its nurse-recruits. It has colluded with a non-licensee and a non-principal to engage in recruitment activities in the Philippines. SRA’s employment contracts with its nurses do not follow its approved model contract. The actual employment agreements that SRA require its recruits to sign do not contain the minimum provisions as mandated by Part V, Rule I, section 2, 2002 POEA Rules in relation to Memo Circular #26, series of 2003. Luyun, in collusion with Prompt/Sentosa Services and its accredited principals, has coerced workers to accept prejudicial arrangements in exchange for certain benefits that rightfully belong to the workers (Part VI, Rule I, section 2t, 2002 POEA Rules). Finally, SRA has deployed workers to principals not accredited by the Administration (Part VI, Rule1, section 2q, 2002 POEA Rules).

Or shall we expect the Philippine government agencies to remain inutile and not give true meaning to the constitutional mandate to afford full protection to labor? Must justice for Filipino migrant workers come from a foreign court? Pray, tell, the Philippine government can protect the interests of its citizens, especially those it calls the “new heroes of the nation”.

* The author is the Executive Vice President of the National Alliance for Filipino Concerns (NAFCON), a national, multi-issue alliance of Filipino organizations and individuals in the United States serving to protect the rights and welfare of Filipinos by fighting for social, economic, and racial justice and equality. He is also the Lead Campaign Convener of the “Justice for Sentosa 27++! Justice for all Filipino Migrant Workers!”