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II. Recruitment and Placement of Workers (Local and Overseas)
 Cases on Recruitment/Placement
February 23, 2011 644 SCRA 1711 G.R. No. 179242

AVELINA F. SAGUN, Petitioner, vs. SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC., Respondent. RESOLUTION NACHURA, J.:

This is a Petition for Review on certiorari under Rule 45 of the Rules of Court, seeking to reverse and set aside the Court of Appeals (CA) Decision1 dated March 23, 2007 and Resolution2 dated August 16, 2007 in CA-G.R. SP No. 89298. The case arose from a complaint for alleged violation of Article 32 and Article 34(a) and (b) of the Labor Code, as amended, filed by petitioner Avelina F. Sagun against respondent Sunace International Management Services, Inc. and the latter’s surety, Country Bankers Insurance Corporation, before the Philippine Overseas Employment Administration (POEA). The case was docketed as POEA Case No. RV 00-03-0261.3 Petitioner claimed that sometime in August 1998, she applied with respondent for the position of caretaker in Taiwan. In consideration of her placement and employment, petitioner allegedly paid P30,000.00 cash,P10,000.00 in the form of a promissory note, and NT$60,000.00 through salary deduction, in violation of the prohibition on excessive placement fees. She also claimed that respondent promised to employ her as caretaker but, at the job site, she worked as a domestic helper and, at the same time, in a poultry farm.4 Respondent, however, denied petitioner’s allegations and maintained that it only collected P20,840.00, the amount authorized by the POEA and for which the corresponding official receipt was issued. It also stressed that it did not furnish or publish any false notice or information or document in relation to recruitment or employment as it was duly received, passed upon, and approved by the POEA.5 On December 27, 2001, POEA Administrator Rosalinda Dimapilis-Baldoz dismissed6 the complaint for lack of merit. Specifically, the POEA Administrator found that petitioner failed to establish facts showing a violation of Article 32, since it was proven that the amount received by respondent as placement fee was covered by an official receipt; or of Article 34(a) as it was not shown that respondent charged excessive fees; and of Article 34(b) simply because respondent processed petitioner’s papers as caretaker, the position she applied and was hired for. Aggrieved, petitioner filed a Motion for Reconsideration7 with the Office of the Secretary of Labor. The Secretary treated the motion as a Petition for Review. On January 13, 2004, then Secretary of Labor Patricia A. Sto. Tomas partially granted8 petitioner’s motion, the pertinent portion of which reads: WHEREFORE, premises considered, the Motion for Reconsideration, herein treated as a petition for review, is PARTIALLY GRANTED. The Order dated December 27, 2001 of the POEA Administrator is partially MODIFIED, and SUNACE International Management Services, Inc. is held liable for collection of excessive placement fee in violation of Article 34 (a) of the Labor Code, as amended. The penalty of suspension of its license for two (2) months, or in lieu thereof, the penalty of fine in the amount of Twenty Thousand Pesos (P20,000.00) is hereby imposed upon SUNACE. Further, SUNACE and its surety, Country Bankers Insurance Corporation, are ordered to refund the petitioner the amounts of Ten Thousand Pesos (P10,000.00) and NT$65,000.00, representing the excessive placement fee exacted from her. SO ORDERED.9 On appeal by respondent, the Office of the President (OP) affirmed 10 the Order of the Secretary of Labor. In resolving the case for petitioner, the OP emphasized the State’s policy on the full protection to labor, local and overseas, organized and unorganized. It also held that it was impossible for respondent to have extended a loan to petitioner since it was not in the business of lending money. It likewise found it immaterial that no evidence was presented to show the overcharging since the issuance of a receipt could not be expected.
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Respondent’s motion for reconsideration was denied in an Order11 dated March 21, 2005, which prompted respondent to elevate the matter to the CA via a petition for review under Rule 43 of the Rules of Court. On March 23, 2007, the CA decided in favor of respondent, disposing, as follows: WHEREFORE, premises considered, the instant petition is GRANTED and the decision of the Office of the President dated 07 January 2005 is REVERSED and SET ASIDE for lack of sufficient evidence. The Order of the POEA Administrator dismissing the complaint of respondent for violation of Article 34(a) and (b) of the Labor Code is hereby AFFIRMED. SO ORDERED.12 The appellate court reversed the rulings of the Secretary of Labor and the OP mainly because their conclusions were based not on evidence but on speculation, conjecture, possibilities, and probabilities. Hence, this petition filed by petitioner, raising the sole issue of: WHETHER THE COURT OF APPEALS ERRED IN GRANTING THE RESPONDENT’S PETITION FOR REVIEW REVERSING THE DECISION AND ORDER [OF THE] OFFICE OF THE PRESIDENT.13 The petition is without merit. Respondent was originally charged with violation of Article 32 and Article 34(a) and (b) of the Labor Code, as amended. The pertinent provisions read: ART. 32. Fees to be Paid by Workers. - Any person applying with a private fee charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees. ART. 34. Prohibited Practices. - It shall be unlawful for any individual, entity, licensee, or holder of authority: (a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor; or to make a worker pay any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment. The POEA, the Secretary of Labor, the OP, and the CA already absolved respondent of liability under Articles 32 and 34(b). As no appeal was interposed by petitioner when the Secretary of Labor freed respondent of said liabilities, the only issue left for determination is whether respondent is liable for collection of excess placement fee defined in Article 34(a) of the Labor Code, as amended. Although initially, the POEA dismissed petitioner’s complaint for lack of merit, the Secretary of Labor and the OP reached a different conclusion. On appeal to the CA, the appellate court, however, reverted to the POEA conclusion. Following this turn of events, we are constrained to look into the records of the case and weigh anew the evidence presented by the parties. We find and so hold that the POEA and the CA are correct in dismissing the complaint for illegal exaction filed by petitioner against respondent. In proceedings before administrative and quasi-judicial agencies, the quantum of evidence required to establish a fact is substantial evidence, or that level of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.14

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In this case, are the pieces of evidence presented by petitioner substantial to show that respondent collected from her more than the allowable placement fee? We answer in the negative. To show the amount it collected as placement fee from petitioner, respondent presented an acknowledgment receipt showing that petitioner paid and respondent received P20,840.00. This notwithstanding, petitioner claimed that she paid more than this amount. In support of her allegation, she presented a photocopy of a promissory note she executed, and testified on the purported deductions made by her foreign employer. In the promissory note, petitioner promised to pay respondent the amount of P10,000.00 that she borrowed for only two weeks.15Petitioner also explained that her foreign employer deducted from her salary a total amount of NT$60,000.00. She claimed that the P10,000.00 covered by the promissory note was never obtained as a loan but as part of the placement fee collected by respondent. Moreover, she alleged that the salary deductions made by her foreign employer still formed part of the placement fee collected by respondent. We are inclined to give more credence to respondent’s evidence, that is, the acknowledgment receipt showing the amount paid by petitioner and received by respondent. A receipt is a written and signed acknowledgment that money or goods have been delivered.16 Although a receipt is not conclusive evidence, an exhaustive review of the records of this case fails to disclose any other evidence sufficient and strong enough to overturn the acknowledgment embodied in respondent’s receipt as to the amount it actually received from petitioner. Having failed to adduce sufficient rebuttal evidence, petitioner is bound by the contents of the receipt issued by respondent. The subject receipt remains as the primary or best evidence.17 The promissory note presented by petitioner cannot be considered as adequate evidence to show the excessive placement fee. It must be emphasized that a promissory note is a solemn acknowledgment of a debt and a formal commitment to repay it on the date and under the conditions agreed upon by the borrower and the lender. A person who signs such an instrument is bound to honor it as a legitimate obligation duly assumed by him through the signature he affixes thereto as a token of his good faith.18 Moreover, as held by the CA, the fact that respondent is not a lending company does not preclude it from extending a loan to petitioner for her personal use. As for the deductions purportedly made by petitioner’s foreign employer, we reiterate the findings of the CA that "there is no single piece of document or receipt showing that deductions have in fact been made, nor is there any proof that these deductions from the salary formed part of the subject placement fee."19 At this point, we would like to emphasize the well-settled rule that the factual findings of quasi-judicial agencies, like the POEA, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but at times even finality if such findings are supported by substantial evidence. 20While the Constitution is committed to the policy of social justice and to the protection of the working class, it should not be presumed that every dispute will automatically be decided in favor of labor.21 To be sure, mere general allegations of payment of excessive placement fees cannot be given merit as the charge of illegal exaction is considered a grave offense which could cause the suspension or cancellation of the agency’s license. They should be proven and substantiated by clear, credible, and competent evidence.22 WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated March 23, 2007 and Resolution dated August 16, 2007 in CA-G.R. SP No. 89298 are AFFIRMED. SO ORDERED.
ANTONIO EDUARDO B. NACHURA Associate Justice

G.R. No. 167614

March 24, 2009

582 SCRA 2542

ANTONIO M. SERRANO, Petitioner, vs. Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents. DECISION AUSTRIA-MARTINEZ, J.:

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For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their earnings have built houses, provided health care, equipped schools and planted the seeds of businesses. They have woven together the world by transmitting ideas and knowledge from country to country. They have provided the dynamic human link between cultures, societies and economies. Yet, only recently have we begun to understand not only how much international migration impacts development, but how smart public policies can magnify this effect. United Nations Secretary-General Ban Ki-Moon Global Forum on Migration and Development Brussels, July 10, 20071 For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit: Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. x x x x (Emphasis and underscoring supplied) does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired portion of their employment contract "or for three months for every year of the unexpired term, whichever is less" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of equal protection and denies them due process. By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which applied the subject clause, entreating this Court to declare the subject clause unconstitutional. Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following terms and conditions:
Duration of contract Position Basic monthly salary Hours of work Overtime Vacation leave with pay 12 months Chief Officer US$1,400.00 48.0 hours per week US$700.00 per month 7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer by the end of April 1998.6 Respondents did not deliver on their promise to make petitioner Chief Officer. 7 Hence, petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.8 Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days. Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73, broken down as follows:

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May 27/31, 1998 (5 days) incl. Leave pay June 01/30, 1998 July 01/31, 1998 August 01/31, 1998 Sept. 01/30, 1998 Oct. 01/31, 1998 Nov. 01/30, 1998 Dec. 01/31, 1998 Jan. 01/31, 1999 Feb. 01/28, 1999 Mar. 1/19, 1999 (19 days) incl. leave pay

US$ 413.90

2,590.00 2,590.00 2,590.00 2,590.00 2,590.00 2,590.00 2,590.00 2,590.00 2,590.00 1,640.00

-------------------------------------------------------------------------------25,382.23 Amount adjusted to chief mate's salary (March 19/31, 1998 to April 1/30, 1998) + 1,060.5010

--------------------------------------------------------------------------------------------TOTAL CLAIM US$ 26,442.7311

as well as moral and exemplary damages and attorney's fees. The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding him monetary benefits, to wit: WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant (petitioner) by the respondents in the above-entitled case was illegal and the respondents are hereby ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange prevailing at the time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the complainant’s salary for three (3) months of the unexpired portion of the aforesaid contract of employment.1avvphi1 The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange prevailing at the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing the complainant’s claim for a salary differential. In addition, the respondents are hereby ordered to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate prevailing at the time of payment, the complainant’s (petitioner's) claim for attorney’s fees equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under this Decision. The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit. All other claims are hereby DISMISSED. SO ORDERED.13 (Emphasis supplied)

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In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire unexpired portion of nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month."14 Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed. Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts.18 In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit: WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered to pay complainant, jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following:
1. Three (3) months salary $1,400 x 3 2. Salary differential US$4,245.00 3. 10% Attorney’s fees TOTAL 424.50 US$4,669.50 US$4,200.00 45.00

The other findings are affirmed. SO ORDERED.19 The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 "does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay."20 Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause.21 The NLRC denied the motion.22 Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge against the subject clause.24 After initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as G.R. No. 151833, filed by petitioner. In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.25 His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to this Court on the following grounds: I The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the Supreme Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired portion of his contract of employment instead of limiting it to three (3) months

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II In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals gravely erred in law when it failed to discharge its judicial duty to decide questions of substance not theretofore determined by the Honorable Supreme Court, particularly, the constitutional issues raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas workers to three (3) months. III Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals gravely erred in law in excluding from petitioner’s award the overtime pay and vacation pay provided in his contract since under the contract they form part of his salary.28 On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he intends to make use of the monetary award for his medical treatment and medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to allow partial execution of the undisputed monetary award and, at the same time, praying that the constitutional question be resolved.30 Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional question raised therein. On the first and second issues The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal. Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1,400.00 covering the period of three months out of the unexpired portion of nine months and 23 days of his employment contract or a total of US$4,200.00. Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment contract, computed at the monthly rate of US$2,590.00.31 The Arguments of Petitioner Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a determinate employment period and a fixed salary package. 32 It also impinges on the equal protection clause, for it treats OFWs differently from local Filipino workers (local workers) by putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary award for local workers when their dismissal is declared illegal; that the disparate treatment is not reasonable as there is no substantial distinction between the two groups;33 and that it defeats Section 18,34 Article II of the Constitution which guarantees the protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas.35 Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected OFWs.36 Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to benefit local placement agencies. He marks the statement made by the Solicitor General in his Memorandum, viz.: Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation.

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Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No. 8042. 37(Emphasis supplied) Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better off than local employers because in cases involving the illegal dismissal of employees, foreign employers are liable for salaries covering a maximum of only three months of the unexpired employment contract while local employers are liable for the full lump-sum salaries of their employees. As petitioner puts it: In terms of practical application, the local employers are not limited to the amount of backwages they have to give their employees they have illegally dismissed, following well-entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be limited to giving the illegally dismissed migrant workers the maximum of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that can be more than three (3) months.38 Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the salaries and other emoluments he is entitled to under his fixed-period employment contract.39 The Arguments of Respondents In their Comment and Memorandum, respondents contend that the constitutional issue should not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA, and not at the earliest opportunity, which was when he filed an appeal before the NLRC.40 The Arguments of the Solicitor General The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms of petitioner's employment, especially on the matter of money claims, as this was not stipulated upon by the parties.42 Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such that their rights to monetary benefits must necessarily be treated differently. The OSG enumerates the essential elements that distinguish OFWs from local workers: first, while local workers perform their jobs within Philippine territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost impossible to enforce judgment; and second, as held in Coyoca v. National Labor Relations Commission43 and Millares v. National Labor Relations Commission,44 OFWs are contractual employees who can never acquire regular employment status, unlike local workers who are or can become regular employees. Hence, the OSG posits that there are rights and privileges exclusive to local workers, but not available to OFWs; that these peculiarities make for a reasonable and valid basis for the differentiated treatment under the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the provision does not violate the equal protection clause nor Section 18, Article II of the Constitution.45 Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the solidary liability of placement agencies for this "redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions."46 The Court's Ruling The Court sustains petitioner on the first and second issues. When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the Congress, it does so only when these conditions obtain: (1) that there is an actual case or controversy involving a conflict of rights susceptible of judicial determination;47 (2) that the constitutional question is raised by a proper party48 and at the earliest opportunity;49 and (3) that the constitutional question is the very lis mota of the case,50otherwise the Court will dismiss the case or decide the same on some other ground.51

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Without a doubt, there exists in this case an actual controversy directly involving petitioner who is personally aggrieved that the labor tribunals and the CA computed his monetary award based on the salary period of three months only as provided under the subject clause. The constitutional challenge is also timely. It should be borne in mind that the requirement that a constitutional issue be raised at the earliest opportunity entails the interposition of the issue in the pleadings before acompetent court, such that, if the issue is not raised in the pleadings before that competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot be considered on appeal. 52 Records disclose that the issue on the constitutionality of the subject clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration with said labor tribunal,53 and reiterated in his Petition forCertiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised because it is not the NLRC but the CA which has the competence to resolve the constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial function – its function in the present case is limited to determining questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in accordance with the standards laid down by the law itself; 55 thus, its foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with the power of judicial review or the power to declare unconstitutional a law or a provision thereof, such as the subject clause.56Petitioner's interposition of the constitutional issue before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in its decision. The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because the monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-month employment contract, and not just for a period of three months, strikes at the very core of the subject clause. Thus, the stage is all set for the determination of the constitutionality of the subject clause. Does the subject clause violate Section 10, Article III of the Constitution on non-impairment of contracts? The answer is in the negative. Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will receive57 is not tenable. Section 10, Article III of the Constitution provides: No law impairing the obligation of contracts shall be passed. The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation, 58and cannot affect acts or contracts already perfected;59 however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto. As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A. No. 8042. But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed. 61 Police power legislations adopted by the State to promote the health, morals, peace, education, good order, safety, and general welfare of the people are generally applicable not only to future contracts but even to those already in existence, for all private contracts must yield to the superior and legitimate measures taken by the State to promote public welfare.62

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Does the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3, Article XIII on labor as a protected sector? The answer is in the affirmative. Section 1, Article III of the Constitution guarantees: No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal protection of the law. Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without distinction as to place of deployment, full protection of their rights and welfare. To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances.65 Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its legislation; however, to be valid, the classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class.66 There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification needs only be shown to be rationally related to serving a legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the government must show that the challenged classification serves an important state interest and that the classification is at least substantially related to serving that interest;68 and c) strict judicial scrutiny69 in which a legislative classification which impermissibly interferes with the exercise of a fundamental right 70 or operates to the peculiar disadvantage of a suspect class 71 is presumed unconstitutional, and the burden is upon the government to prove that the classification is necessary to achieve a compelling state interest and that it is the least restrictive means to protect such interest.72 Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications 73 based on race74 or gender75 but not when the classification is drawn along income categories.76 It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was challenged for maintaining its rank-and-file employees under the Salary Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been exempted from the SSL by their respective charters. Finding that the disputed provision contained a suspect classification based on salary grade, the Court deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said provision. More significantly, it was in this case that the Court revealed the broad outlines of its judicial philosophy, to wit: Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and respect by the courts of justice except when they run afoul of the Constitution. The deference stops where the classification violates a fundamental right, or prejudices persons accorded special protection by the Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of constitutional guaranties, and require a stricter and more exacting adherence to constitutional limitations. Rational basis should not suffice. Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter judicial scrutiny finds no support in American or English jurisprudence. Nevertheless, these foreign decisions and authorities are not per se controlling in this jurisdiction. At best, they are persuasive and have been used to support many of our decisions. We should not place undue and fawning reliance upon them and regard them as indispensable mental crutches without which we cannot come to our own decisions through the employment of our own endowments. We live in a different ambience and must decide our own problems in the light of our own interests and needs, and of our qualities and

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even idiosyncrasies as a people, and always with our own concept of law and justice. Our laws must be construed in accordance with the intention of our own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related thereto. More importantly, they must be construed to serve our own public interest which is the be-all and the end-all of all our laws. And it need not be stressed that our public interest is distinct and different from others. xxxx Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of effective judicial intervention. Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in Philippine society. The command to promote social justice in Article II, Section 10, in "all phases of national development," further explicitated in Article XIII, are clear commands to the State to take affirmative action in the direction of greater equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal support for a more vigorous state effort towards achieving a reasonable measure of equality. Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law. And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches but also on the judiciary to translate this pledge into a living reality. Social justice calls for the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. xxxx Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be based on the "rational basis" test, and the legislative discretion would be given deferential treatment. But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice against persons favored by the Constitution with special protection, judicial scrutiny ought to be more strict. A weak and watered down view would call for the abdication of this Court’s solemn duty to strike down any law repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a private person or the government itself or one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of the actor. xxxx In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin to a distinction based on economic class and status, with the higher grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP now receive higher compensation packages that are competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank - possessing higher and better education and opportunities for career advancement - are given higher compensation packages to entice them to stay. Considering that majority, if not all, the rank-and-file employees consist of people whose status and rank in life are less and limited, especially in terms of job marketability, it is they - and not the officers - who have the real economic and financial need for the adjustment . This is in accord with the policy of the Constitution "to free the people from poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of life for all." Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass muster. (Emphasis supplied) Imbued with the same sense of "obligation to afford protection to labor," the Court in the present case also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a suspect classification prejudicial to OFWs.

