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Republic

SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. No. 170139

August 5, 2014

SAMEER
OVERSEAS
PLACEMENT
vs.
JOY C. CABILES, Respondent.

AGENCY,

INC., Petitioner,

DECISION
LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our duty,
given the facts and the law, to approximate justice for her.
We are asked to decide a petition for review 1 on certiorari assailing the Court of Appeals’
decision2 dated June 27, 2005. This decision partially affirmed the National Labor
RelationsCommission’s resolution dated March 31, 2004,3declaring respondent’s
dismissal illegal, directing petitioner to pay respondent’s three-month salary equivalent
to New Taiwan Dollar (NT$) 46,080.00, and ordering it to reimburse the NT$3,000.00
withheld from respondent, and pay her NT$300.00 attorney’s fees.4
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement
agency.5 Responding to an ad it published, respondent, Joy C. Cabiles, submitted her
application for a quality control job in Taiwan.6
Joy’s application was accepted.7 Joy was later asked to sign a oneyear employment
contract for a monthly salary of NT$15,360.00. 8 She alleged that Sameer Overseas
Agency required her to pay a placement fee of P70,000.00 when she signed the
employment contract.9
Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997. 10 She
alleged that in her employment contract, she agreed to work as quality control for one
year.11 In Taiwan, she was asked to work as a cutter.12
Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain Mr. Huwang
from Wacoal informedJoy, without prior notice, that she was terminated and that "she
should immediately report to their office to get her salary and passport." 13 She was asked
to "prepare for immediate repatriation."14
Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total
of NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her plane ticket
to Manila.16
On October 15, 1997, Joy filed a complaint 17 with the National Labor Relations
Commission against petitioner and Wacoal. She claimed that she was illegally
dismissed.18 She asked for the return of her placement fee, the withheld amount for
repatriation costs, payment of her salary for 23 months as well as moral and exemplary
damages.19 She identified Wacoal as Sameer Overseas Placement Agency’s foreign
principal.20

Sameer Overseas Placement Agency alleged that respondent's termination was due to
her inefficiency, negligence in her duties, and her "failure to comply with the work
requirements [of] her foreign [employer]."21 The agency also claimed that it did not ask
for a placement fee of P70,000.00.22 As evidence, it showedOfficial Receipt No. 14860
dated June 10, 1997, bearing the amount of P20,360.00.23 Petitioner added that
Wacoal's accreditation with petitioner had already been transferred to the Pacific
Manpower & Management Services, Inc. (Pacific) as of August 6, 1997. 24 Thus,
petitioner asserts that it was already substituted by Pacific Manpower.25
Pacific Manpower moved for the dismissal of petitioner’s claims against it. 26 It alleged
that there was no employer-employee relationship between them. 27 Therefore, the
claims against it were outside the jurisdiction of the Labor Arbiter. 28 Pacific Manpower
argued that the employment contract should first be presented so that the employer’s
contractual obligations might be identified.29 It further denied that it assumed liability
for petitioner’s illegal acts.30
On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint. 31 Acting Executive Labor
Arbiter Pedro C.Ramos ruled that her complaint was based on mereallegations. 32 The
Labor Arbiter found that there was no excess payment of placement fees, based on the
official receipt presented by petitioner. 33 The Labor Arbiter found unnecessary a
discussion on petitioner’s transfer of obligations to Pacific 34 and considered the matter
immaterial in view of the dismissal of respondent’s complaint. 35
Joy appealed36 to the National Labor Relations Commission.
In a resolution37 dated March 31, 2004, the National Labor Relations Commission
declared that Joy was illegally dismissed. 38 It reiterated the doctrine that the burden of
proof to show that the dismissal was based on a just or valid cause belongs to the
employer.39 It found that Sameer Overseas Placement Agency failed to prove that there
were just causes for termination. 40 There was no sufficient proofto show that respondent
was inefficient in her work and that she failed to comply with company
requirements.41 Furthermore, procedural dueprocess was not observed in terminating
respondent.42
The National Labor Relations Commission did not rule on the issue of reimbursement of
placement fees for lack of jurisdiction.43 It refused to entertain the issue of the alleged
transfer of obligations to Pacific.44 It did not acquire jurisdiction over that issue because
Sameer Overseas Placement Agency failed to appeal the Labor Arbiter’s decision not to
rule on the matter.45
The National Labor Relations Commission awarded respondent only three (3) months
worth of salaryin the amount of NT$46,080, the reimbursement of the NT$3,000
withheld from her, and attorney’s fees of NT$300.46
The Commission denied the agency’s motion for reconsideration 47 dated May 12, 2004
through a resolution48 dated July 2, 2004.
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a
petition49 for certiorari with the Court of Appeals assailing the National Labor Relations
Commission’s resolutions dated March 31, 2004 and July 2, 2004.
The Court of Appeals50 affirmed the decision of the National Labor Relations
Commission with respect to the finding of illegal dismissal, Joy’s entitlement to the
equivalent of three months worth of salary, reimbursement of withheld repatriation
expense, and attorney’s fees.51 The Court of Appeals remanded the case to the National
Labor Relations Commission to address the validity of petitioner's allegations against
Pacific.52 The Court of Appeals held, thus: Although the public respondent found the