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Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels: First, OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts ofone year or more; Second, among OFWs with employment contracts of more than one year; and Third, OFWs vis-à-vis local workers with fixed-period employment; OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts of one year or more As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations Commission79 (Second Division, 1999) that the Court laid down the following rules on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit: A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months’ salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the words "for every year of the unexpired term" which follows the words "salaries x x x for three months."To follow petitioners’ thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary to the wellestablished rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect since the law-making body is presumed to know the meaning of the words employed in the statue and to have used them advisedly. Ut res magis valeat quam pereat.80 (Emphasis supplied) In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract. Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on Section 10(5). One was Asian Center for Career and Employment System and Services v. National Labor Relations Commission(Second Division, October 1998),81 which involved an OFW who was awarded a two-year employment contract,but was dismissed after working for one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lumpsum salary covering eight months, the unexpired portion of his contract. On appeal, the Court reduced the award to SR3,600.00 equivalent to his three months’ salary, this being the lesser value, to wit: Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just, valid or authorized cause is entitled to his salary for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. In the case at bar, the unexpired portion of private respondent’s employment contract is eight (8) months. Private respondent should therefore be paid his basic salary corresponding to three (3) months or a total of SR3,600.82 Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division, December 1998),83 which involved an OFW (therein respondent Erlinda Osdana) who was originally granted a 12-month contract, which was deemed renewed for another 12 months. After serving for one year and seven-and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired portion of four and one-half months of her contract. The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:
Case Title Contract Period of Service Unexpired Period Period Applied in the

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Period Skippers v. Maguad84 Bahia Shipping v. Reynaldo Chua 85 Centennial Transmarine v. dela Cruz l86 Talidano v. Falcon87 Univan v. CA88 Oriental v. CA89 PCL v. NLRC90 Olarte v. Nayona91 JSS v.Ferrer92 Pentagon v. Adelantar93 Phil. Employ v. Paramio, et al.94 Flourish Maritime v. Almanzor 95 Athenna Manpower v. Villanos 96 6 months 9 months 9 months 2 months 8 months 4 months 4 months 4 months 5 months

Computation of the Monetary Award 4 months 4 months 5 months

12 months 12 months 12 months 12 months 12 months 12 months 12 months 12 months 2 years 1 year, 10 months and 28 days

3 months 3 months more than 2 months more than 2 months 21 days 16 days 9 months and 7 days 10 months 26 days 1 month

9 months 9 months 10 months more or less 9 months 11 months and 9 days 11 months and 24 days 2 months and 23 days 2 months 23 months and 4 days 1 year, 9 months and 28 days

3 months 3 months 3 months 3 months 3 months 3 months 2 months and 23 days Unexpired portion 6 months or 3 months for each year of contract 6 months or 3 months for each year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first category includes OFWs with fixed-period employment contracts of less than one year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired portion of their contracts. The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for about 2 months out of their 12-month contracts were awarded their salaries for only 3 months of the unexpired portion of their contracts. Even the OFWs involved in Talidano and Univan who had worked for a longer period of 3 months out of their 12-month contracts before being illegally dismissed were awarded their salaries for only 3 months. To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced work on the same day and under the same employer, and were illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his contract, as the US$3,000.00 is the lesser amount. The disparity becomes more aggravating when the Court takes into account jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14, 1995,97 illegally dismissed OFWs, no matter how long the period of their employment

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contracts, were entitled to their salaries for the entire unexpired portions of their contracts. The matrix below speaks for itself:
Case Title Contract Period Period of Service 2 months 7 days 9 months 2 months 5 months 4 months 6 months and 22 days Unexpired Period Period Applied in the Computation of the Monetary Award 22 months 23 months and 23 days 15 months 22 months 19 months 8 months 5 months and 18 days

ATCI v. CA, et al.98 Phil. Integrated v. NLRC99 JGB v. NLC100 Agoy v. NLRC101 EDI v. NLRC, et al.102 Barros v. NLRC, et al.103 Philippine Transmarine v. Carilla104

2 years 2 years 2 years 2 years 2 years 12 months 12 months

22 months 23 months and 23 days 15 months 22 months 19 months 8 months 5 months and 18 days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were treated alike in terms of the computation of their monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of their employment contracts. The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed OFWs based on their employment periods, in the process singling out one category whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while sparing the other category from such prejudice, simply because the latter's unexpired contracts fall short of one year. Among OFWs With Employment Contracts of More Than One Year Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on the accuracy of the Marsaman interpretation. The Court notes that the subject clause "or for three (3) months for every year of the unexpired term, whichever is less" contains the qualifying phrases "every year" and "unexpired term." By its ordinary meaning, the word "term" means a limited or definite extent of time.105 Corollarily, that "every year" is but part of an "unexpired term" is significant in many ways: first, the unexpired term must be at least one year, for if it were any shorter, there would be no occasion for such unexpired term to be measured by every year; and second, the original term must be more than one year, for otherwise, whatever would be the unexpired term thereof will not reach even a year. Consequently, the more decisive factor in the determination of when the subject clause "for three (3) months forevery year of the unexpired term, whichever is less" shall apply is not the length of the original contract period as held in Marsaman,106 but the length of the unexpired portion of the contract period -- the subject clause applies in cases when the unexpired portion of the contract period is at least one year, which arithmetically requires that the original contract period be more than one year. Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for more than one year: those who are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the subject clause, and their monetary benefits limited to their salaries for three months only.

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To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the contract period of OFW-C, the subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired portion. OFWs vis-à-vis Local Workers With Fixed-Period Employment As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in place. This uniform system was applicable even to local workers with fixed-term employment.107 The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce (1888),108 to wit: Article 299. If the contracts between the merchants and their shop clerks and employees should have been made of a fixed period, none of the contracting parties, without the consent of the other, may withdraw from the fulfillment of said contract until the termination of the period agreed upon. Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the provisions contained in the following articles. In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to determine the liability of a shipping company for the illegal discharge of its managers prior to the expiration of their fixed-term employment. The Court therein held the shipping company liable for the salaries of its managers for the remainder of their fixed-term employment. There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which provides: Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they cannot be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence. Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally dismissed employees for the entire unexpired portion of their employment contracts. While Article 605 has remained good law up to the present,111 Article 299 of the Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit: Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain work cannot leave or be dismissed without sufficient cause, before the fulfillment of the contract. (Emphasis supplied.) Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a conjunctive "and" so as to apply the provision to local workers who are employed for a time certain although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company.113 And in both Lemoine and Palomar, the Court adopted the general principle that in actions for wrongful discharge founded on Article 1586, local workers are entitled to recover damages to the extent of the amount stipulated to be paid to them by the terms of their contract. On the computation of the amount of such damages, the Court in Aldaz v. Gay114 held:

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The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the contrary under Spanish jurisprudence, that when an employee is wrongfully discharged it is his duty to seek other employment of the same kind in the same community, for the purpose of reducing the damages resulting from such wrongful discharge. However, while this is the general rule, the burden of showing that he failed to make an effort to secure other employment of a like nature, and that other employment of a like nature was obtainable, is upon the defendant. When an employee is wrongfully discharged under a contract of employment his prima facie damage is the amount which he would be entitled to had he continued in such employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.)115 (Emphasis supplied) On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do not expressly provide for the remedies available to a fixed-term worker who is illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich,117 the Court carried over the principles on the payment of damages underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving the illegal discharge of a local worker whose fixed-period employment contract was entered into in 1952, when the new Civil Code was already in effect.118 More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-term employment contracts were illegally terminated, such as in First Asian Trans & Shipping Agency, Inc. v. Ople,119involving seafarers who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period employment contract as a baby sitter, was awarded salaries corresponding to the unexpired portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor Relations Commission,121 which involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally dismissed after only nine months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired portion of his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission,122 a Filipino working as a security officer in 1989 in Angola was awarded his salaries for the remaining period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor Relations Commission,123 an OFW whose 12-month contract was illegally cut short in the second month was declared entitled to his salaries for the remaining 10 months of his contract. In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment. The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest through the least restrictive means. What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by history.124 It is akin to the paramount interest of the state125 for which some individual liberties must give way, such as the public interest in safeguarding health or maintaining medical standards, 126 or in maintaining access to information on matters of public concern.127 In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve. The OSG defends the subject clause as a police power measure "designed to protect the employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic], Filipino seafarers have better chance of getting

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hired by foreign employers." The limitation also protects the interest of local placement agencies, which otherwise may be made to shoulder millions of pesos in "termination pay."128 The OSG explained further: Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money are reduced under Section 10 of RA 8042. This measure redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions.129 (Emphasis supplied) However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception of the state interest sought to be served by the subject clause. The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;130 but the speech makes no reference to the underlying reason for the adoption of the subject clause. That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause. On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit: Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of the complaint, the claim arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas employment including claims for actual, moral, exemplary and other forms of damages. The liability of the principal and the recruitment/placement agency or any and all claims under this Section shall be joint and several. Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of damages under this Section shall not be less than fifty percent (50%) of such money claims: Provided, That any installment payments, if applicable, to satisfy any such compromise or voluntary settlement shall not be more than two (2) months. Any compromise/voluntary agreement in violation of this paragraph shall be null and void. Non-compliance with the mandatory period for resolutions of cases provided under this Section shall subject the responsible officials to any or all of the following penalties: (1) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be, withheld until the said official complies therewith; (2) Suspension for not more than ninety (90) days; or (3) Dismissal from the service with disqualification to hold any appointive public office for five (5) years. Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may have incurred under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph. But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money claims.

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A rule on the computation of money claims containing the subject clause was inserted and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee (Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state interest, let alone a compelling one, that is sought to be protected or advanced by the adoption of the subject clause. In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest that would justify the perpetuation of the discrimination against OFWs under the subject clause. Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier rationale will have to be rejected. There can never be a justification for any form of government action that alleviates the burden of one sector, but imposes the same burden on another sector, especially when the favored sector is composed of private businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands. The idea that private business interest can be elevated to the level of a compelling state interest is odious. Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vis their foreign principals, there are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs. The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring foreign employers who default on their contractual obligations to migrant workers and/or their Philippine agents. These disciplinary measures range from temporary disqualification to preventive suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring foreign employers. Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement agencies in enforcing the solidary liability of their foreign principals. Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal protection.
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Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the subject clause from the lone perspective that the clause directly violates state policy on labor under Section 3,131Article XIII of the Constitution. While all the provisions of the 1987 Constitution are presumed self-executing, 132 there are some which this Court has declared not judicially enforceable, Article XIII being one,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor Relations Commission,134 has described to be not self-actuating: Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the sense that these are automatically acknowledged and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the full exercise of the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal regardless of circumstance. This interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers. Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure the protection and promotion, not only the rights of the labor sector, but of the employers' as well. Without specific and pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the Constitution. Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable rightto stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing. As manifested

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by several framers of the 1987 Constitution, the provisions on social justice require legislative enactments for their enforceability.135 (Emphasis added) Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of which the questioned clause may be declared unconstitutional. It may unwittingly risk opening the floodgates of litigation to every worker or union over every conceivable violation of so broad a concept as social justice for labor. It must be stressed that Section 3, Article XIII does not directly bestow on the working class any actual enforceable right, but merely clothes it with the status of a sector for whom the Constitution urges protection through executive or legislative action and judicial recognition. Its utility is best limited to being an impetus not just for the executive and legislative departments, but for the judiciary as well, to protect the welfare of the working class. And it was in fact consistent with that constitutional agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated the judicial precept that when the challenge to a statute is premised on the perpetuation of prejudice against persons favored by the Constitution with special protection -- such as the working class or a section thereof -- the Court may recognize the existence of a suspect classification and subject the same to strict judicial scrutiny. The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee Association exaggerate the significance of Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause. Article XIII, by itself, without the application of the equal protection clause, has no life or force of its own as elucidated in Agabon. Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's right to substantive due process, for it deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose.136 The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them a better chance of getting hired by foreign employers. This is plain speculation. As earlier discussed, there is nothing in the text of the law or the records of the deliberations leading to its enactment or the pleadings of respondent that would indicate that there is an existing governmental purpose for the subject clause, or even just a pretext of one. The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause violates not just petitioner's right to equal protection, but also her right to substantive due process under Section 1,137 Article III of the Constitution. The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042. On the Third Issue Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary award, because these are fixed benefits that have been stipulated into his contract. Petitioner is mistaken. The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days and holidays. By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's monetary award, unless there is evidence that he performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,138

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However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. National Labor Relations Commission, to wit: The rendition of overtime work and the submission of sufficient proof that said was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted since the same is given during the actual service of the seamen. WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month. No costs. SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ Associate Justice SEPARATE CONCURRING OPINION3

CARPIO, J.:

I concur that the provision “or for three (3) months for every year of the unexpired term, whichever is less” in Section 10, paragraph 5,[1] of Republic Act (RA) No. 8042[2] is unconstitutional, but on a different ground. The provision violates the prohibition against deprivation of property without due process of law. It is an invalid exercise of police power. Section 1, Article III, of the Constitution states that no person shall be deprived of property without due process of law. Protected property includes the right to work and the right to earn a living. In JMM Promotion and Management, Inc. v. Court of Appeals,[3] the Court held that: A profession, trade or calling is a property right within the meaning of our constitutional guarantees. One cannot be deprived of the right to work and the right to make a living because these rights are property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable wrong. (Emphasis supplied) The right to work and the right to earn a living necessarily includes the right to bargain for better terms in an employment contract and the right to enforce those terms. If protected property does not include these rights, then the right to work and the right to earn a living would become empty civil liberties — the State can deprive persons of their right to work and their right to earn a living by depriving them of the right to negotiate for better terms and the right to enforce those terms. The assailed provision prevents the OFWs from bargaining for payment of more than three months’ salary in case the employer wrongfully terminates the employment. The law may set a minimum amount that the employee can recover, but it cannot set a ceiling because this unreasonably curtails the employee’s right to bargain for better terms of employment. The right to bargain for better terms of employment is a constitutional right that cannot be unreasonably curtailed by the State. Here, no compelling State interest has been advanced why the employee’s right to bargain should be curtailed. The claim that that the three-month salary cap provides an incentive to service contractors and manning agencies is specious because such incentive is at the expense of a protected and disadvantaged class — the OFWs.
3

http://sc.judiciary.gov.ph

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The right to property is not absolute — the prohibition against deprivation of property is qualified by the phrase “without due process of law.” Thus, the State may deprive persons of property through the exercise of police power. [4] However, the deprivation must be done with due process. Substantive due process requires that the means employed in depriving persons of property must not be unduly oppressive. In Social Justice Society v. Atienza, Jr., [5] the Court held that: [T]he State x x x may be considered as having properly exercised [its] police power only if the following requisites are met: (1) the interests of the public generally, as distinguished from those of a particular class, require its exercise and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. In short, there must be a concurrence of a lawful subject and a lawful method. (Emphasis supplied)

[6]

Moreover, the exercise of police power, to be valid, must be reasonable and not repugnant to the Constitution. In Philippine Association of Service Exporters, Inc. v. Drilon,[7] the Court held that: Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in that event, it defeats the purpose for which it is exercised, that is, to advance the public good. (Emphasis supplied)

The assailed provision is unduly oppressive, unreasonable, and repugnant to the Constitution. It undermines the mandate of the Constitution to protect the rights of overseas workers and to promote their welfare. Section 3, Article XIII, of the Constitution states that the State shall (1) afford full protection to overseas labor, (2) promote full employment and equality of employment opportunities for all, and (3) guarantee the rights of all workers to security of tenure, humane conditions of work, and a living wage. Section 18, Article II, of the Constitution states that, “The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.” The assailed provision also undermines the declared policies of RA No. 8042. Section 2 of RA No. 8042 states that (1) the State shall, at all times, uphold the dignity of Filipino migrant workers; (2) the State shall afford full protection to overseas labor and promote full employment opportunities for all; (3) the existence of overseas employment program rests solely on the assurance that the dignity and fundamental human rights and freedoms of Filipinos shall not, at any time, be compromised or violated; and (4) it is imperative that an effective mechanism be instituted to ensure that the rights and interest of distressed Filipino migrant workers are adequately protected and safeguarded. The assailed provision is the reverse of the constitutional mandate and the declared policies of RA No. 8042: (1) instead of protecting the rights and promoting the welfare of OFWs, it unreasonably curtails their freedom to enter into employment contracts; (2) instead of empowering OFWs, it prevents them from bargaining for better terms; (3) instead of setting the minimum amount that OFWs are entitled to in case they are terminated without just, valid or authorized cause, it provides a ceiling; (4) instead of allowing OFWs who have been terminated without just, valid or authorized cause to recover what is rightfully due, it arbitrarily sets the recoverable amount to their three-month salary. OFWs belong to a disadvantaged class, are oppressed, and need protection. In Olarte v. Nayona,[8] the Court held that: Our overseas workers belong to a disadvantaged class. Most of them come from the poorest sector of our society. Their profile shows they live in suffocating slums, trapped in an environment of crimes. Hardly literate and in ill health, their only hope lies in jobs they find with difficulty in our country. Their unfortunate circumstance makes them easy prey to avaricious employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just to survive. Out of despondence, they will work under sub-human conditions and accept salaries below the minimum. The least we can do is to protect them in our laws. (Emphasis supplied)

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In Philippine Association of Service Exporters, Inc.,[9] the Court held that: What concerns the Constitution more paramountly is that x x x employment be above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and economically, while away from home. (Emphasis supplied) With the inclusion of the assailed provision in RA No. 8042, the OFWs, whom the Constitution and the law particularly seek to protect, end up even more oppressed. In her ponencia, Justice Ma. Alicia Austria-Martinez held that the assailed provision violated the equal protection clause. The application of the equal protection clause is improper because local workers and OFWs are differently situated. Local workers who perform activities which are usually necessary or desirable in the usual business or trade of the employer are deemed regular after six months of service. This is true even if the workers are for a fixed term. In Glory Philippines, Inc. v. Vergara,[10] the Court held that: [W]e cannot give credence to petitioner’s claim that respondents were fixed term employees. x x x In the instant case, respondents’ original employment contracts were renewed four times. x x x In Philips Semiconductors (Phils.), Inc. v. Fadriquela, we held that such a continuing need for respondents’ services is sufficient evidence of the necessity and indispensability of their services to petitioner’s business. Consequently, we find that respondents were regular employees defined under Article 280 of the Labor Code as those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of petitioner. (Emphasis supplied) On the other hand, OFWs are never deemed regular. In Brent School, Inc. v. Zamora,[11] the Court held that: Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment with all that it implies does not appear ever to have been applied, Article 280 of the Labor Code notwithstanding. (Emphasis supplied)

Accordingly, I vote to declare the provision “or for three (3) months for every year of the unexpired term, whichever is less” in Section 10, paragraph 5, of Republic Act No. 8042 as unconstitutional for violation of the due process clause.
ANTONIO T. CARPIO Associate Justice CONCURRING OPINION BRION, J.:

I concur with the ponencia’s conclusion that Section 10 of Republic Act No. 8042, or the Migrant Workers and Overseas Filipinos Act (R.A. No. 8042), is unconstitutional insofar as it provides that –
In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

My conclusion, however, proceeds from a different reason and constitutional basis. I believe that this provision should be struck down for violations of the constitutional provisions in favor of labor[1] and of the substantive aspect of the due process clause.[2] Given these bases, I see no necessity in invoking the equal protection clause. Underlying this restraint

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in invoking the equal protection clause is my hesitation to join the ponencia in declaring a classification as “suspect” and in using the strict scrutiny standard without clearly defined parameters on when this approach applies. I begin by reading the assailed provision – Section 10, R.A. No. 8042 – in its constitutional context. Section 18, Article II of the Constitution declares it a state policy to affirm labor as a primary social economic force and to protect the rights of workers and promote their welfare. This policy is emphatically given more life and vitality under Article XIII, Section 3 of the Constitution which reads:
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.

On June 7, 1995, Congress enacted R.A. No. 8042 “to establish a higher standard of protection and promotion of the welfare of migrant workers, their families and of overseas Filipinos in distress.”[3] The express policy declarations of R.A. No. 8042 show that its purposes are reiterations of the very same policies enshrined in the Constitution. R.A. No. 8042, among others, recites that:
(b) The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. Towards this end, the State shall provide adequate and timely social, economic and legal services to Filipino migrant workers.[4] xxx (e) Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty. In this regard, it is imperative that an effective mechanism be instituted to ensure that the rights and interests of distressed overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or undocumented, are adequately protected and safeguarded.

These declared purposes patently characterize R.A. No. 8042 as a direct implementation of the constitutional objectives on Filipino overseas work so that it must be read and understood in terms of these policy objectives. Under this interpretative guide, any provision in R.A. No. 8042 inimical to the interest of an overseas Filipino worker (OFW) cannot have any place in the law. Further examination of the law shows that while it acknowledges that the State shall “promote full employment,” it states at the same time that “the State does not promote overseas employment as a means to sustain economic growth and national development. The existence of overseas employment program rests solely on the assurance that the dignity and fundamental human rights and freedoms of Filipino citizens shall not, at any time, be compromised or violated.” In blunter terms, the overseas employment program exists only for OFW protection. Having said all these, the law concludes its Declaration of Policies with a statement the lawmakers may have perceived as an exception to the law’s previously declared policies, by stating – “[n]onetheless, the deployment of Filipino overseas workers, whether land-based or sea-based, by local service contractors and manning agencies employing them shall be encouraged. Appropriate incentives may be extended to them.” Thus, in express terms, the law recognizes that there can be “incentives” to service contractors and manning agencies in the spirit of encouraging greater deployment efforts. No mention at all, however, was made of incentives to the contractors’ and agencies’ principals, i.e., the foreign employers in whose behalf the contractors and agencies recruit OFWs. The matter of money claims – the immediate subject of the present case – is governed by Section 10 of the law. This section grants the National Labor Relations Commission (NLRC) jurisdiction over OFW money claims. On liability for money claims, the sections states:

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SECTION 10. Money Claims. — Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employeremployee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract. Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within four (4) months from the approval of the settlement by the appropriate authority. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

Under these terms, the law protects the OFW as against the employer and the recruitment agency in case of illegal termination of service, but limits this liability to the reimbursement of the placement fee and interest, and the payment of “his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.” After earlier declaring the principal/employer and the contractor/recruitment agency jointly and solidarily liable, the limitation of liability appears to be a step backward that can only be justified, under the terms of the law, if it is an “appropriate incentive.” To be “appropriate,” the incentive must necessarily relate to the law’s purpose with reasonable expectation that it would serve this purpose; it must also accrue to its intended beneficiaries (the recruitment/placement agencies), and not to parties to whom the reason for the grant does not apply. These considerations bring us to the question – can the disputed portion of Section 10 stand constitutional scrutiny? I submit that it cannot as it violates the constitutional provisions in favor of labor, as well as the requirements of substantive due process. The best indicator of the effect of the disputed portion of Section 10 on OFWs can be seen from the results of the pre-R.A. No. 8042 rulings of this Court that the ponencia painstakingly arranged in tabular form. The ponencia’s table shows that by our own past rulings, before R.A. No. 8042, all illegal dismissals merited the payment of the salaries that the OFWs would have received for the unexpired portion of their contracts.[5] After R.A. No. 8042, our rulings vary on the computation of what should be paid to illegally dismissed OFWs, but in all cases the principal’s/agency’s adjudged liability was for less than the unexpired portion of the OFW’s contract.[6] Anyway viewed, the situation of illegally dismissed OFWs changed for the worse after R.A. No. 8042. In this sense, the disputed portion of Section 10 is one that goes against the interests of labor, based on R.A. No. 8042’s own declared purposes and, more importantly, on constitutional standards. Section 10 diminished rather than enhanced the protection the Constitution envisions for OFWs. The more significant violation, however, that the disputed portion of Section 10 spawns relates to its character as a police power measure, and its failure to meet the substantive due process requirements of Article III, Section 1 of the Constitution. By the Office of the Solicitor General’s (OSG) own representations, the disputed Section 10 is a police power measure adopted to mitigate the solidary liability of placement agencies. It “redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions.” [7] To

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constitutionally test the validity of this measure, substantive due process requires that there be: (1) a lawful purpose; and (2) lawful means or method to achieve the lawful purpose.[8] I see nothing inherently unconstitutional in providing incentives to local service contractors and manning agencies; they are significant stakeholders in the overseas employment program and providing them with encouragement – as R.A. No. 8042 apparently envisions in its Declaration of Policies – will ultimately redound to the benefit of the OFWs they recruit and deploy for overseas work. The Constitution itself also expressly recognizes “the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.”[9] As entities acting for the principals/employers in the overseas employment program, the recruitment/manning agencies deserve no less. Viewed from this perspective, the purpose of encouraging greater efforts at securing work for OFWs cannot but be constitutionally valid. Thus, the issue before us in considering substantive due process is reduced to whether the means taken to achieve the purpose of encouraging recruitment efforts (i.e., the incentive granted limiting the liability of recruitment/manning agencies for illegal dismissals) is reasonable. The first significant consideration in examining this issue is the question of liability – who is liable when a foreign principal/employer illegally terminates the services of an OFW? Under Philippine law, the employer, as the contracting party who violated the terms of the contract, is primarily liable. [10] In the overseas employment situation, the protective measures adopted under the law and the Philippine Overseas Employment Administration (POEA) rules to protect the OFW in his or her overseas contract best tell us how we regard liability under this contract. First, POEA Rules require, as a condition precedent to an OFW deployment, the execution of a master contract signed by a foreign principal/employer before it can be accredited by the POEA as an entity who can source its manpower needs from the Philippines under its overseas employment program.[11] The master contract contains the terms and conditions the foreign principal/employer binds itself to in its employment relationship with the OFWs it will employ. Second, signed individual contracts of employment between the foreign principal/employer or its agent and the OFW, drawn in accordance with the master contract, are required as well.[12] Third, the foreign aspects or incidents of these contracts are submitted to the Philippine labor attachés for verification at site. [13] This is a protective measure to ensure the existence and financial capability of the foreign principal/employer. Labor attaches verify as well the individual employment contracts signed by foreign principals/employers overseas. Fourth, the POEA Rules require the issuance by the foreign principal-employer of a special power of attorney authorizing the recruitment/manning agency to sign for and its behalf, and allowing itself to sue or be sued on the employment contracts in the Philippines through its authorized recruitment/manning agency.[14] Fifth, R.A. No. 8042 itself and its predecessor laws have always provided that the liability between the principal and its agent (the recruitment/manning agency) is joint and solidary,[15] thus ensuring that either the principal or the agent can be held liable for obligations due to OFWs. Finally, OFWs themselves can sue at the host countries with the assistance of Philippine embassies and labor offices.[16] These measures collectively protect OFWs by ensuring the integrity of their contracts; by establishing the responsible parties; and by providing the mechanisms for their enforcement. In all these, the primary recourse is with the foreign principal employer who has direct and primary responsibility under the employment contract. Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a hidden twist affecting the principal/employer’s liability. While intended as an incentive accruing to recruitment/manning agencies, the law, as worded, simply limits the OFWs’ recovery in wrongful dismissal situations. Thus, it redounds to the benefit of whoever may be liable, including the principal/employer – the direct employer primarily liable for the wrongful dismissal. In this sense, Section 10 – read as a grant of incentives to recruitment/manning agencies – oversteps what it aims to do by effectively limiting what is otherwise the full liability of the foreign principals/employers. Section 10, in short, really operates to benefit the wrong party and allows that party, without justifiable reason, to mitigate its liability for wrongful dismissals. Because of this hidden twist, the limitation of liability under Section 10 cannot be an “appropriate” incentive, to borrow the term that R.A. No. 8042 itself uses to describe the incentive it envisions under its purpose clause. What worsens the situation is the chosen mode of granting the incentive: instead of a grant that, to encourage greater efforts at recruitment, is directly related to extra efforts undertaken, the law simply limits their liability for the wrongful dismissals of already deployed OFWs. This is effectively a legally-imposed partial condonation of their liability to OFWs, justified solely by the law’s intent to encourage greater deployment efforts. Thus, the incentive, from a more practical and realistic view, is really part of a scheme to sell Filipino overseas labor at a bargain for purposes solely of attracting the market. Ironically, the OSG unabashedly confirmed this view in its Comment when it represented that “[b]y limiting the liability to three months, Filipino seafarers have better chance of getting hired by foreign employees.”[17]

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The so-called incentive is rendered particularly odious by its effect on the OFWs - the benefits accruing to the recruitment/manning agencies and their principals are taken from the pockets of the OFWs to whom the full salaries for the unexpired portion of the contract rightfully belong. Thus, the principals/employers and the recruitment/manning agencies even profit from their violation of the security of tenure that an employment contract embodies. Conversely, lesser protection is afforded the OFW, not only because of the lessened recovery afforded him or her by operation of law, but also because this same lessened recovery renders a wrongful dismissal easier and less onerous to undertake; the lesser cost of dismissing a Filipino will always be a consideration a foreign employer will take into account in termination of employment decisions. This reality, unfortunately, is one that we cannot simply wish away with the disputed Section 10 in place. Thus, this inherently oppressive, arbitrary, confiscatory and inimical provision should be struck down for its conflict with the substantive aspect of the constitutional due process guarantee. Specifically, the phrase “for three (3) months for every year of the unexpired terms, whichever is less” in the fifth and final paragraph of Section 10 of R.A. 8042 should be declared unconstitutional. With these conclusions, I see no need to further test the validity of the assailed clause under the equal protection guarantee. My restraint in this regard rests on two reasons. First, I believe that the ponencia’s use of the strict scrutiny standard of review – on the premise that the assailed clause established a suspect classification – is misplaced. Second, I do not see the present case as an occasion to further expand the use of the strict scrutiny standard which the Court first expanded in Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas,[18] A suspect classification is one where distinctions are made based on the most invidious bases for classification that violate the most basic human rights, i.e., on the basis of race, national origin, alien status, religious affiliation, and to a certain extent, sex and sexual orientation.[19] With a suspect classification, the scrutiny of the classification is raised to its highest level: the ordinary presumption of constitutionality is reversed and government carries the burden of proving that its challenged policy is constitutional. To withstand strict scrutiny, the government must show that its policy is necessary to achieve a compelling state interest; if this is proven, the state must then demonstrate that the legislation is narrowly tailored to achieve the intended result.[20] In the present case, I do not see the slightest indication that Congress actually intended to classify OFWs – between and among themselves, and in relation with local workers – when it adopted the disputed portion of Section 10. The congressional intent was to merely grant recruitment and manning agencies an incentive and thereby encourage them into greater deployment efforts, although, as discussed above, the incentive really works for the foreign principals’ benefit at the expense of the OFWs. Even assuming that a classification resulted from the law, the classification should not immediately be characterized as a suspect classification that would invite the application of the strict scrutiny standard. The disputed portion of Section 10 does not, on its face, restrict or curtail the civil and human rights of any single group of OFWs. At best, the disputed portion limits the monetary award for wrongful termination of employment – a tort situation affecting an OFW’s economic interest. This characterization and the unintended classification that unwittingly results from the incentive scheme under Section 10, to my mind, render a strict scrutiny disproportionate to the circumstances to which it is applied. I believe, too, that we should tread lightly in further expanding the concept of suspect classification after we have done so in Central Bank,[21] where we held that classifications that result in prejudice to persons accorded special protection by the Constitution[22] requires a stricter judicial scrutiny. The use of a suspect classification label cannot depend solely on whether the Constitution has accorded special protection to a specified sector. While the Constitution specially mentions labor as a sector that needs special protection, the involvement of or relationship to labor, by itself, cannot automatically trigger a suspect classification and the accompanying strict scrutiny; much should depend on the circumstances of the case, on the impact of the illegal differential treatment on the sector involved, on the needed protection, and on the impact of recognizing a suspect classification on future situations. In other words, we should carefully calibrate our moves when faced with an equal protection situation so that we do not misappreciate the essence of what a suspect classification is, and thereby lessen its jurisprudential impact and value. Reserving this approach to the worst cases of unacceptable classification and discrimination highlights the importance of striking at these types of unequal treatment and is a lesson that will not be lost on all concerned, particularly the larger public. There is the added reason, too, that the reverse onus that a strict scrutiny brings directly strikes, in the most glaring manner, at the regularity

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of the performance of functions of a co-equal branch of government; inter-government harmony and courtesy demand that we reserve this type of treatment to the worst violations of the Constitution. Incidentally, I believe that we can arrive at the same conclusion and similarly strike down the disputed Section 10 by using the lowest level of scrutiny, thereby rendering the use of the strict scrutiny unnecessary. Given the OSG’s positions, the resulting differential treatment the law fosters between Philippine-based workers and OFWs in illegal dismissal situations does not rest on substantial distinctions that are germane to the purpose of the law. No reasonable basis for classification exists since the distinctions the OSG pointed out do not justify the different treatment of OFWs and Philippine-based workers, specifically, why one class should be excepted from the consequences of illegal termination under the Labor Code, while the other is not. To be sure, the difference in work locations and working conditions that the OSG pointed out are not valid grounds for distinctions that should matter in the enforcement of employment contracts. Whether in the Philippines or elsewhere, the integrity of contracts – be they labor, commercial or political – is a zealously guarded value that we in the Philippines should not demean by allowing a breach of OFW contracts easy to undertake. This is true whatever may be the duration or character of employment; employment contracts, whatever their term and conditions may be subject only to their consistency with the law, must be respected during the whole contracted term and under the conditions agreed upon. Significantly, the OSG could not even point to any reason other than the protection of recruitment agencies and the expansion of the Philippine overseas program as justification for the limitation of liability that has effectively distinguished OFWs from locally-based workers. These reasons, unfortunately, are not on the same plane as protection to labor in our constitutional hierarchy of values. Even RA 8042 repeats that “the State does not promote overseas employment as a means to sustain economic growth and national development.” Under RA 8042’s own terms, the overseas employment program exists only for OFW protection. Thus viewed, the expansion of the Philippine overseas deployment program and the need for incentives to achieve results are simply not valid reasons to justify a classification, particularly when the incentive is in the form of oppressive and confiscatory limitation of liability detrimental to labor. No valid basis for classification thus exists to justify the differential treatment that resulted from the disputed Section 10. In light of all these, I vote to strike down the disputed portion of Section 10 of R.A. No. 8042.
ARTURO D. BRION Associate Justice

G.R. No. 179532

May 30, 2011 649 SCRA 3694

CLAUDIO S. YAP, Petitioner, vs. THENAMARIS SHIP'S MANAGEMENT and INTERMARE MARITIME AGENCIES, INC., Respondents. DECISION NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision2 dated February 28, 2007, which affirmed with modification the National Labor Relations Commission (NLRC) resolution3 dated April 20, 2005. The undisputed facts, as found by the CA, are as follows: [Petitioner] Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. The contract of employment entered into by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare, was for a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT and commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold. The Philippine Overseas Employment Administration (POEA) was informed about the sale on 06 December 2001 in a letter signed by Capt. Adviento. Yap, along with the other crewmembers, was informed by the Master of their vessel that the same was sold and will be scrapped. They were also informed about the Advisory sent by Capt. Constatinou, which states, among others:

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" …PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO BE TRANSFERRED TO OTHER VESSELS AFTER VESSEL S DELIVERY (GREEK VIA ATHENS-PHILIPINOS VIA MANILA… …FOR CREW NOT WISH TRANSFER TO DECLARE THEIR PROSPECTED TIME FOR REEMBARKATION IN ORDER TO SCHEDULE THEM ACCLY…" Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus. However, with respect to the payment of his wage, he refused to accept the payment of one-month basic wage. He insisted that he was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from employment. He alleged that he opted for immediate transfer but none was made. [Respondents], for their part, contended that Yap was not illegally dismissed. They alleged that following the sale of the M/T SEASCOUT, Yap signed off from the vessel on 10 November 2001 and was paid his wages corresponding to the months he worked or until 10 November 2001 plus his seniority bonus, vacation bonus and extra bonus. They further alleged that Yap’s employment contract was validly terminated due to the sale of the vessel and no arrangement was made for Yap’s transfer to Thenamaris’ other vessels.4 Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and Attorney’s Fees before the Labor Arbiter (LA). Petitioner claimed that he was entitled to the salaries corresponding to the unexpired portion of his contract. Subsequently, he filed an amended complaint, impleading Captain Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare) and Thenamaris Ship’s Management (respondents), together with C.J. Martionos, Interseas Trading and Financing Corporation, and Vulture Shipping Limited/Stejo Shipping Limited. On July 26, 2004, the LA rendered a decision 5 in favor of petitioner, finding the latter to have been constructively and illegally dismissed by respondents. Moreover, the LA found that respondents acted in bad faith when they assured petitioner of re-embarkation and required him to produce an electrician certificate during the period of his contract, but actually he was not able to board one despite of respondents’ numerous vessels. Petitioner made several follow-ups for his re-embarkation but respondents failed to heed his plea; thus, petitioner was forced to litigate in order to vindicate his rights. Lastly, the LA opined that since the unexpired portion of petitioner’s contract was less than one year, petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine months. The LA disposed, as follows: WHEREFORE, in view of the foregoing, a decision is hereby rendered declaring complainant to have been constructively dismissed. Accordingly, respondents Intermare Maritime Agency Incorporated, Thenamaris Ship’s Mgt., and Vulture Shipping Limited are ordered to pay jointly and severally complainant Claudio S. Yap the sum of $12,870.00 or its peso equivalent at the time of payment. In addition, moral damages of ONE HUNDRED THOUSAND PESOS (P100,000.00) and exemplary damages of FIFTY THOUSAND PESOS (P50,000.00) are awarded plus ten percent (10%) of the total award as attorney’s fees. Other money claims are DISMISSED for lack of merit. SO ORDERED.6 Aggrieved, respondents sought recourse from the NLRC. In its decision7 dated January 14, 2005, the NLRC affirmed the LA’s findings that petitioner was indeed constructively and illegally dismissed; that respondents’ bad faith was evident on their wilful failure to transfer petitioner to another vessel; and that the award of attorney’s fees was warranted. However, the NLRC held that instead of an award of salaries corresponding to nine months, petitioner was only entitled to salaries for three months as provided under Section 108 of Republic Act (R.A.) No. 8042,9 as enunciated in our ruling in Marsaman Manning Agency, Inc. v. National Labor Relations Commission.10 Hence, the NLRC ruled in this wise: WHEREFORE, premises considered, the decision of the Labor Arbiter finding the termination of complainant illegal is hereby AFFIRMED with a MODIFICATION. Complainant[’s] salary for the unexpired portion of his contract should only be limited to three (3) months basic salary.

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Respondents Intermare Maritime Agency, Inc.[,] Vulture Shipping Limited and Thenamaris Ship Management are hereby ordered to jointly and severally pay complainant, the following: 1. Three (3) months basic salary – US$4,290.00 or its peso equivalent at the time of actual payment. 2. Moral damages – P100,000.00 3. Exemplary damages – P50,000.00 4. Attorney’s fees equivalent to 10% of the total monetary award. SO ORDERED.11 Respondents filed a Motion for Partial Reconsideration,12 praying for the reversal and setting aside of the NLRC decision, and that a new one be rendered dismissing the complaint. Petitioner, on the other hand, filed his own Motion for Partial Reconsideration,13 praying that he be paid the nine (9)-month basic salary, as awarded by the LA. On April 20, 2005, a resolution14 was rendered by the NLRC, affirming the findings of Illegal Dismissal and respondents’ failure to transfer petitioner to another vessel. However, finding merit in petitioner’s arguments, the NLRC reversed its earlier Decision, holding that "there can be no choice to grant only three (3) months salary for every year of the unexpired term because there is no full year of unexpired term which this can be applied." Hence – WHEREFORE, premises considered, complainant’s Motion for Partial Reconsideration is hereby granted. The award of three (3) months basic salary in the sum of US$4,290.00 is hereby modified in that complainant is entitled to his salary for the unexpired portion of employment contract in the sum of US$12,870.00 or its peso equivalent at the time of actual payment. All aspect of our January 14, 2005 Decision STANDS. SO ORDERED.15 Respondents filed a Motion for Reconsideration, which the NLRC denied. Undaunted, respondents filed a petition for certiorari16 under Rule 65 of the Rules of Civil Procedure before the CA. On February 28, 2007, the CA affirmed the findings and ruling of the LA and the NLRC that petitioner was constructively and illegally dismissed. The CA held that respondents failed to show that the NLRC acted without statutory authority and that its findings were not supported by law, jurisprudence, and evidence on record. Likewise, the CA affirmed the lower agencies’ findings that the advisory of Captain Constantinou, taken together with the other documents and additional requirements imposed on petitioner, only meant that the latter should have been re-embarked. In the same token, the CA upheld the lower agencies’ unanimous finding of bad faith, warranting the imposition of moral and exemplary damages and attorney’s fees. However, the CA ruled that the NLRC erred in sustaining the LA’s interpretation of Section 10 of R.A. No. 8042. In this regard, the CA relied on the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 and held: In the present case, the employment contract concerned has a term of one year or 12 months which commenced on August 14, 2001. However, it was preterminated without a valid cause. [Petitioner] was paid his wages for the corresponding months he worked until the 10th of November. Pursuant to the provisions of Sec. 10, [R.A. No.] 8042, therefore, the option of "three months for every year of the unexpired term" is applicable.17 Thus, the CA provided, to wit: WHEREFORE, premises considered, this Petition for Certiorari is DENIED. The Decision dated January 14, 2005, and Resolutions, dated April 20, 2005 and July 29, 2005, respectively, of public respondent National Labor Relations Commission-Fourth Division, Cebu City, in NLRC No. V-000038-04 (RAB VIII (OFW)-04-01-0006) are hereby AFFIRMED with the MODIFICATION that private respondent is entitled to three (3) months of basic salary computed at US$4,290.00 or its peso equivalent at the time of actual payment.

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Costs against Petitioners.18 Both parties filed their respective motions for reconsideration, which the CA, however, denied in its Resolution 19dated August 30, 2007. Unyielding, petitioner filed this petition, raising the following issues: 1) Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords an illegally dismissed migrant worker the lesser benefit of – "salaries for [the] unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less" – is constitutional; and 2) Assuming that it is, whether or not the Court of Appeals gravely erred in granting petitioner only three (3) months backwages when his unexpired term of 9 months is far short of the "every year of the unexpired term" threshold.20 In the meantime, while this case was pending before this Court, we declared as unconstitutional the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in the case of Serrano v. Gallant Maritime Services, Inc.21 on March 24, 2009. Apparently, unaware of our ruling in Serrano, petitioner claims that the 5th paragraph of Section 10, R.A. No. 8042, is violative of Section 1,22 Article III and Section 3,23 Article XIII of the Constitution to the extent that it gives an erring employer the option to pay an illegally dismissed migrant worker only three months for every year of the unexpired term of his contract; that said provision of law has long been a source of abuse by callous employers against migrant workers; and that said provision violates the equal protection clause under the Constitution because, while illegally dismissed local workers are guaranteed under the Labor Code of reinstatement with full backwages computed from the time compensation was withheld from them up to their actual reinstatement, migrant workers, by virtue of Section 10 of R.A. No. 8042, have to waive nine months of their collectible backwages every time they have a year of unexpired term of contract to reckon with. Finally, petitioner posits that, assuming said provision of law is constitutional, the CA gravely abused its discretion when it reduced petitioner’s backwages from nine months to three months as his nine-month unexpired term cannot accommodate the lesser relief of three months for every year of the unexpired term.24 On the other hand, respondents, aware of our ruling in Serrano, aver that our pronouncement of unconstitutionality of the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in Serrano should not apply in this case because Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and obligations of the parties in case of Illegal Dismissal of a migrant worker and is not merely procedural in character. Thus, pursuant to the Civil Code, there should be no retroactive application of the law in this case. Moreover, respondents asseverate that petitioner’s tanker allowance of US$130.00 should not be included in the computation of the award as petitioner’s basic salary, as provided under his contract, was only US$1,300.00. Respondents submit that the CA erred in its computation since it included the said tanker allowance. Respondents opine that petitioner should be entitled only to US$3,900.00 and not to US$4,290.00, as granted by the CA. Invoking Serrano, respondents claim that the tanker allowance should be excluded from the definition of the term "salary." Also, respondents manifest that the full sum of P878,914.47 in Intermare’s bank account was garnished and subsequently withdrawn and deposited with the NLRC Cashier of Tacloban City on February 14, 2007. On February 16, 2007, while this case was pending before the CA, the LA issued an Order releasing the amount of P781,870.03 to petitioner as his award, together with the sum of P86,744.44 to petitioner’s former lawyer as attorney’s fees, and the amount of P3,570.00 as execution and deposit fees. Thus, respondents pray that the instant petition be denied and that petitioner be directed to return to Intermare the sum of US$8,970.00 or its peso equivalent.25 On this note, petitioner counters that this new issue as to the inclusion of the tanker allowance in the computation of the award was not raised by respondents before the LA, the NLRC and the CA, nor was it raised in respondents’ pleadings other than in their Memorandum before this Court, which should not be allowed under the circumstances.26 The petition is impressed with merit. Prefatorily, it bears emphasis that the unanimous finding of the LA, the NLRC and the CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the tribunals’ unanimous finding of bad faith on the part of respondents, thus, warranting the award of moral and exemplary damages and attorney’s fees. What remains in issue,

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therefore, is the constitutionality of the 5th paragraph of Section 10 of R.A. No. 8042 and, necessarily, the proper computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal. Verily, we have already declared in Serrano that the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws. In an exhaustive discussion of the intricacies and ramifications of the said clause, this Court, in Serrano, pertinently held: The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.27 Moreover, this Court held therein that the subject clause does not state or imply any definitive governmental purpose; hence, the same violates not just therein petitioner’s right to equal protection, but also his right to substantive due process under Section 1, Article III of the Constitution.28 Consequently, petitioner therein was accorded his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042. We have already spoken. Thus, this case should not be different from Serrano. As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all. The general rule is supported by Article 7 of the Civil Code, which provides: Art. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary. The doctrine of operative fact serves as an exception to the aforementioned general rule. In Planters Products, Inc. v. Fertiphil Corporation,29 we held: The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it.30 Following Serrano, we hold that this case should not be included in the aforementioned exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFW’s security of tenure which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law. In the same vein, we cannot subscribe to respondents’ postulation that the tanker allowance of US$130.00 should not be included in the computation of the lump-sum salary to be awarded to petitioner. First. It is only at this late stage, more particularly in their Memorandum, that respondents are raising this issue. It was not raised before the LA, the NLRC, and the CA. They did not even assail the award accorded by the CA, which computed the lump-sum salary of petitioner at the basic salary of US$1,430.00, and which clearly included the US$130.00 tanker allowance. Hence, fair play, justice, and due process dictate that this Court cannot now, for the first time on appeal, pass upon this question. Matters not taken up below cannot be raised for the first time on appeal. They must be raised

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seasonably in the proceedings before the lower tribunals. Questions raised on appeal must be within the issues framed by the parties; consequently, issues not raised before the lower tribunals cannot be raised for the first time on appeal.31 Second. Respondents’ invocation of Serrano is unavailing. Indeed, we made the following pronouncements in Serrano, to wit: The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days and holidays.32 A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. Respondents themselves in their petition for certiorari before the CA averred that petitioner’s basic salary, pursuant to the contract, was "US$1,300.00 + US$130.00 tanker allowance."33 If respondents intended it differently, the contract per se should have indicated that said allowance does not form part of the basic salary or, simply, the contract should have separated it from the basic salary clause. A final note. We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte v. Nayona,34 this Court held that: Our overseas workers belong to a disadvantaged class. Most of them come from the poorest sector of our society. Their profile shows they live in suffocating slums, trapped in an environment of crimes. Hardly literate and in ill health, their only hope lies in jobs they find with difficulty in our country. Their unfortunate circumstance makes them easy prey to avaricious employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just to survive. Out of despondence, they will work under sub-human conditions and accept salaries below the minimum. The least we can do is to protect them with our laws. WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision dated February 28, 2007 and Resolution dated August 30, 2007 are hereby MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment contract consisting of nine months computed at the rate of US$1,430.00 per month. All other awards are hereby AFFIRMED. No costs. SO ORDERED.
ANTONIO EDUARDO B. NACHURA Associate Justice

G.R. No. 175558 February 8, 20125 SKIPPERS UNITED PACIFIC, INC. and SKIPPERS MARITIME SERVICES, INC., LTD., Petitioners, vs. NATHANIEL DOZA, NAPOLEON DE GRACIA, ISIDRO L. LATA, and CHARLIE APROSTA, Respondents. DECISION CARPIO, J.:

The Case This is a Petition for Review under Rule 45 assailing the 5 July 2006 Decision1 and 7 November 2006 Resolution2of the Court of Appeals in CA-G.R. SP No. 88148.3 This arose from consolidated labor case4 filed by seafarers Napoleon De Gracia (De Gracia), Isidro L. Lata (Lata), Charlie Aprosta (Aprosta), and Nathaniel Doza (Doza) against local manning agency Skippers United Pacific, Inc. and its foreign principal, Skippers Maritime Services, Inc., Ltd. (Skippers) for unremitted home allotment for the month of December 1998, salaries for the unexpired portion of their employment contracts, moral damages, exemplary damages, and
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attorney’s fees. Skippers, on the other hand, answered with a claim for reimbursement of De Gracia, Aprosta and Lata’s repatriation expenses, as well as award of moral damages and attorney’s fees. De Gracia, Lata, Aprosta and Doza’s (De Gracia, et al.) claims were dismissed by the Labor Arbiter for lack of merit.5 The Labor Arbiter also dismissed Skippers’ claims.6 De Gracia, et al. appealed7 the Labor Arbiter’s decision with the National Labor Relations Commission (NLRC), but the First Division of the NLRC dismissed the appeal for lack of merit. 8 Doza, et al.’s Motion for Reconsideration was likewise denied by the NLRC, 9 so they filed a Petition for Certiorari with the Court of Appeals (CA).10 The CA granted the petition, reversed the Labor Arbiter and NLRC Decisions, and awarded to De Gracia, Lata and Aprosta their unremitted home allotment, three months salary each representing the unexpired portion of their employment contracts and attorney’s fees.11 No award was given to Doza for lack of factual basis. 12 The CA denied Skippers’ Motion for Partial Reconsideration.13 Hence, this Petition. The Facts

Skippers United Pacific, Inc. deployed, in behalf of Skippers, De Gracia, Lata, and Aprosta to work on board the vessel MV Wisdom Star, under the following terms and conditions:

Name Position Contract Duration Basic Monthly Salary Contract Date

: : : : :

Napoleon O. De Gracia 3rd Engineer 10 months US$800.00 17 July 199814

Name Position Contract Duration Basic Monthly Salary Contract Date

: : : : :

Isidro L. Lata 4th Engineer 12 months US$600.00 17 April 199815

Name Position Contract Duration Basic Monthly Salary Contract Date

: : : : :

Charlie A. Aprosta Third Officer 12 months US$600.00 17 April 199816

Paragraph 2 of all the employment contracts stated that: "The terms and conditions of the Revised Employment Contract Governing the Employment of All Seafarers approved per Department Order No. 33 and Memorandum Circular No. 55, both series of 1996 shall be strictly and faithfully observed."17 No employment contract was submitted for Nathaniel Doza. De Gracia, et al. claimed that Skippers failed to remit their respective allotments for almost five months, compelling them to air their grievances with the Romanian Seafarers Free Union.18 On 16 December 1998, ITF Inspector Adrian Mihalcioiu of the Romanian Seafarers Union sent Captain Savvas of Cosmos Shipping a fax letter, relaying the complaints of his crew, namely: home allotment delay, unpaid salaries (only advances), late provisions, lack of laundry services (only one washing machine), and lack of maintenance of the vessel (perforated and unrepaired deck).19 To date, however, Skippers

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only failed to remit the home allotment for the month of December 1998.20On 28 January 1999, De Gracia, et al. were unceremoniously discharged from MV Wisdom Stars and immediately repatriated.21 Upon arrival in the Philippines, De Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter on 4 April 1999 and prayed for payment of their home allotment for the month of December 1998, salaries for the unexpired portion of their contracts, moral damages, exemplary damages, and attorney’s fees.22 Skippers, on the other hand, claims that at around 2:00 a.m. on 3 December 1998, De Gracia, smelling strongly of alcohol, went to the cabin of Gabriel Oleszek, Master of MV Wisdom Stars, and was rude, shouting noisily to the master.23 De Gracia left the master’s cabin after a few minutes and was heard shouting very loudly somewhere down the corridors.24 This incident was evidenced by the Captain’s Report sent via telex to Skippers on said date.25 Skippers also claims that at 12:00 noon on 22 January 1999, four Filipino seafarers, namely Aprosta, De Gracia, Lata and Doza, arrived in the master’s cabin and demanded immediate repatriation because they were not satisfied with the ship.26 De Gracia, et al. threatened that they may become crazy any moment and demanded for all outstanding payments due to them.27 This is evidenced by a telex of Cosmoship MV Wisdom to Skippers, which however bears conflicting dates of 22 January 1998 and 22 January 1999.28 Skippers also claims that, due to the disembarkation of De Gracia, et al., 17 other seafarers disembarked under abnormal circumstsances.29 For this reason, it was suggested that Polish seafarers be utilized instead of Filipino seamen. 30 This is again evidenced by a fax of Cosmoship MV Wisdom to Skippers, which bears conflicting dates of 24 January 1998 and 24 January 1999.31 Skippers, in its Position Paper, admitted non-payment of home allotment for the month of December 1998, but prayed for the offsetting of such amount with the repatriation expenses in the following manner:32
Seafarer De Gracia Aprosta Lata Repatriation Expense US$1,340.00 US$1,340.00 US$1,340.00 Home Allotment US$900.00 US$600.00 US$600.00 Balance US$440.00 US$740.00 US$740.00