dismissal of the complainant-respondent illegal, we should point out that the NLRC
merely awarded her three (3) months backwages or the amount of NT$46,080.00,
which was based upon its finding that she was dismissed without due process, a finding
that we uphold, given petitioner’s lack of worthwhile discussion upon the same in the
proceedings below or before us. Likewise we sustain NLRC’s finding in regard to the
reimbursement of her fare, which is squarely based on the law; as well as the award of
attorney’s fees.
But we do find it necessary to remand the instant case to the public respondent for
further proceedings, for the purpose of addressing the validity or propriety of
petitioner’s third-party complaint against the transferee agent or the Pacific Manpower
& Management Services, Inc. and Lea G. Manabat. We should emphasize that as far as
the decision of the NLRC on the claims of Joy Cabiles, is concerned, the same is hereby
affirmed with finality, and we hold petitioner liable thereon, but without prejudice to
further hearings on its third party complaint against Pacific for reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby partly
AFFIRMED in accordance with the foregoing discussion, but subject to the caveat
embodied inthe last sentence. No costs.
SO ORDERED.53
Dissatisfied, Sameer Overseas Placement Agency filed this petition. 54
We are asked to determine whether the Court of Appeals erred when it affirmed the
ruling of the National Labor Relations Commission finding respondent illegally
dismissed and awarding her three months’ worth of salary, the reimbursement of the
cost ofher repatriation, and attorney’s fees despite the alleged existence of just causes of
termination.
Petitioner reiterates that there was just cause for termination because there was a
finding of Wacoal that respondent was inefficient in her work. 55
Therefore, it claims that respondent’s dismissal was valid.56
Petitioner also reiterates that since Wacoal’s accreditation was validly transferred to
Pacific at the time respondent filed her complaint, it should be Pacific that should now
assume responsibility for Wacoal’s contractual obligations to the workers originally
recruited by petitioner.57
Sameer Overseas Placement Agency’spetition is without merit. We find for respondent.
I
Sameer Overseas Placement Agency failed to show that there was just cause for causing
Joy’s dismissal. The employer, Wacoal, also failed to accord her due process of law.
Indeed, employers have the prerogative to impose productivity and quality standards at
work.58 They may also impose reasonable rules to ensure that the employees comply
with these standards.59 Failure to comply may be a just cause for their
dismissal.60 Certainly, employers cannot be compelled to retain the services of
anemployee who is guilty of acts that are inimical to the interest of the employer. 61 While
the law acknowledges the plight and vulnerability of workers, it does not "authorize the
oppression or self-destruction of the employer." 62 Management prerogative is
recognized in law and in our jurisprudence.