Since De Gracia, et al. pre-terminated their contracts, Skippers claims they are liable for their repatriation expenses 33 in accordance with Section 19(G) of Philippine Overseas Employment Administration (POEA) Memorandum Circular No. 55, series of 1996 which states: G. A seaman who requests for early termination of his contract shall be liable for his repatriation cost as well as the transportation cost of his replacement. The employer may, in case of compassionate grounds, assume the transportation cost of the seafarer’s replacement. Skippers also prayed for payment of moral damages and attorney’s fees.34 The Decision of the Labor Arbiter The Labor Arbiter rendered his Decision on 18 February 2002, with its dispositive portion declaring: WHEREFORE, judgment is hereby rendered dismissing herein action for lack of merit. Respondents’ claim for reimbursement of the expenses they incurred in the repatriation of complainant Nathaniel Doza is likewise dismissed. SO ORDERED.35 The Labor Arbiter dismissed De Gracia, et al.’s complaint for illegal dismissal because the seafarers voluntarily preterminated their employment contracts by demanding for immediate repatriation due to dissatisfaction with the ship. 36 The Labor Arbiter held that such voluntary pre-termination of employment contract is akin to resignation, 37a form of termination by employee of his employment contract under Article 285 of the Labor Code. The Labor Arbiter gave weight and credibility to the telex of the master of the vessel to Skippers, claiming that De Gracia, et al. demanded for immediate

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repatriation.38 Due to the absence of illegal dismissal, De Gracia, et. al.’s claim for salaries representing the unexpired portion of their employment contracts was dismissed.39 The Labor Arbiter also dismissed De Gracia et al.’s claim for home allotment for December 1998. 40 The Labor Arbiter explained that payment for home allotment is "in the nature of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary benefit."41 Since De Gracia, et al. were not able to prove their entitlement to home allotment, such claim was dismissed.42 Lastly, Skippers’ claim for reimbursement of repatriation expenses was likewise denied, since Article 19(G) of POEA Memorandum Circular No. 55, Series of 1996 allows the employer, in case the seafarer voluntarily pre-terminates his contract, to assume the repatriation cost of the seafarer on compassionate grounds.43 The Decision of the NLRC The NLRC, on 28 October 2002, dismissed De Gracia, et al.’s appeal for lack of merit and affirmed the Labor Arbiter’s decision.44 The NLRC considered De Gracia, et al.’s claim for home allotment for December 1998 unsubstantiated, since home allotment is a benefit which De Gracia, et al. must prove their entitlement to. 45 The NLRC also denied the claim for illegal dismissal because De Gracia, et al. were not able to refute the telex received by Skippers from the vessel’s master that De Gracia, et al. voluntarily pre-terminated their contracts and demanded immediate repatriation due to their dissatisfaction with the ship’s operations.46 The Decision of the Court of Appeals The CA, on 5 July 2006, granted De Gracia, et al.’s petition and reversed the decisions of the Labor Arbiter and NLRC, its dispositive portion reading as follows: WHEREFORE, the instant petition for certiorari is GRANTED. The Resolution dated October 28, 2002 and the Order dated August 31, 2004 rendered by the public respondent NLRC are ANNULLED and SET ASIDE. Let another judgment be entered holding private respondents jointly and severally liable to petitioners for the payment of: 1. Unremitted home allotment pay for the month of December, 1998 or the equivalent thereof in Philippine pesos: a. De Gracia = US$900.00 b. Lata = US$600.00 c. Aprosta = US$600.00 2. Salary for the unexpired portion of the employment contract or for 3 months for every year of the unexpired term, whichever is less, or the equivalent thereof in Philippine pesos: a. De Gracia = US$2,400.00 b. Lata = US$1,800.00 c. Aprosta = US$1,800.00 3. Attorney’s fees and litigation expenses equivalent to 10% of the total claims. SO ORDERED.47 The CA declared the Labor Arbiter and NLRC to have committed grave abuse of discretion when they relied upon the telex message of the captain of the vessel stating that De Gracia, et al. voluntarily pre-terminated their contracts and demanded immediate repatriation.48 The telex message was "a self-serving document that does not satisfy the requirement of substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as

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adequate to justify the conclusion that petitioners indeed voluntarily demanded their immediate repatriation." 49 For this reason, the repatriation of De Gracia, et al. prior to the expiration of their contracts showed they were illegally dismissed from employment.50 In addition, the failure to remit home allotment pay was effectively admitted by Skippers, and prayed to be offset from the repatriation expenses.51 Since there is no proof that De Gracia, et al. voluntarily pre-terminated their contracts, the repatriation expenses are for the account of Skippers, and cannot be offset with the home allotment pay for December 1998.52 No relief was granted to Doza due to lack of factual basis to support his petition. 53 Attorney’s fees equivalent to 10% of the total claims was granted since it involved an action for recovery of wages or where the employee was forced to litigate and incur expenses to protect his rights and interest.54 The Issues Skippers, in its Petition for Review on Certiorari, assigned the following errors in the CA Decision: a) The Court of Appeals seriously erred in not giving due credence to the master’s telex message showing that the respondents voluntarily requested to be repatriated. b) The Court of Appeals seriously erred in finding petitioners liable to pay backwages and the alleged unremitted home allotment pay despite the finding of the Labor Arbiter and the NLRC that the claims are baseless. c) The Court of Appeals seriously erred in awarding attorney’s fees in favor of respondents despite its findings that the facts attending in this case do not support the claim for moral and exemplary damages.55 The Ruling of this Court We deny the petition and affirm the CA Decision, but modify the award. For a worker’s dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process.56 Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second notice informs the employee of the employer’s decision to dismiss him. Before the issuance of the second notice, the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not necessary that an actual hearing be conducted.57 Substantive due process, on the other hand, requires that dismissal by the employer be made under a just or authorized cause under Articles 282 to 284 of the Labor Code. In this case, there was no written notice furnished to De Gracia, et al. regarding the cause of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the local manning agency, claiming that De Gracia, et al. were repatriated because the latter voluntarily pre-terminated their contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment contract "akin to resignation" and no illegal dismissal. However, as correctly ruled by the CA, the telex message is "a biased and self-serving document that does not satisfy the requirement of substantial evidence." If, indeed, De Gracia, et al. voluntarily pre-terminated their contracts, then De Gracia, et al. should have submitted their written resignations. Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving written notice on the employer at least one (1) month in advance." Given that provision, the law contemplates the requirement of a written notice of resignation. In the absence of a written resignation, it is safe to presume that the employer terminated the seafarers. In addition, the telex message relied upon by the Labor Arbiter and NLRC bore conflicting dates of 22

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January 1998 and 22 January 1999, giving doubt to the veracity and authenticity of the document. In 22 January 1998, De Gracia, et al. were not even employed yet by the foreign principal. For these reasons, the dismissal of De Gracia, et al. was illegal. On the issue of home allotment pay, Skippers effectively admitted non-remittance of home allotment pay for the month of December 1998 in its Position Paper. Skippers sought the repatriation expenses to be offset with the home allotment pay. However, since De Gracia, et al.’s dismissal was illegal, their repatriation expenses were for the account of Skippers and could not be offset with the home allotment pay. Contrary to the claim of the Labor Arbiter and NLRC that the home allotment pay is in "the nature of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary benefit," Section 8 of POEA Memorandum Circular No. 55, series of 1996, states that the allotment actually constitutes at least eighty percent (80%) of the seafarer’s salary: The seafarer is required to make an allotment which is payable once a month to his designated allottee in the Philippines through any authorized Philippine bank. The master/employer/agency shall provide the seafarer with facilities to do so at no expense to the seafarer. The allotment shall be at least eighty percent (80%) of the seafarer’s monthly basic salary including backwages, if any. (Emphasis supplied) Paragraph 2 of the employment contracts of De Gracia, Lata and Aprosta incorporated the provisions of above Memorandum Circular No. 55, series of 1996, in the employment contracts. Since said memorandum states that home allotment of seafarers actually constitutes at least eighty percent (80%) of their salary, home allotment pay is not in the nature of an extraordinary money or benefit, but should actually be considered as salary which should be paid for services rendered. For this reason, such non-remittance of home allotment pay should be considered as unpaid salaries, and Skippers shall be liable to pay the home allotment pay of De Gracia, et al. for the month of December 1998. Damages As admitted by Skippers in its Position Paper, the home allotment pay for December 1998 due to De Gracia, Lata and Aprosta is: Seafarer De Gracia Aprosta Lata Home Allotment Pay US$900.00 US$600.00 US$600.00

The monthly salary of De Gracia, according to his employment contract, is only US$800.00. However, since Skippers admitted in its Position Paper a higher home allotment pay for De Gracia, we award the higher amount of home allotment pay for De Gracia in the amount of US$900.00. Since the home allotment pay can be considered as unpaid salaries, the peso equivalent of the dollar amount should be computed using the prevailing rate at the time of termination since it was due and demandable to De Gracia, et al. on 28 January 1999. Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment contracts: In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. The Migrant Workers Act provides that salaries for the unexpired portion of the employent contract or three (3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co. Inc.,58 the Court,

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in an En Banc Decision, declared unconstitutional the clause "or for three months for every year of the unexpired term, whichever is less" and awarded the entire unexpired portion of the employment contract to the overseas Filipino worker. On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and once again reiterated the provision of awarding the unexpired portion of the employent contract or three (3) months for every year of the unexpired term, whichever is less. Nevertheless, since the termination occurred on January 1999 before the passage of the amendatory RA 10022, we shall apply RA 8042, as unamended, without touching on the constitutionality of Section 7 of RA 10022. The declaration in March 2009 of the unconstitutionality of the clause "or for three months for every year of the unexpired term, whichever is less" in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The unconstitutional provision is inoperative, as if it was not passed into law at all.59 As such, we compute the claims as follows: Seafarer De Gracia Lata Aprosta Contract Term 10 months 12 months 12 months Contract Date 17 Jul. 1998 17 Apr. 1998 17 Apr. 1998 Repatriation Date 28 Jan. 1999 28 Jan. 1999 28 Jan. 1999 Unexpired Term 3 months & 20 days 2 months & 20 days 2 months & 20 days Monthly Salary US$800 US$600 US$600 Total Claims US$2933.34 US$1600 US$1600

Given the above computation, we modify the CA’s imposition of award, and grant to De Gracia, et al. salaries representing the unexpired portion of their contracts, instead of salaries for three (3) months. Article 2219 of the Civil Code of the Philippines provides for recovery of moral damages in certain cases: Art. 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in Article 309; (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

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The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. Article 2229 of the Civil Code, on the other hand, provides for recovery of exemplary damages: Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. In this case, we agree with the CA in not awarding moral and exemplary damages for lack of factual basis. Lastly, Article 2208 of the Civil Code provides for recovery of attorney’s fees and expenses of litigation: Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen’s compensation and employer’s liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered. In all cases, the attorney’s fees and expenses of litigation must be reasonable. Article 111 of the Labor Code provides for a maximum award of attorney’s fees in cases of recovery of wages: Art. 111. Attorney’s fees. a. In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered. b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.

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Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries and protect their interest, we agree with the CA’s imposition of attorney’s fees in the amount of ten percent (10%) of the total claims.
1âwphi1

WHEREFORE, we AFFIRM the Decision of the Court of Appeals dated 5 July 2006 with MODIFICATION. Petitioners Skippers United Pacific, Inc. and Skippers Maritime Services Inc., Ltd. are jointly and severally liable for payment of the following: 1) Unremitted home allotment pay for the month of December 1998 in its equivalent rate in Philippine Pesos at the time of termination on 28 January 1999: a. De Gracia = US$900.00 b. Lata = US$600.00 c. Aprosta = US$600.00 2) Salary for the unexpired portion of the employment contract or its current equivalent in Philippine Pesos: a. De Gracia = US$2,933.34 b. Lata = US$1,600.00 c. Aprosta = US$1,600.00 3) Attorney’s fees and litigation expenses equivalent to 10% of the total claims. SO ORDERED.
ANTONIO T. CARPIO Associate Justice

G.R. No. 177498

January 18, 20126

STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP MANAGEMENT, Petitioners, vs. SULPECIO MEDEQUILLO, JR., Respondent. DECISION PEREZ, J.:

Before the Court is a Petition for Review on Certiorari1 of the Decision2 of the First Division of the Court of Appeals in CAG.R. SP No. 91632 dated 31 January 2007, denying the petition for certiorari filed by Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship Management (petitioners) and affirming the Resolution of the National Labor Relations Commission (NLRC). The dispositive portion of the assailed decision reads: WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed Decision promulgated on February 28, 2003 and the Resolution dated July 27, 2005 are AFFIRMED.3 The facts as gathered by this Court follow: On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the Adjudication Office of the Philippine Overseas Employment Administration (POEA) against the petitioners for illegal dismissal under a first contract and for failure to deploy under a second contract. In his complaint-affidavit,4 respondent alleged that: 1. On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama as Third Assistant Engineer on board the vessel "Stolt Aspiration" for a period of nine (9) months;
6

http://www.lawphil.net

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2. He would be paid with a monthly basic salary of $808.00 and a fixed overtime pay of $404.00 or a total of $1,212.00 per month during the employment period commencing on 6 November 1991; 3. On 8 November 1991, he joined the vessel MV "Stolt Aspiration"; 4. On February 1992 or for nearly three (3) months of rendering service and while the vessel was at Batangas, he was ordered by the ship’s master to disembark the vessel and repatriated back to Manila for no reason or explanation; 5. Upon his return to Manila, he immediately proceeded to the petitioner’s office where he was transferred employment with another vessel named MV "Stolt Pride" under the same terms and conditions of the First Contract; 6. On 23 April 1992, the Second Contract was noted and approved by the POEA; 7. The POEA, without knowledge that he was not deployed with the vessel, certified the Second Employment Contract on 18 September 1992. 8. Despite the commencement of the Second Contract on 21 April 1992, petitioners failed to deploy him with the vessel MV "Stolt Pride"; 9. He made a follow-up with the petitioner but the same refused to comply with the Second Employment Contract. 10. On 22 December 1994, he demanded for his passport, seaman’s book and other employment documents. However, he was only allowed to claim the said documents in exchange of his signing a document; 11. He was constrained to sign the document involuntarily because without these documents, he could not seek employment from other agencies. He prayed for actual, moral and exemplary damages as well as attorney’s fees for his illegal dismissal and in view of the Petitioners’ bad faith in not complying with the Second Contract. The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of the Migrant Workers and Overseas Filipinos Act of 1995. The parties were required to submit their respective position papers before the Labor Arbiter. However, petitioners failed to submit their respective pleadings despite the opportunity given to them.5 On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a judgment6 finding that the respondent was constructively dismissed by the petitioners. The dispositive portion reads: WHEREFORE, premises considered, judgment is hereby rendered, declaring the respondents guilty of constructively dismissing the complainant by not honoring the employment contract. Accordingly, respondents are hereby ordered jointly and solidarily to pay complainant the following:

1. $12,537.00 or its peso equivalent at the time of payment.7
The Labor Arbiter found the first contract entered into by and between the complainant and the respondents to have been novated by the execution of the second contract. In other words, respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract.8 However, he ruled that there was no substantial evidence to grant the prayer for moral and exemplary damages.9 The petitioners appealed the adverse decision before the National Labor Relations Commission assailing that they were denied due process, that the respondent cannot be considered as dismissed from employment because he was not even deployed yet and the monetary award in favor of the respondent was exorbitant and not in accordance with law.10 On 28 February 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter. The dispositive portion reads: WHEREFORE, premises considered, the decision under review is hereby, MODIFIED BY DELETING the award of overtime pay in the total amount of Three Thousand Six Hundred Thirty Six US Dollars (US $3,636.00). In all other respects, the assailed decision so stands as, AFFIRMED.11

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Before the NLRC, the petitioners assailed that they were not properly notified of the hearings that were conducted before the Labor Arbiter. They further alleged that after the suspension of proceedings before the POEA, the only notice they received was a copy of the decision of the Labor Arbiter.12 The NLRC ruled that records showed that attempts to serve the various notices of hearing were made on petitioners’ counsel on record but these failed on account of their failure to furnish the Office of the Labor Arbiter a copy of any notice of change of address. There was also no evidence that a service of notice of change of address was served on the POEA.13 The NLRC upheld the finding of unjustified termination of contract for failure on the part of the petitioners to present evidence that would justify their non-deployment of the respondent.14 It denied the claim of the petitioners that the monetary award should be limited only to three (3) months for every year of the unexpired term of the contract. It ruled that the factual incidents material to the case transpired within 1991-1992 or before the effectivity of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 which provides for such limitation.15 However, the NLRC upheld the reduction of the monetary award with respect to the deletion of the overtime pay due to the non-deployment of the respondent.16 The Partial Motion for Reconsideration filed by the petitioners was denied by the NLRC in its Resolution dated 27 July 2005.17 The petitioners filed a Petition for Certiorari before the Court of Appeals alleging grave abuse of discretion on the part of NLRC when it affirmed with modification the ruling of the Labor Arbiter. They prayed that the Decision and Resolution promulgated by the NLRC be vacated and another one be issued dismissing the complaint of the respondent. Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of the labor tribunal. The Court’s Ruling The following are the assignment of errors presented before this Court: I. THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED THE FIRST CONTRACT. 1. THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT MUST BE RESOLVED SEPARATELY FROM THE ALLEGATION OF FAILURE TO DEPLOY UNDER THE SECOND CONTRACT. 2. THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS FILED AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED FOR BEING BARRED BY PRESCRIPTION. II. THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT. 1. IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL WHEN THE EMPLOYMENT HAS NOT YET COMMENCED. 2. ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT, PETITIONERS CAN ONLY BE FOUND AS HAVING FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH VALID REASON. III.

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THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING THERE WAS BASIS FOR HOLDING PETITIONER LIABLE FOR "FAILURE TO DEPLOY" RESPONDENT, THE POEA RULES PENALIZES SUCH OMISSION WITH A MERE "REPRIMAND."18 The petitioners contend that the first employment contract between them and the private respondent is different from and independent of the second contract subsequently executed upon repatriation of respondent to Manila. We do not agree. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order for novation to take place, the concurrence of the following requisites is indispensable: 1. There must be a previous valid obligation, 2. There must be an agreement of the parties concerned to a new contract, 3. There must be the extinguishment of the old contract, and 4. There must be the validity of the new contract.19 In its ruling, the Labor Arbiter clarified that novation had set in between the first and second contract. To quote: xxx [T]his office would like to make it clear that the first contract entered into by and between the complainant and the respondents is deemed to have been novated by the execution of the second contract. In other words, respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract.20 This ruling was later affirmed by the Court of Appeals in its decision ruling that: Guided by the foregoing legal precepts, it is evident that novation took place in this particular case. The parties impliedly extinguished the first contract by agreeing to enter into the second contract to placate Medequillo, Jr. who was unexpectedly dismissed and repatriated to Manila. The second contract would not have been necessary if the petitioners abided by the terms and conditions of Madequillo, Jr.’s employment under the first contract. The records also reveal that the 2nd contract extinguished the first contract by changing its object or principal. These contracts were for overseas employment aboard different vessels. The first contract was for employment aboard the MV "Stolt Aspiration" while the second contract involved working in another vessel, the MV "Stolt Pride." Petitioners and Madequillo, Jr. accepted the terms and conditions of the second contract. Contrary to petitioners’ assertion, the first contract was a "previous valid contract" since it had not yet been terminated at the time of Medequillo, Jr.’s repatriation to Manila. The legality of his dismissal had not yet been resolved with finality. Undoubtedly, he was still employed under the first contract when he negotiated with petitioners on the second contract. As such, the NLRC correctly ruled that petitioners could only be held liable under the second contract.21 We concur with the finding that there was a novation of the first employment contract. We reiterate once more and emphasize the ruling in Reyes v. National Labor Relations Commission,22 to wit: x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the Court of Appeals in due course, are conclusive on this Court, which is not a trier of facts. xxxx x x x Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals. Such findings deserve full respect and, without justifiable reason, ought not to be altered, modified or reversed.(Emphasis supplied)23

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With the finding that respondent "was still employed under the first contract when he negotiated with petitioners on the second contract",24 novation became an unavoidable conclusion. Equally settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.25 But these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. 26 In this case, there was no showing of any arbitrariness on the part of the lower courts in their findings of facts. Hence, we follow the settled rule. We need not dwell on the issue of prescription. It was settled by the Court of Appeals with its ruling that recovery of damages under the first contract was already time-barred. Thus: Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may initiate money claims under the 1st contract commenced on the date of his repatriation. xxx The start of the three (3) year prescriptive period must therefore be reckoned on February 1992, which by Medequillo Jr.’s own admission was the date of his repatriation to Manila. It was at this point in time that Medequillo Jr.’s cause of action already accrued under the first contract. He had until February 1995 to pursue a case for illegal dismissal and damages arising from the 1st contract. With the filing of his ComplaintAffidavit on March 6, 1995, which was clearly beyond the prescriptive period, the cause of action under the 1st contract was already time-barred.27 The issue that proceeds from the fact of novation is the consequence of the non-deployment of respondent. The petitioners argue that under the POEA Contract, actual deployment of the seafarer is a suspensive condition for the commencement of the employment.28 We agree with petitioners on such point. However, even without actual deployment, the perfected contract gives rise to obligations on the part of petitioners. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.29 The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.30 The POEA Standard Employment Contract provides that employment shall commence "upon the actual departure of the seafarer from the airport or seaport in the port of hire."31 We adhere to the terms and conditions of the contract so as to credit the valid prior stipulations of the parties before the controversy started. Else, the obligatory force of every contract will be useless. Parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.32 Thus, even if by the standard contract employment commences only "upon actual departure of the seafarer", this does not mean that the seafarer has no remedy in case of non-deployment without any valid reason. Parenthetically, the contention of the petitioners of the alleged poor performance of respondent while on board the first ship MV "Stolt Aspiration" cannot be sustained to justify the non-deployment, for no evidence to prove the same was presented.33 We rule that distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.34 Further, we do not agree with the contention of the petitioners that the penalty is a mere reprimand. The POEA Rules and Regulations Governing Overseas Employment35 dated 31 May 1991 provides for the consequence and penalty against in case of non-deployment of the seafarer without any valid reason. It reads:

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Section 4. Worker’s Deployment. — An agency shall deploy its recruits within the deployment period as indicated below: xxx b. Thirty (30) calendar days from the date of processing by the administration of the employment contracts of seafarers. Failure of the agency to deploy a worker within the prescribed period without valid reasons shall be a cause for suspension or cancellation of license or fine. In addition, the agency shall return all documents at no cost to the worker.(Emphasis and underscoring supplied) The appellate court correctly ruled that the penalty of reprimand36 provided under Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers is not applicable in this case. The breach of contract happened on February 1992 and the law applicable at that time was the 1991 POEA Rules and Regulations Governing Overseas Employment. The penalty for non-deployment as discussed is suspension or cancellation of license or fine. Now, the question to be dealt with is how will the seafarer be compensated by reason of the unreasonable nondeployment of the petitioners? The POEA Rules Governing the Recruitment and Employment of Seafarers do not provide for the award of damages to be given in favor of the employees. The claim provided by the same law refers to a valid contractual claim for compensation or benefits arising from employer-employee relationship or for any personal injury, illness or death at levels provided for within the terms and conditions of employment of seafarers. However, the absence of the POEA Rules with regard to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. As earlier discussed, they do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him.37 We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment.lavvphil The law provides: Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x (Underscoring supplied) Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of the provision. Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months’ worth of salary as provided in the contract. 38 This is but proper because of the non-deployment of respondent without just cause. WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court of Appeals in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby ordered to pay Sulpecio Medequillo, Jr., the award of actual damages equivalent to his salary for nine (9) months as provided by the Second Employment Contract. SO ORDERED.
JOSE PORTUGAL PEREZ Associate Justice

G.R. No. 165935

February 8, 20127

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http://www.lawphil.net

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BRIGHT MARITIME CORPORATION (BMC)/DESIREE P. TENORIO, Petitioners, vs. RICARDO B. FANTONIAL, Respondent. DECISION PERALTA, J.:

This is a petition for review on certiorari1 of the Decision of the Court of Appeals in CA-G.R. SP No. 67571, dated October 25, 2004, reversing and setting aside the Decision of the National Labor Relations Commission (NLRC), and reinstating the Decision of the Labor Arbiter finding that respondent Ricardo B. Fantonial was illegally dismissed, but the Court of Appeals modified the award of damages. The facts are as follows: On January 15, 2000, a Contract of Employment2 was executed by petitioner Bright Maritime Corporation (BMC), a manning agent, and its president, petitioner Desiree P. Tenorio, for and in behalf of their principal, Ranger Marine S.A., and respondent Ricardo B. Fantonial, which contract was verified and approved by the Philippine Overseas Employment Administration (POEA) on January 17, 2000. The employment contract provided that respondent shall be employed as boatswain of the foreign vessel M/V AUK for one year, with a basic monthly salary of US$450, plus an allowance of US$220. The contract also provided for a 90 hours per month of overtime with pay and a vacation leave with pay of US$45 per month. Respondent was made to undergo a medical examination at the Christian Medical Clinic, which was petitioner’s accredited medical clinic. Respondent was issued a Medical Certificate 3 dated January 17, 2000, which certificate had the phrase "FIT TO WORK" stamped on its lower and upper portion. At about 3:30 p.m. of January 17, 2000, respondent, after having undergone the pre-departure orientation seminar and being equipped with the necessary requirements and documents for travel, went to the Ninoy Aquino International Airport upon instruction of petitioners. Petitioners told respondent that he would be departing on that day, and that a liaison officer would be delivering his plane ticket to him. At about 4:00 p.m., petitioners’ liaison officer met respondent at the airport and told him that he could not leave on that day due to some defects in his medical certificate. The liaison officer instructed respondent to return to the Christian Medical Clinic. Respondent went back to the Christian Medical Clinic the next day, and he was told by the examining physician, Dr. Lyn dela Cruz-De Leon, that there was nothing wrong or irregular with his medical certificate. Respondent went to petitioners’ office for an explanation, but he was merely told to wait for their call, as he was being lined-up for a flight to the ship's next port of call. However, respondent never got a call from petitioners. On May 16, 2000, respondent filed a complaint against petitioners for illegal dismissal, payment of salaries for the unexpired portion of the employment contract and for the award of moral, exemplary, and actual damages as well as attorney’s fees before the Regional Arbitration Branch No. 7 of the NLRC in Cebu City.4 In their Position Paper,5 petitioners stated that to comply with the standard requirements that only those who meet the standards of medical fitness have to be sent on board the vessel, respondent was referred to their accredited medical clinic, the Christian Medical Clinic, for pre-employment medical examination on January 17, 2000, the same day when respondent was supposed to fly to Germany to join the vessel. Unfortunately, respondent was not declared fit to work on January 17, 2000 due to some medical problems. Petitioners submitted the Affidavit6 of Dr. Lyn dela Cruz-De Leon, stating that the said doctor examined respondent on January 17, 2000; that physical and laboratory results were all within normal limits except for the finding, after chest x-ray, of Borderline Heart Size, and that respondent was positive to Hepatitis B on screening; that respondent underwent ECG to check if he had any heart problem, and the result showed left axis deviation. Dr. De Leon stated that she requested for a Hepatitis profile, which was done on January 18, 2000; that on January 20, 2000, the result of the Hepatitis profile showed non-infectious Hepatitis B. Further, Dr. De Leon stated that respondent was declared fit to work only on January 21, 2000; however, the date of the Medical Certificate was January 17, 2000, which was the date when she started to examine the patient per standard operating procedure.

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Petitioners argued that since respondent was declared fit to work only on January 21, 2000, he could not join the vessel anymore as it had left the port in Germany. Respondent was advised to wait for the next vacancy for boatswain, but he failed to report to petitioners’ office, and he gave them an incorrect telephone number. During the mandatory conference/conciliation stage of this case, petitioners offered respondent to join one of their vessels, but he refused. Petitioners further argued that they cannot be held liable for illegal dismissal as the contract of employment had not yet commenced based on Section 2 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA Memorandum Circular No. 055-96), which states: SEC 2. COMMENCEMENT/DURATION OF CONTRACT A. The employment contract between the employer and the seafarer shall commence upon actual departure of the seafarer from the airport or seaport in the point of hire and with a POEA approved contract. It shall be effective until the seafarer’s date of arrival at the point of hire upon termination of his employment pursuant to Section 18 of this Contract. Petitioners asserted that since respondent was not yet declared fit to work on January 17, 2000, he was not able to leave on the scheduled date of his flight to Germany to join the vessel. With his non-departure, the employment contract was not commenced; hence, there is no illegal dismissal to speak of. Petitioners prayed for the dismissal of the complaint. On September 25, 2000, Labor Arbiter Ernesto F. Carreon rendered a Decision7 in favor of respondent. The pertinent portion of the decision reads: Unarguably, the complainant and respondents have already executed a contract of employment which was duly approved by the POEA. There is nothing left for the validity and enforceability of the contract except compliance with what are agreed upon therein and to all their consequences. Under the contract of employment, the respondents are under obligation to employ the complainant on board M/V AUK for twelve months with a monthly salary of 450 US$ and 220 US$ allowance. The respondents failed to present plausible reason why they have to desist from complying with their obligation under the contract. The allegation of the respondents that the complainant was unfit to work is ludicrous. Firstly, the respondents' accredited medical clinic had issued a medical certificate showing that the complainant was fit to work. Secondly, if the complainant was not fit to work, a contract of employment would not have been executed and approved by the POEA. We are not also swayed by the argument of the respondents that since the complainant did not actually depart from Manila his contract of employment can be withdrawn because he has not yet commenced his employment. The commencement of the employment is not one of those requirements in order to make the contract of employment consummated and enforceable between the parties, but only as a gauge for the payment of salary. In this case, while it is true that the complainant is not yet entitled to the payment of wages because then his employment has not yet commenced, nevertheless, the same did not relieve the respondents from fulfilling their obligation by unilaterally revoking the contract as the same amounted to pre-termination of the contract without just or authorized cause perforce, we rule to be constitutive of illegal dismissal. Anent our finding of illegal dismissal, we condemn the respondent corporation to pay the complainant three (3) months salary and the refund of his placement fee, including documentation and other actual expenses, which we fixed at one month pay. The granted claims are computed as follows: US$670 x 4 months US$ 2,680.00 WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Bright Maritime Corporation to pay the complainant Ricardo Fantonial the peso equivalent at the time of actual payment of US$ 2,680.00. The other claims and the case against respondent Desiree P. Tenorio are dismissed for lack of merit.8 Petitioners appealed the decision of the Labor Arbiter to the NLRC.

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On May 31, 2001, the NLRC, Fourth Division, rendered a Decision 9 reversing the decision of the Labor Arbiter. The dispositive portion of the NLRC decision reads: WHEREFORE, premises considered, the decision of Labor Arbiter Ernesto F. Carreon, dated 25 September 2000, is SET ASIDE and a new one is entered DISMISSING the complaint of the complainant for lack of merit. SO ORDERED.10 The NLRC held that the affidavit of Dr. Lyn dela Cruz-De Leon proved that respondent was declared fit to work only on January 21, 2000, when the vessel was no longer at the port of Germany. Hence, respondent’s failure to depart on January 17, 2000 to join the vessel M/V AUK in Germany was due to respondent’s health. The NLRC stated that as a recruitment agency, petitioner BMC has to protect its name and goodwill, so that it must ensure that an applicant for employment abroad is both technically equipped and physically fit because a labor contract affects public interest. Moreover, the NLRC stated that the Labor Arbiter’s decision ordering petitioners to refund respondent’s placement fee and other actual expenses, which was fixed at one month pay in the amount of US$670.00, does not have any bases in law, because in the deployment of seafarers, the manning agency does not ask the applicant for a placement fee. Hence, respondent is not entitled to the said amount. Respondent filed a motion for reconsideration of the NLRC decision, which motion was denied in a Resolution 11dated July 23, 2001. Respondent filed a petition for certiorari before the Court of Appeals, alleging that the NLRC committed grave abuse of discretion in rendering the Decision dated May 31, 2001and the Resolution dated July 23, 2001. On March 12, 2002, respondent’s counsel filed a Manifestation with Motion for Substitution of Parties due to the death of respondent on November 15, 2001, which motion was granted by the Court of Appeals. On October 25, 2004, the Court of Appeals rendered a Decision, the dispositive portion of which reads: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us REVERSING and SETTING ASIDE the May 31, 2001 Decision and the July 23, 2001 Resolution of the NLRC, Fourth Division, and REINSTATING the September 25, 2000 Decision of the Labor Arbiter with the modification that the placement fee and other expenses equivalent to one (1) month salary is deleted and that the private respondent Bright Maritime Corporation must also pay the amounts of P30,000.00 and P10,000.00 as moral and exemplary damages, respectively, to the petitioner.12 The Court of Appeals held that the NLRC, Fourth Division, acted with grave abuse of discretion in reversing the decision of the Labor Arbiter who found that respondent was illegally dismissed. It agreed with the Labor Arbiter that the unilateral revocation of the employment contract by petitioners amounted to pre-termination of the said contract without just or authorized cause. The Court of Appeals held that the contract of employment between petitioners and respondent had already been perfected and even approved by the POEA. There was no valid and justifiable reason for petitioners to withhold the departure of respondent on January 17, 2000. It found petitioners’ argument that respondent was not fit to work on the said date as preposterous, since the medical certificate issued by petitioners’ accredited medical clinic showed that respondent was already fit to work on the said date. The Court of Appeals stated, thus: Private respondent's contention, which was contained in the affidavit of Dr. Lyn dela Cruz-De Leon, that the Hepatitis profile was done only on January 18, 2000 and was concluded on January 20, 2000, is of dubious merit. For how could the said examining doctor place in the medical certificate dated January 17, 2000 the words "CLASS-B NON-Infectious Hepatitis" (Rollo, p. 17) if she had not conducted the hepatitis profile? Would the private respondent have us believe that its accredited physician would fabricate medical findings? It is obvious, therefore, that the petitioner had been fit to work on January 17, 2000 and he should have been able to leave for Germany to meet with the vessel M/V AUK, had it not been for the unilateral act by private respondent of preventing

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him from leaving. The private respondent was merely grasping at straws in attacking the medical condition of the petitioner just so it can justify its act in preventing petitioner from leaving for abroad.13 The Court of Appeals held that petitioners’ act of preventing respondent from leaving for Germany was tainted with bad faith, and that petitioners were also liable to respondent for moral and exemplary damages. Thereafter, petitioners filed this petition raising the following issues: I WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED A SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION WHEN IT HELD THE PETITIONERS LIABLE FOR ILLEGALLY TERMINATING THE PRIVATE RESPONDENT FROM HIS EMPLOYMENT. II WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN SETTING ASIDE THE OVERWHELMING EVIDENCE SHOWING THAT THE PRIVATE RESPONDENT FAILED TO COMPLY WITH THE REQUIREMENTS SET BY THE POEA RULES REGARDING FITNESS FOR WORK. III WHETHER OR NOT THE HONORABLE APPELLATE COURT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT AWARDED MONETARY BENEFITS TO THE PRIVATE RESPONDENT DESPITE THE PROVISION OF THE POEA [STANDARD EMPLOYMENT CONTRACT] TO THE CONTRARY. IV WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED SERIOUS ERROR WITH REGARD TO ITS FINDINGS OF FACTS, WHICH, IF NOT CORRECTED, WOULD CERTAINLY CAUSE GRAVE OR IRREPARABLE DAMAGE OR INJURY TO THE PETITIONERS.14 The general rule that petitions for review only allow the review of errors of law by this Court is not ironclad.15Where the issue is shrouded by a conflict of factual perceptions by the lower court or the lower administrative body, such as the NLRC in this case, this Court is constrained to review the factual findings of the Court of Appeals.16 Petitioners contend that the Court of Appeals erred in doubting the Affidavit of Dr. Lyn dela Cruz-De Leon, which affidavit stated that the Hepatitis profile of respondent was done only on January 18, 2000 and was concluded on January 20, 2000. Petitioners stated that they had no intention to fabricate or mislead the appellate court and the Labor Arbiter, but they had to explain the circumstances that transpired in the conduct of the medical examination. Petitioners reiterated that the medical examination was conducted on January 17, 2000 and the result was released on January 20, 2000. As explained by Dr. Lyn dela Cruz-De Leon, the date "January 17, 2000" was written on the medical examination certificate because it was the day when respondent was referred and initially examined by her. The medical examination certificate was dated January 17, 2000 not for any reason, but in accordance with a generally accepted medical practice, which was not controverted by respondent. Petitioners assert that respondent’s failure to join the vessel on January 17, 2000 should not be attributed to it for it was a direct consequence of the delay in the release of the medical report. Respondent was not yet declared fit to work at the time when he was supposed to be deployed on January 17, 2000, as instructed by petitioners’ principal. Respondent’s fitness to work is a condition sine qua non for purposes of deploying an overseas contract worker. Since respondent failed to qualify on the date designated by the principal for his deployment, petitioners had to find a qualified replacement considering the nature of the shipping business where delay in the departure of the vessel is synonymous to demurrage/damages on the part of the principal and on the vessel’s charterer. Without a clean bill of health, the contract of employment cannot be considered to have been perfected as it is wanting of an important requisite.