we follow the principle of lex loci contractus. in Article XIII. Herein the Philippines. The Constitution itself. It shall guarantee the rights of all workers to selforganization. and promote full employment and equality of employment opportunities for all. With respect to the rights of overseas Filipino workers. citation omitted) Even with respect to fundamental procedural rights. Again. employment agreements are more than contractual in nature. First.. in Triple Eight Integrated Services. Apparently. should not be abused. petitioner hopes tomake it appear that the labor laws of Saudi Arabia do not require any certification by a competent public health authority in the dismissal of employees due to illness. However. humane conditions of work. They may not be removed from employment without a validor just cause as determined by law and without going through the proper procedure. its implementing rules and regulations.. her employment was subject to the laws of the host country.65 this court noted: Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since Osdana was working in Saudi Arabia. including the right to strike in accordance with law. v. to wit: The State shall afford full protection to labor. Section 3.Furthermore. v. and a living wage.This prerogative.64 Employees are not stripped of their security of tenure when they move to work in a different jurisdiction."63Workers are entitled to substantive and procedural due process before termination.Thus. settled is the rule that the courts of the forum will not enforce any foreign claim obnoxious to the forum’s public policy. petitioners contend that the twin requirements ofnotice and hearing applies strictly only when the employment is within the Philippines and that these need not be strictly observed in cases of international maritime or overseas employment. collective bargaining and negotiations.67 to wit: Petitioners admit that they did notinform private respondent in writing of the charges against him and that they failed to conduct a formal investigation to give him opportunity to air his side. however.66 (Emphasis supplied. Theyshall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. and other laws affecting labor apply in this case. Therefore. Inc. guarantees the special protection of workers. Inc. organized and unorganized. and peaceful concerted activities. NLRC. .. this court emphasized in PCL Shipping Philippines. the Labor Code. local and overseas. NLRC. This public policy should be borne in mind in this case because to allow foreign employers to determine for and by themselves whether an overseas contract worker may be dismissed on the ground of illness would encourage illegal or arbitrary pretermination of employment contracts. It is "tempered with the employee’s right to security of tenure. They shall be entitled to security of tenure. petitioner’s argument is without merit. . established is the rule that lex loci contractus (the law of the place where the contract is made) governs in this jurisdiction. There is no question that the contract of employment in this case was perfected here in the Philippines. Security of tenure for labor is guaranteed by our Constitution.

71 To show that dismissal resulting from inefficiency in work is valid. 282. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. we do not see why the application of that ruling should be limited to probationary employment. it must be shown that: 1) the employer has set standards of conduct and workmanship against which the employee will be judged. Termination by employer.The Court does not agree. Petitioner’s allegation that respondentwas inefficient in her work and negligent in her duties69 may. it is not disputed that the Contract of Employment entered into by and between petitioners and private respondent was executed here in the Philippines with the approval of the Philippine Overseas Employment Administration (POEA). The provisions of the Constitution as well as the Labor Code which afford protection to labor apply to Filipino employees whether working within the Philippines or abroad. Hence. (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative."70 Failure to show that there was valid or just cause for termination would necessarily mean that the dismissal was illegal. Thus: Art. (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives. which allow termination ofthe employee only when there is "just cause or when [the probationary employee] fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his [or her] engagement.68 (Emphasis supplied. The burden of proving that there is just cause for termination is on the employer. "The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and after compliance with procedural due process requirements. 2) the standards of conduct and workmanship must have been communicated tothe employee. but only if petitioner was able to prove it. the principle of lex loci contractus (the law of the place where the contract is made) governs in this jurisdiction. That rule is basic to the idea of security of tenure and due ."72 However. and (e) Other causes analogous to the foregoing. and 3) the communication was made at a reasonable time prior to the employee’s performance assessment. Article 282 of the Labor Code enumerates the just causes of termination by the employer. citations omitted) By our laws. (b) Gross and habitual neglect by the employee of his duties. In the present case. therefore. Moreover. the Labor Code together with its implementing rules and regulations and other laws affecting labor apply in this case. constitute a just cause for termination under Article 282(b). This is similar to the law and jurisprudence on probationary employees.

" 73 In this case. and after complying with the due process requirements of notice and hearing.process. efficiency. The pre-determined standards that the employer sets are the bases for determining the probationary employee’s fitness. Assessing an employee’s work performance does not stop after regularization." 79 Petitioner failed to comply with the twin notices and hearing requirements. propriety. The bare allegations of petitioner are not sufficient to support a claim that there is just cause for termination. They patently show that the employersdid not comply with the due process requirement. the employer may exercise its management prerogative of terminating the employee found unqualified. The employer. This time. and qualifications as a regular employee. There is no proof that respondent was legally terminated. petitioner merely alleged that respondent failed to comply with her foreign employer’s work requirements and was inefficient in her work. She was also . Due process requires that the probationary employee be informed of such standards at the time of his or her engagement so he or she can adjusthis or her character or workmanship accordingly. Courts should remain vigilant on allegations of the employer’s failure to communicatework standards that would govern one’s employment "if [these are] to discharge in good faith [their] duty to adjudicate. 1997 effective on the same day and barely a month from her first workday. based on work standards. Petitioner did not even bother to specify what requirements were not met. Respondent started working on June 26. or what particular acts of respondent constituted inefficiency. what efficiency standards were violated. There was also no showing that respondent was sufficiently informed of the standards against which her work efficiency and performance were judged. The regular employee must constantlyattempt to prove to his or her employer that he or she meets all the standards for employment. which are guaranteed to all employees. 74 No evidence was shown to support such allegations. 77 The other notice must "[inform] the employee of the employer’s decision. whether their employment is probationary or regular. the standards to be met are set for the purpose of retaining employment or promotion.76 One of the written notices must inform the employee of the particular acts that may cause his or her dismissal."78 Aside from the notice requirement. Based on that determination. determines if an employee is still qualified and efficient. however. The parties’ conflict as to the position held by respondent showed that even the matter as basic as the job title was not clear. the employee must also be given "an opportunity to be heard. A valid dismissal requires both a valid cause and adherence to the valid procedure of dismissal. Petitioner failed the due process requirements to comply with Respondent’s dismissal less than one year from hiring and her repatriation on the same day show not onlyfailure on the partof petitioner to comply with the requirement of the existence of just cause for termination. 1997.75 The employer is required to give the charged employee at least two written notices before termination. on a regular basis. She was told that she was terminated on July 14. Proper adjustment to fit the standards upon which the employee’s qualifications will be evaluated will increase one’s chances of being positively assessed for regularization by his or her employer. The employee cannot be expected to meet any standard of character or workmanship if such standards were not communicated to him or her.

The performance bond to be filed by the recruitment/placementagency. states thatoverseas workers who were terminated without just. If the recruitment/placement agency is a juridical being. This provisions [sic] shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval." The exception is when "termination of employment is due solely to the fault of the worker." Sec. . MONEY CLAIMS. the corporate officers and directors and partners as the case may be.. 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. shall be answerable for all money claims or damages that may be awarded to the workers. is entitled to her salary for the unexpired portion ofthe employment contract that was violated together with attorney’s fees and reimbursement of amounts withheld from her salary. It reads: SEC. – Notwithstanding any provision of law to the contrary. shall themselves be jointly and solidarily liable with the corporation orpartnership for the aforesaid claims and damages. having been illegally dismissed. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution. In case of termination of overseas employment without just. 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.. valid or authorized cause as defined by law or contract. REPATRIATION OF WORKERS. 8042 states that "repatriation of the worker and the transport of his [or her] personal belongings shall be the primary responsibility of the agency which recruited or deployed the worker overseas. The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. .otherwise known as the Migrant Workers and Overseas Filipinos Act of1995. as provided by law. within ninety (90) calendar days after filing of the complaint. plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term. 10.repatriated on the same day that she was informed of her termination. is not the case. 15.. Her constitutional right to due process of law was violated. the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide. (Emphasis supplied) Section 15 of Republic Act No. 8042. moral. exemplary and other forms of damages." 80 which as we have established. or authorized cause "shall be entitled to the full reimbursement of his placement fee with interest of twelve (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. valid. whichever is less. II Respondent Joy Cabiles. The abruptness of the termination negated any finding that she was properly notified and given the opportunity to be heard. whichever is less. the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve (12%) per annum. Section 10 of Republic Act No. amendment or modification made locally or in a foreign country of the said contract.