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Based on the foregoing argument of petitioners, the first issue to be resolved is whether petitioners’ reason for preventing respondent from leaving Manila and joining the vessel M/V AUK in Germany on January 17, 2000 is valid. The Court rules in the negative. The Court has carefully reviewed the records of the case, and agrees with the Court of Appeals that respondent’s Medical Certificate17 dated January 17, 2000, stamped with the words "FIT TO WORK," proves that respondent was medically fit to leave Manila on January 17, 2000 to join the vessel M/V AUK in Germany. The Affidavit of Dr. Lyn dela Cruz-De Leon that respondent was declared fit to work only on January 21, 2000 cannot overcome the evidence in the Medical Certificate dated January 17, 2000, which already stated that respondent had "Class-B Non-Infectious Hepatitis-B," and that he was fit to work. The explanation given by Dr. Lyn dela Cruz-De Leon in her affidavit that the Medical Certificate was dated January 17, 2000, since it carries the date when they started to examine the patient per standard operating procedure, does not persuade as it goes against logic and the chronological recording of medical procedures. The Medical Certificate submitted as documentary evidence18 is proof of its contents, including the date thereof which states that respondent was already declared fit to work on January 17, 2000, the date of his scheduled deployment. Next, petitioners contend that respondent’s employment contract was not perfected pursuant to the POEA Standard Employment Contract, which provides: SEC 2. COMMENCEMENT/DURATION OF CONTRACT A. The employment contract between the employer and the seafarer shall commence upon actual departure of the seafarer from the airport or seaport in the point of hire and with a POEA approved contract. It shall be effective until the seafarer’s date of arrival at the point of hire upon termination of his employment pursuant to Section 18 of this Contract.19 Petitioners argue that, as ruled by the NLRC, since respondent did not actually depart from the Ninoy Aquino International Airport in Manila, no employer-employee relationship existed between respondent and petitioners’ principal, Ranger Marine S.A., hence, there is no illegal dismissal to speak of, so that the award of damages must be set aside. Petitioners assert that they did not conceal any information from respondent related to his contract of employment, from his initial application until the release of the result of his medical examination. They even tried to communicate with respondent for another shipboard assignment even after his failed deployment, which ruled out bad faith. They pray that respondent’s complaint be dismissed for lack of merit. Petitioners’ argument is partly meritorious. An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the contract, and (c) cause of the obligation. 20 The object of the contract was the rendition of service by respondent on board the vessel for which service he would be paid the salary agreed upon. Hence, in this case, the employment contract was perfected on January 15, 2000 when it was signed by the parties, respondent and petitioners, who entered into the contract in behalf of their principal, Ranger Marine S.A., thereby signifying their consent to the terms and conditions of employment embodied in the contract, and the contract was approved by the POEA on January 17, 2000. However, the employment contract did not commence, since petitioners did not allow respondent to leave on January 17, 2000 to embark the vessel M/V AUK in Germany on the ground that he was not yet declared fit to work on the day of departure, although his Medical Certificate dated January 17, 2000 proved that respondent was fit to work. In Santiago v. CF Sharp Crew Management, Inc.,21 the Court held that the employment contract did not commence when the petitioner therein, a hired seaman, was not able to depart from the airport or seaport in the point of hire; thus, no employer-employee relationship was created between the parties. Nevertheless, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action

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against the erring party.22 If the reverse happened, that is, the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.23 The Court agrees with the NLRC that a recruitment agency, like petitioner BMC, must ensure that an applicant for employment abroad is technically equipped and physically fit because a labor contract affects public interest. Nevertheless, in this case, petitioners failed to prove with substantial evidence that they had a valid ground to prevent respondent from leaving on the scheduled date of his deployment. While the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.24 Petitioners’ act of preventing respondent from leaving and complying with his contract of employment constitutes breach of contract for which petitioner BMC is liable for actual damages to respondent for the loss of one-year salary as provided in the contract.25 The monthly salary stipulated in the contract is US$670, inclusive of allowance. The Court upholds the award of moral damages in the amount of P30,000.00, as the Court of Appeals correctly found petitioners’ act was tainted with bad faith,26 considering that respondent’s Medical Certificate stated that he was fit to work on the day of his scheduled departure, yet he was not allowed to leave allegedly for medical reasons.1âwphi1 Further, the Court agrees with the Court of Appeals that petitioner BMC is liable to respondent for exemplary damages,27 which are imposed by way of example or correction for the public good in view of petitioner’s act of preventing respondent from being deployed on the ground that he was not yet declared fit to work on the date of his departure, despite evidence to the contrary. Such act, if tolerated, would prejudice the employment opportunities of our seafarers who are qualified to be deployed, but prevented to do so by a manning agency for unjustified reasons. Exemplary damages are imposed not to enrich one party or impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions.28 In this case, petitioner should be held liable to respondent for exemplary damages in the amount of P50,000.00,29 following the recent case of Claudio S. Yap v. Thenamaris Ship’s Management, et al.,30 instead of P10,000.00 The Court also holds that respondent is entitled to attorney’s fees in the concept of damages and expenses of litigation.31 Attorney's fees are recoverable when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest.32 Petitioners’ failure to deploy respondent based on an unjustified ground forced respondent to file this case, warranting the award of attorney’s fees equivalent to ten percent (10%) of the recoverable amount.33 WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 67571, dated October 25, 2004, is AFFIRMED with modification. Petitioner Bright Maritime Corporation is hereby ORDERED to pay respondent Ricardo B. Fantonial actual damages in the amount of the peso equivalent of US$8,040.00, representing his salary for one year under the contract; moral damages in the amount Thirty Thousand Pesos (P30,000.00); exemplary damages that is increased from Ten Thousand Pesos (P10,000.00) to Fifty Thousand Pesos (P50,000.00), and attorney’s fees equivalent to ten percent (10%) of the recoverable amount. Costs against petitioners. SO ORDERED.
DIOSDADO M. PERALTA Associate Justice

G.R. No. 178204 August 20, 2008 [Formerly G.R. No. 156497] THE PEOPLE OF THE PHILIPPINES, appellee, vs. MARCOS GANIGAN, appellant.

562 SCRA 741

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DECISION TINGA, J.:

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Before us for automatic review is the Decision1 dated 14 November 2006 of the Court of Appeals affirming the judgment of conviction2 for the crime of illegal recruitment rendered by the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 21.3 In an Information filed before the RTC, accused Ruth, Monchito, Eddie, Avelin Sulaiman and Marcos (appellant), all surnamed Ganigan, were charged with illegal recruitment committed as follows: That sometime between the period from July and August 1998 in Plaridel, Bulacan and within the jurisdiction of this Honorable Court, the above-named accused, representing themselves to have the capacity to contract, enlist and transport workers for employment in New Zealand, conspiring, confederating and mutually helping one another, did then and there willfully, unlawfully and feloniously recruit for a fee the following persons namely: MAURO EUSEBIO, VALENTINO CRISOSTOMO and LEONORA DOMINGO, all residents of Sto. Niño, Plaridel, Bulacan for employment in New Zealand, without first obtaining the required license and/or authority from the Philippine Overseas Employment Administration. CONTRARY TO LAW.4 Only appellant was arrested. The other accused remained at large. Appellant, assisted by counsel, pleaded not guilty on arraignment. Trial ensued. The three private complainants, Leonora Domingo (Leonora), Mauro Reyes (Mauro), and Valentino Crisostomo (Valentino), testified for the prosecution. They narrated that they first met appellant in the house of Manolito Reyes in Plaridel, Bulacan in June 1998. Appellant allegedly made representations to private complainants, among others, that his brother, Monchito, and his sister-in-law, Ruth, had the capacity to recruit apple and grape pickers for employment in New Zealand.5 On 5 July 1998, the group, composed of the three private complainants and 35 others, 6 went to La Union where they met with Monchito and Ruth. Ruth proceeded to explain their prospective employment with a $1,200.00 monthly salary. Ruth also required the group to attend bible study sessions every Sunday because their prospective employer is a devout Catholic. Pursuant to their desire to work in New Zealand, the group attended bible study from 5 July to December 1998.7 Each member of the group was asked to pay P2,000.00 as assurance fee.8 Leonora paid an additionalP400.00 for her National Statistics Office-issued birth certificate,9 P500.00 for physical examination andP320.00 for medical fee.10 Mauro gave an additional P320.00 for medical expenses11 whereas Valentino shelled out P180.00 for pictures, P1,000.00 for biodata and P350.00 for medical examination.12 The three attested that appellant received their payment and a document was prepared by one of their companions as evidence of the receipt. 13 The exhibits submitted by the prosecution show that Monchito acknowledged having received a total of P101,480.00 from various applicants.14 Other documents showed that appellant and Ruth received payment from the applicants.15 Ruth and appellant allegedly promised them that they would leave for New Zealand before October 1998. When they were unable to leave, however, they were told that their prospective employer would arrive in the Philippines on 22 November 1998. On the designated date, they were informed that their prospective employer fell down the stairway of the airplane. An interview was then scheduled on 29 December 1998 but on that day, they were told that their prospective employer had been held up. This prompted the complainants to go to the Philippine Overseas Employment Administration (POEA) to check on the background of the accused. They learned that appellant, Ruth and Monchito do not have the authority to recruit workers for employment abroad.16 Certifications to that effect were issued by the POEA.17 Appellant denied having recruited private complainants for work abroad. He claimed that he himself was also a victim as he had also paid P3,000.00 for himself and P2,000.00 for his daughter. He likewise attended the bible study sessions as a requirement for the overseas employment.18 He contended that he was merely implicated in the case because he was the only one apprehended among the accused.19

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The trial court rendered judgment convicting appellant of the crime of illegal recruitment. The dispositive portion of the decision reads: Wherefore, all premises considered, this Court finds and so holds that the prosecution was able to establish by proof beyond reasonable doubt the criminal culpability of the accused Marcos Ganigan on the offense charged against him. Accordingly, this Court finds him guilty of the crime of illegal recruitment in large scale resulting in economic sabotage as defined under Section 6 and penalized under Section 7(b) of Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995. Accordingly, he is sentenced to suffer the penalty of life imprisonment and to pay a fine of P500,000.00. Accused Marcos Ganigan is also directed to pay complainants Leonora Domingo, Mauro Reyes and Valentino Crisostomo the amounts of P2,400.00 each plus the sum of P500.00 for Leonora Domingo for actual damages and P25,000.00 as and for moral damages. With regard to accused Ruth Ganigan, Monchito Ganigan, Eddie Ganigan and Avelin Sulaiman Ganigan, who remain at large until this time, the case against them is ordered archived. Let an alias Warrant of arrest be issued for their apprehension. SO ORDERED.20 The trial court found that all elements of illegal recruitment in large scale had been established through the testimonial and documentary evidence of the prosecution. In view of the penalty imposed, the case was elevated to this Court on automatic review. However, this Court resolved to transfer the case to the Court of Appeals for intermediate review in light of our ruling in People v. Mateo.21 On 14 November 2006, the Court of Appeals affirmed the trial court's decision. Upon receipt of the unfavorable decision, appellant filed a notice of appeal. On 15 October 2007, this Court resolved to accept the case and to require the parties to simultaneously submit their respective supplemental briefs. The Office of the Solicitor General (OSG) filed a Manifestation and Motion22 stating that it would no longer file any supplemental briefs and instead adopt its appellee's brief filed on 12 January 2006. Appellant likewise manifested that he would merely adopt his appellant's brief.23 Appellant argues that the prosecution has failed to establish his guilt beyond reasonable doubt. He maintains that he did not participate in any recruitment activity and that the alleged payments made by private complainants were for membership in the Christian Catholic Mission, as shown by the fact that private complainants have regularly attended bible study sessions from 5 July to November 1998. He also points out that nothing on record would show that the necessary training or orientation seminar pertaining to the supposed employment has ever been conducted. Assuming arguendo that the Christian Catholic Mission was only a front to an illegal venture, appellant avers that he was not part of the conspiracy because he was a victim himself as he in fact also paid assurance fees for membership in the Christian Catholic Mission. He laments that aside from introducing private complainants to Ruth, he has not done any other act tantamount to recruitment. The OSG defended the decision of the trial court in giving full faith and credence to the testimonies of the complaining witnesses. It contends that there is no showing that the victims were impelled by any ill motive to falsely testify against appellant. It asserts that the collective testimony of the witnesses has categorically established appellant's participation in the crime.24 The crime of illegal recruitment is committed when these two elements concur: (1) the offenders have no valid license or authority required by law to enable them to lawfully engage in the recruitment and placement of workers; and (2) the offenders undertake any activity within the meaning of recruitment and placement defined in Article 13(b) or any prohibited practices enumerated in Article 34 of the Labor Code. In case of illegal recruitment in large scale, a third element is added - that the accused commits the acts against three or more persons, individually or as a group.25

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Article 13(b) defines recruitment and placement as "any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers; and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not." In the simplest terms, illegal recruitment is committed by persons who, without authority from the government, give the impression that they have the power to send workers abroad for employment purposes.26 Since appellant, along with the other accused, made misrepresentations concerning their purported power and authority to recruit for overseas employment, and in the process collected from private complainants various amounts in the guise of placement fees, the former clearly committed acts constitutive of illegal recruitment. In fact, this Court held that illegal recruiters need not even expressly represent themselves to the victims as persons who have the ability to send workers abroad. It is enough that these recruiters give the impression that they have the ability to enlist workers for job placement abroad in order to induce the latter to tender payment of fees.27 It is clear from the testimonies of private complainants that appellant undertook to recruit them for a purported employment in New Zealand and in the process collected various amounts from them as "assurance fees" and other fees related thereto. Private complainants testified in a clear, positive and straightforward manner. Leonora testified that appellant recruited her to work in New Zealand as a fruit picker and was promised by Ruth a monthly salary of $1,200.00. She was required to pay an assurance fee of P2,000.00. She later learned that appellant and his cohorts had not been licensed by the POEA to recruit for overseas employment.28 On cross-examination, she confirmed that she turned over the amount of fees to appellant with the understanding that such payment was for employment abroad.29 Mauro similarly recounted that he was introduced to Monchito and Ruth by appellant as an applicant for farm work in New Zealand. He was told to prepare P2,000.00 as assurance fee, which he paid to appellant. When he was unable to leave, he checked with the POEA and found out that appellant had no license to recruit.30 During the cross-examination, Mauro was firm in his stance that he paid the amount of P2,000.00 as assurance of employment in New Zealand. Furthermore, he regularly attended the bible study as a requirement for said employment.31 Valentino's testimony corroborated that of Leonora and Mauro.32 The trial court found these testimonies credible and convincing. Well-settled is the doctrine that great weight is accorded to the factual findings of the trial court particularly on the ascertainment of the credibility of witnesses; this can only be discarded or disturbed when it appears in the record that the trial court overlooked, ignored or disregarded some fact or circumstance of weight or significance which if considered would have altered the result.33 In the present case, we find no reason to depart from the rule. Verily, we agree with the OSG that the testimonies of private complainants have adequately established the elements of the crime, as well as appellant's indispensable participation therein. Appellant recruited at least three persons, the private complainants in this case, giving them the impression that he and his relatives had the capability of sending them to New Zealand for employment as fruit pickers. The OSG adds that appellant went to Bulacan to invite the victims and accompanied them to a fellowship and briefing in La Union; that appellant misrepresented that joining the religious group would ensure their overseas employment; and that appellant without any license or authority to recruit, collected various amounts from private complainants. Appellant miserably failed to convince this Court that the payments made by the complainants were actually for their membership in the religious organization. He did not present any document to prove this allegation. For their part, private complainants were adamant that the payments made to appellant were for purposes of employment to New Zealand. They further explained that their participation in the bible study sessions was but a requirement imposed by appellant because their prospective employer was also a member of the same religious group. Moreover, appellant has failed to rebut the evidence presented by the prosecution consisting of a receipt of payment signed by him.34 His flimsy denial that the signature on the receipt was not his own does not merit consideration in light of the trial court's contrary finding.