82 this court ruled that the clause "or for three (3) months for every year of the unexpired term."85 We are aware that the clause "or for three (3) months for every year of the unexpired term. In Serrano v. Section 7 of Republic Act No. 10. Inc. as amended. The performance bond to de [sic] filed by the recruitment/placement agency.Section 10 of Republic Act No. Money Claims. and the reimbursement of the withheld NT$3. it is inoperative as if it has not been passed at all. in cases where the termination of employment is due solely to the fault of the worker. 8042.00. 8042 upon promulgation of Republic Act No. the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide.EMERGENCY REPATRIATION FUND. the repatriation of remains and transport of the personal belongings of a deceased worker and all costs attendant thereto shall be borne by the principal and/or local agency. whichever is less"83 is unconstitutional for violating the equal protection clause and substantive due process. shall be answerable for all money claims or damages that may be awarded to the workers. The Labor Code81 also entitles the employee to 10% of the amount of withheld wages as attorney’s feeswhen the withholding is unlawful. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval.. 10022 in 2010. moral. However.000.00 salary. as provided by law. the principal/employer or agency shall not in any manner be responsible for the repatriation of the former and/or his belongings. the corporate officers and directors and partners as the case .. If the recruitment/placement agency is a juridical being.– Notwithstanding any provision of law to the contrary. The Court of Appeals affirmedthe National Labor Relations Commission’s decision to award respondent NT$46. exemplary and other forms of damage. Inc. whichever is less"was reinstated in Republic Act No. Gallant Maritime Services. be increased to the amount equivalent to the unexpired term of the employment contract.84 A statute or provision which was declared unconstitutional is not a law. . 10022 provides: Section 7. it imposes no duties. We uphold the finding that respondent is entitled to all of these awards. Consistent with this mandate.080. is hereby amended to read as follows: SEC. The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. attorney’s fees of NT$300.. The award of the three-month equivalent of respondent’s salary should. All costs attendant to repatriation shall be borne by or charged to the agency concerned and/or its principal.00 or the threemonth equivalent of her salary. and Marlow Navigation Co. the NLRC shall endeavor to update and keep abreast with the developments in the global services industry. Likewise. it affords no protection.. it creates no office. which answered for her repatriation. 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. It "confers no rights. within ninety (90) calendar days after the filing of the complaint. – The repatriation of the worker and the transport of his personal belongings shall be the primary responsibility of the agency which recruited or deployed the worker overseas.. however.

the existence of Republic Act No. The law passed incorporates the exact clause already declared as unconstitutional. (Emphasis supplied) Republic Act No.may be. Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within thirty (30) days from approval of the settlement by the appropriate authority. plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term. When a law is passed. 2010. However. we are confronted with a unique situation. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution. (b) Suspension for not more than ninety (90) days. or any unauthorized deductions from the migrant worker’s salary. whichever is less. this court awaits an actual case that clearly raises adversarial positions in their proper context before considering a prayer to declare it as unconstitutional. This means that the reinstatement of the clause in Republic Act No. it shall be automatically disqualified.That the penalties herein provided shall be without prejudice to any liability which any such official may have incured [sic] under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph. 10022 may delay the execution of the judgment in this case. 86 Republic Act No. 10022 was promulgated on March 8. In case of termination of overseas employment without just.At minimum. shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. the worker shall be entitled to the full reimbursement if [sic] his placement fee and the deductions made with interest at twelve percent (12%) per annum. further frustrating remedies to assuage the wrong done to petitioner. This may cause confusion on the part of the National Labor Relations Commission and the Court of Appeals. . 8042 was not yet in effect at the time of respondent’s termination from work in 1997. In case of a final and executory judgement against a foreign employer/principal. withheld until the said official complies therewith. 8042 before it was amended byRepublic Act No. 10022 governs this case. Noncompliance with the mandatory periods for resolutions of case providedunder this section shall subject the responsible officials to any or all of the following penalties: (a) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be. however. or (c) Dismissal from the service with disqualification to hold any appointive public office for five (5) years. without any perceived substantial change in the circumstances. amendment or modification made locally or in a foreign country of the said contract. or caused to be. from participating in the Philippine Overseas Employment Program and from recruiting and hiring Filipino workers until and unless it fully satisfies the judgement award. without further proceedings. Provided. valid or authorized cause as defined by law or contract.