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As between the positive and categorical testimonies of private complainants and the unsubstantiated denial proffered by appellant, this Court is inclined to give more weight to the former. In sum, appellant is correctly found guilty of large scale illegal recruitment tantamount to economic sabotage. Under Section 7(b) of Republic Act No. 8042, the penalty of life imprisonment and a fine of not less thanP500,000.00 nor more than P1,000.000.00 shall be imposed if illegal recruitment constitutes economic sabotage. WHEREFORE, premises considered, the decision of the Court of Appeals in CA-G.R. CR-H.C. No. 00867 is AFFIRMED. SO ORDERED.
DANTE O. TINGA Associate Justice

G.R. No. 171644

November 23, 20119

DELIA D. ROMERO, Petitioner, vs. PEOPLE OF THE PHILIPPINES, ROMULO pADLAN and ARTURO SIAPNO, Respondents. DECISION PERALTA, J.:

This is to resolve the Petition for Review on Certiorari1 dated March 25, 2006 of petitioner Delia D. Romero assailing the Decision2 dated July 18, 2005 and Resolution3 dated February 13, 2006 of the Court of Appeals (CA), affirming the Decision4 dated February 24, 2004 of the Regional Trial Court (RTC), Branch 44, Dagupan City, finding petitioner guilty beyond reasonable doubt of the crime of Illegal Recruitment as defined in paragraph (a) of Article 38 of Presidential Decree (P.D.) No. 2018. The records contain the following antecedent facts: Private respondent Romulo Padlan (Romulo) was a former classmate of petitioner in college. Sometime in September 2000 Romulo went to petitioner's stall (wedding gown rentals) at W. A. Jones St., Calasiao, Pangasinan to inquire about securing a job in Israel. Convinced by petitioner's words of encouragement and inspired by the potential salary of US$700.00 to US$1,200.00 a month, Romulo asked petitioner the amount of money required in order for him to be able to go to Israel. Petitioner informed him that as soon as he could give her US$3,600.00, his papers would be immediately processed. To raise the amount, Romulo secured a loan from a bank and borrowed some more from his friends. When he was able to raise the amount, Romulo went back to petitioner and handed her the money. Petitioner contacted Jonney Erez Mokra who instructed Romulo to attend a briefing at his (Jonney's) house in Dau, Mabalacat, Pampanga. Romulo was able to leave for Israel on October 26, 2000 and was able to secure a job with a monthly salary of US$650.00. Unfortunately, after two and a half months, he was caught by Israel's immigration police and detained for 25 days. He was subsequently deported because he did not possess a working visa. On his return, Romulo demanded from petitioner the return of his money, but the latter refused and failed to do so. On the other hand, private respondent Arturo Siapno is petitioner's nephew. Sometime in August 2000, he went to petitioner's stall. He was convinced by the petitioner that if he could give her US$3,600.00 for the processing of his papers, he could leave the country within 1 to 2 weeks for a job placement in Israel. Arturo contacted a relative in the U.S. to ask the latter to cover the expenses for the former's overseas job placement. The relative sent the US$3,000.00 to Teresita D. Visperas, petitioner's sister in Israel. Petitioner processed Arturo's papers and contacted Jonney Erez Mokra. Jonney instructed Arturo to attend a briefing in Dau, Mabalacat, Pampanga. Afterwards, Arturo left for Israel sometime in September 2000. He was able to work and receive US$800.00 salary per month. After three months of stay in Israel, he was caught by the immigration officials, incarcerated for ten days and was eventually deported. After arriving in the country, Arturo immediately sought the petitioner. Petitioner promised him that she would send him back to Israel, which did not happen. Arturo, after learning that Romulo suffered the same fate, checked with the Department of Labor and Employment (DOLE) Dagupan District Office whether petitioner, Teresita D. Visperas and Jonney Erez Mokra had any license or authority to
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recruit employees for overseas employment. Finding that petitioner and the others were not authorized to recruit for overseas employment, Arturo and Romulo filed a complaint against petitioner, Teresita and Jonney before the National Bureau of Investigation (NBI). Consequently, an Information dated June 18, 2001 was filed against petitioner and Jonney Erez Mokra for the crime of Illegal Recruitment which reads as follows: That sometime in the month of August and September 2000 in the Municipality of Calasiao, Province of Pangasinan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, not being licensee or holder of authority, conspiring, confederating and mutually helping one another, did then and there, wilfully, unlawfully and feloniously undertake and perform recruitment activity by recruiting ARTURO SIAPNO and ROMULO PADLAN to a supposed job abroad particularly in Israel, for a fee, without first securing the necessary license and permit to do the same. CONTRARY to Art. 38 (a) of P.D. 442, as amended by P.D. 2018. Upon arraignment on August 20, 2001, petitioner, with the assistance of her counsel pleaded not guilty, whereas accused Jonney Erez Mokra was and is still at-large. Thereafter, trial on the merits ensued. To establish the facts earlier mentioned, the prosecution presented the testimonies of Romulo Padlan and Arturo Siapno. Petitioner, on the other hand, offered her own testimony, as well as Satchi Co Pontace’s to prove that petitioner did not recruit the private respondents. According to petitioner, private respondents went to her to inquire about the working status of her sister in Israel. She told them that her sister was doing well. When private respondents asked her how her sister was able to go to Israel, petitioner told them that she does not know and that she will have to ask her sister about that matter. Petitioner then called her sister and told her that the private respondents wanted to ask for her help in going to Israel. It was petitioner's sister and the private respondents who communicated with each other, and the petitioner had no knowledge as to the content of the former's conversations and agreements. The RTC found petitioner guilty as charged. The dispositive portion of its decision reads as follows: WHEREFORE, the Court finds accused Delia Romero guilty beyond reasonable doubt of the crime of Illegal Recruitment as defined in paragraph (a) of Article 38 of Presidential Decree No. 442, as amended by Presidential Decree No. 2018, and pursuant to law hereby sentences accused Delia Romero to suffer the penalty of Eight (8) Years and a fine of P100,000.00 plus costs. Accused Delia Romero is directed to return the amount of $3,600.00 or its equivalent to complainant Romulo Padlan and the amount of $3,600.00 or its equivalent to Arturo Siapno. The case as against Jonney Mokra aka Erez, is hereby ordered archived subject to reinstatement upon his arrest. SO ORDERED. On appeal, the CA affirmed in toto the decision of the RTC, the fallo of which states: WHEREFORE, premises considered, the appealed Decision is AFFIRMED in toto. SO ORDERED. Hence, the present petition after petitioner's motion for reconsideration was denied by the CA. Petitioner enumerates the following assignment of errors: First Assignment of Error The Court of Appeals erred in affirming the conviction of the accused of the offense charged (Illegal Recruitment) for said finding is contrary to law and evidence in record.

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Second Assignment of Error The Court of Appeals erred in affirming the conviction of the accused in interpreting the gesture of good faith of the petitioner as referral in the guise of illegal recruitment. Third Assignment of Error The Court of Appeals erred in affirming the conviction of the accused based merely on a certification from the DOLE-Dagupan District Office without said certification being properly identified and testified thereto. Fourth Assignment of Error The Court of Appeals erred in affirming the conviction of accused based on speculations and probabilities and not on the evidence on record. Fifth Assignment of Error The Court of Appeals erred in not acquitting the accused on the ground of reasonable doubt. Illegal recruitment is defined in Article 38 of the Labor Code, as amended, as follows: ART. 38. Illegal Recruitment. - (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable under Article 39 of this Code. The [Department] of Labor and Employment or any law enforcement officer may initiate complaints under this Article. (b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. Article 13 (b) of the same Code defines, "recruitment and placement" as: "any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, that any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement." The crime of illegal recruitment is committed when two elements concur, namely: (1) the offender has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers; and (2) he undertakes either any activity within the meaning of "recruitment and placement" defined under Article 13 (b), or any prohibited practices enumerated under Article 34 of the Labor Code.5 In disputing the absence of the first element, petitioner offers her opinion that the CA erred in affirming the trial court's reliance on a mere certification from the DOLE Dagupan District Office that she does not have the necessary licence to recruit workers for abroad. She claims that the prosecution committed a procedural lapse in not procuring a certification from the agency primarily involved, the Philippine Overseas Employment Administration (POEA). The said argument, however, is flawed. Under the first element, a non-licensee or non-holder of authority is any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor, or whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary.6 Clearly, the creation of the POEA did not divest the Secretary of Labor of his/her jurisdiction over recruitment and placement of activities. The governing rule is still Article 357 of the Labor Code. This is further discussed in this Court's ruling in Trans Action Overseas Corp. v. Secretary of Labor,8 wherein it was ruled that:

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In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, we held that: The penalties of suspension and cancellation of license or authority are prescribed for violations of the above-quoted provisions, among others. And the Secretary of Labor has the power under Section 35 of the law to apply these sanctions, as well as the authority, conferred by Section 36, not only to "restrict and regulate the recruitment and placement activities of all agencies," but also to "promulgate rules and regulations to carry out the objectives and implement the provisions" governing said activities. Pursuant to this rule-making power thus granted, the Secretary of Labor gave the POEA, on its own initiative or upon a filing of a complaint or report or upon request for investigation by any aggrieved person, "xxx (authority to) conduct the necessary proceedings for the suspension or cancellation of the license or authority of any agency or entity" for certain enumerated offenses including 1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or services, or any fee or bond in excess of what is prescribed by the Administration, and 2) any other violation of pertinent provisions of the Labor Code and other relevant laws, rules and regulations. The Administrator was also given the power to "order the dismissal of the case or the suspension of the license or authority of the respondent agency or contractor or recommend to the Minister the cancellation thereof." This power conferred upon the Secretary of Labor and Employment was echoed in People v. Diaz, viz.: A non-licensee or non-holder of authority means any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor, or whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary.9 Thus, the trial court did not err in considering the certification from the DOLE-Dagupan District Office stating that petitioner has not been issued any license by the POEA nor is a holder of an authority to engage in recruitment and placement activities. The Office of the Solicitor General (OSG), in its Comment10 dated October 9, 2006, also gives a valid observation as to the admissibility of the certification as evidence for the prosecution, thus: x x x Notably, there is nothing on record to show that petitioner objected to the admissibility of the certification for the purpose for which it was offered. Thus, petitioner's argument that the certification was inadmissible because it was not properly identified by the issuing officer should be rejected. It is well-settled that "[e]very objections to the admissibility of evidence shall be made at the time such evidence is offered or as soon thereafter as the ground for objection shall have become apparent, otherwise the objection shall be considered waived." Accordingly, the certification has been accepted as admissible by the trial court and properly considered as evidence for the party who submitted it.11 Anent the second element, petitioner insists that the CA was wrong in affirming the factual findings of the trial court. According to her, the accommodation extended by the petitioner to the private respondents is far from the referral as contemplated in Article 13 (b) of the Labor Code. It is a settled rule that factual findings of the trial courts, including their assessment of the witnesses' credibility, are entitled to great weight and respect by the Supreme Court, particularly when the CA affirmed such findings. 12 After all, the trial court is in the best position to determine the value and weight of the testimonies of witnesses.13 Nevertheless, the testimonies of the private respondents clearly establish the fact that petitioner's conduct falls within the term recruitment as defined by law. As testified by Romulo Padlan, petitioner convinced him and Arturo Siapno to give her US$3,600.00 for the processing of their papers, thus: Q: In September 2000, did you see the accused? A: There was, sir. Q: Where did you see each other? A: At her stall, sir.

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xxxx Q: What was your purpose in going to her stall? A: My purpose is to inquire about my application to Israel, sir. Q: What happened when you inquired from her about your application in going to Israel? A: I inquired from her and she responded with me with sweet words, sir. Q: What did you ask her when you first met her in her stall [in] September 2000? A: I asked her about the possible placement and the condition about the job in Israel. Q: And what was her response? A: Her response was positive and very encouraging, sir. Q: What was the very good and very encouraging response of the accused? A: Regarding the salary amounting to $700.00 to $1,000.00 dollars a month, sir. Q: When you were informed that the salary is quite good in Israel, what did you do, if any? A: I planned to produce money so that I can apply for Israel, sir. Q: And what transpired next after that? A: She told me that, "If you can produce $3,600.00 dollars then I will begin to process your papers. Q: After telling you that, what did you do, if any? A: So I planned to have a loan [from] Rural Bank of Central Pangasinan and borrow some money [from] my other friends, sir. xxxx Q: After producing that money, what did you do? xxxx A: I [went] to her stall [in] September 26 around 10:00 P.M. and handed the money to Mrs. Delia Romero, sir. xxxx Q: How much money did you give to the accused [in] September 2000? A: [In] September 2000, I gave her $1,500.00 US dollars, sir.14 Arturo Siapno also testified as to how petitioner convinced him to apply for a job in Israel and offered her services for a fee, thus: Q: [I]n August 2000, where were you?

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A: I was residing in Puelay-Carangalaan. Dagupan City. Q: On the same month, did you have any transaction with the accused? A: Yes sir[.] I met the accused at the appliance store which is located at Puelay and she offered me a job in Israel. Q: [When] she offered you a job in Israel, what did you do? A: I went to their stall which is located [in] Calasiao, and in the same place I also met several applicants. Q: When did you go to the stall of the accused? A: The following day, sir. xxxx Q: And what did you do at the stall of the accused in Calasiao, Pangasinan? A: When I went to the stall of the accused, since I saw other applicants, I was convinced to apply and I called up my aunt and asked for help. Q: Since you were at the stall of the accused in Calasiao, what transpired next? A: When I talked to her, she told me if I have a money of P3,600.00 I could easily depart within one (1) week or two (2) weeks.15 From the above testimonies, it is apparent that petitioner was able to convince the private respondents to apply for work in Israel after parting with their money in exchange for the services she would render. The said act of the petitioner, without a doubt, falls within the meaning of recruitment and placement as defined in Article 13 (b) of the Labor Code. As to petitioner's contention that the testimony of Arturo Siapno that the latter paid a certain amount of money to the former must not be given any credence due to the absence of any receipt or any other documentary evidence proving such, the same is without any merit. In People v. Alvarez,16 this Court ruled that in illegal recruitment cases, the failure to present receipts for money that was paid in connection with the recruitment process will not affect the strength of the evidence presented by the prosecution as long as the payment can be proved through clear and convincing testimonies of credible witnesses. It was discussed that: In illegal recruitment, mere failure of the complainant to present written receipts for money paid for acts constituting recruitment activities is not fatal to the prosecution, provided the payment can be proved by clear and convincing testimonies of credible witnesses. xxxx x x x The Court has already ruled that the absence of receipts in a case for illegal recruitment is not fatal, as long as the prosecution is able to establish through credible testimonial evidence that accused-appellant has engaged in illegal recruitment. Such case is made, not by the issuance or the signing of receipts for placement fees, but by engagement in recruitment activities without the necessary license or authority. In People v. Pabalan, the Court held that the absence of receipts for some of the amounts delivered to the accused did not mean that the appellant did not accept or receive such payments. Neither in the Statute of Frauds nor in the rules of evidence is the presentation of receipts required in order to prove the existence of a recruitment agreement and the procurement of fees in illegal recruitment cases. Such proof may come from the testimonies of witnesses.17 With regard to the penalty imposed by the RTC and affirmed by the CA, this Court finds it to be inappropriate. The trial court imposed the penalty of eight (8) years imprisonment and a fine of P100,000.00 plus cost and ordered petitioner to

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return the amount of US$3,600.00 or its equivalent to Romulo Padlan and the amount of US$3,600.00 or its equivalent to Arturo Siapno. Under Article 39 (c) of the Labor Code, which prescribes the penalty for illegal recruitment, any person who is neither a licensee nor a holder of authority under the law and found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four (4) years but not more than eight (8) years or a fine of not less thanP20,000.00 nor more than P100,000.00 or both such imprisonment and fine, at the discretion of the court. Clearly, the trial court, by imposing a straight penalty, disregarded the application of the Indeterminate Sentence Law.18 InArgoncillo v. Court of Appeals,19 this Court ruled that the application of the Indeterminate Sentence Law is mandatory to both the Revised Penal Code and the special laws, and in the same ruling, this Court summarized the application and non-application of the Indeterminate Sentence Law, to wit: x x x It is basic law that x x x the application of the Indeterminate Sentence Law is mandatory where imprisonment exceeds one (1) year, except only in the following cases: a. Offenses punished by death or life imprisonment. b. Those convicted of treason (Art. 114) conspiracy or proposal to commit treason (Art. 115). c. Those convicted of misprision of treason (Art. 116), rebellion (Art. 134), sedition (Art. 139) or espionage (Art. 117). d. Those convicted of piracy (Art. 122). e. Habitual delinquents (Art. 62, par. 5). Recidivists are entitled to an Indeterminate sentence. (People v. Jaramilla, L-28547, February 22, 1974) Offender is not disqualified to avail of the benefits of the law even if the crime is committed while he is on parole. (People v. Calreon, CA 78 O. G. 6701, November 19, 1982). f. Those who escaped from confinement or those who evaded sentence. g. Those granted conditional pardon and who violated the terms of the same. (People v. Corral, 74 Phil. 359). h. Those whose maximum period of imprisonment does not exceed one (1) year. Where the penalty actually imposed does not exceed one (1) year, the accused cannot avail himself of the benefits of the law, the application of which is based upon the penalty actually imposed in accordance with law and not upon that which may be imposed in the discretion of the court. (People v. Hidalgo, [CA] G.R. No. 00452CR, January 22, 1962). i. Those who are already serving final judgment upon the approval of the Indeterminate Sentence Law. The need for specifying the minimum and maximum periods of the indeterminate sentence is to prevent the unnecessary and excessive deprivation of liberty and to enhance the economic usefulness of the accused, since he may be exempted from serving the entire sentence, depending upon his behavior and his physical, mental, and moral record. The requirement of imposing an indeterminate sentence in all criminal offenses whether punishable by the Revised Penal Code or by special laws, with definite minimum and maximum terms, as the Court deems proper within the legal range of the penalty specified by the law must, therefore, be deemed mandatory.20 The Indeterminate Sentence Law provides that if, as in this case, the offense is punished by a law other than the Revised Penal Code, the court shall sentence the accused to an indeterminate sentence, the maximum term of which shall not exceed the maximum fixed by said law and the minimum shall not be less than the minimum term prescribed by the same. The imposable penalty is imprisonment of not less than four (4) years but not more than eight (8) years; hence, the proper penalty imposed should be within the range of four (4) years to eight (8) years. Thus, applying the Indeterminate Sentence Law, the Court can impose the minimum and maximum terms of the penalty of imprisonment within the range of four (4) years to eight (8) years.

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WHEREFORE, the Petition for Review on Certiorari dated March 25, 2006 of petitioner Delia D. Romero is hereby DENIED. Consequently, the Decision dated July 18, 2005 and Resolution dated February 13, 2006 of the Court of Appeals, affirming the Decision dated February 24, 2004 of the Regional Trial Court, finding petitioner guilty beyond reasonable doubt of the crime of Illegal Recruitment as defined in paragraph (a) of Article 38 of Presidential Decree (P.D.) No. 2018, are hereby AFFIRMED with the MODIFICATION that the penalty imposed should be imprisonment of four (4) years, as minimum, to seven (7) years, as maximum, and a fine of P100,000.00 plus cost and for petitioner to return the amount of $3,600.00 or its equivalent to Romulo Padlan and the amount of $3,600.00 or its equivalent to Arturo Siapno. SO ORDERED.
DIOSDADO M. PERALTA Associate Justice

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