this court is possessed with the constitutional duty to "[p]romulgate rules concerning the protection and enforcement of constitutional rights. when a law or a provision of law is null because it is inconsistent with the Constitution. No. All laws must be read in light of the Constitution. 90 The legislators intended a balance between the employers’ and the employees’ rights by not unduly burdening the local recruitment agency. Thus. .91 Petitioner is also of the view that the clause was already declared as constitutional in Serrano. A law or provision of law that was already declared unconstitutional remains as such unless circumstances have sochanged as to warrant a reverse conclusion. 10022. Constitutional interpretation is complex. we cannot countenance added expenses for further litigation thatwill reduce their hardearned wages as well as add to the indignity of having been deprived of the protection of our laws simply because our precedents have not been followed.the nullity cannot be cured by reincorporation or reenactment of the same or a similar law or provision. respondentargued that the clause was unconstitutional because it infringed on workers’ right to contract. Any law that is inconsistent with it is a nullity.89 petitioner argued that the clause was constitutional. regardless of the existence of any law that supports such exercise.95 We observe that the reinstated clause. 10022. we do not hesitate to provide for guidance to bench and bar in situations where the same violations are capable of repetition but will evade review. Moreover." 87 When cases become mootand academic.92 The Office of the Solicitor General also argued that the clause was valid and constitutional. In the hierarchy of laws. In its comment.94 On the other hand. there are special reasons of judicial efficiency and economy that attend to these cases. Failure to reiterate the very ratio decidendi of that case will result in the same untold economic hardships that our reading of the Constitution intended to avoid. since the parties never raised the issue of the constitutionality of the clause asreinstated in Republic Act No. Thus. this time as provided in Republic Act. violates the constitutional rights to equal protection and due process. We are not convinced by the pleadings submitted by the parties that the situation has so changed so as to cause us to reverse binding precedent. Obviously. there is a necessity to decide this constitutional issue. The Constitution cannot be trumped by any other law. we ordered the parties and the Office of the Solicitor General to comment on the constitutionality of the reinstated clause in Republic Act No. Likewise. in a resolution88 dated October 22.Hence.93 However. There is no constitutional doctrine that causes injustice in the face of empty procedural niceties. its contention is that it is beyond judicial review. 96 Petitioner as well as the Solicitor General have failed to show any compelling changein the circumstances that would warrant us to revisit the precedent. No branch or office of the government may exercise its powers in any manner inconsistent with the Constitution. 2013. 10022. This is analogous to cases where there are millions of Filipinos working abroad who are bound to suffer from the lack of protection because of the restoration of an identical clause in a provision previously declared as unconstitutional. the Constitution is supreme. The new law puts our overseas workers in the same vulnerable position as they were prior to Serrano. but it is never unreasonable.

101 A law is void on this basis.100 The equal protection clause does not infringe on this legislative power. 110 Thus. only if classifications are made arbitrarily. for it perceive[d] in the subject clause a suspect classification prejudicial to OFWs. employ[ed] the standard of strict judicial scrutiny."111 We also noted in Serranothat before the passage of Republic Act No. 8042. Equal protection of the law is a guarantee that persons under like circumstances and falling within the same class are treated alike.116 Meanwhile." 105 The reinstated clause does not satisfy the requirement of reasonable classification." 109 Under the Constitution.104 A reasonable classification "(1) must rest on substantial distinctions. 8042 subjected the money claims of illegally dismissed overseas workers with an unexpired term of at least a year to a cap of three months worth of their salary.112 Their money claims were computed based onthe "unexpired portions of their contracts.We reiterate our finding in Serrano v. (2) must be germane to the purposes of the law. .115 We observed that illegally dismissed overseas workers whose employment contracts had a term of less than one year were granted the amount equivalent to the unexpired portion of their employment contracts. . it has a wide discretion. the money claims of illegally terminated overseas and local workers with fixed-term employment werecomputed in the same manner. labor is afforded special protection. there is a "legislative classification which impermissibly interferes with the exercise of a fundamental right or operates to the peculiar disadvantage of a suspect class.114 There was no such limitation on the money claims of illegally terminated local workers with fixed-term employment."99 In exercising such power. in terms of "privileges conferred and liabilities enforced."97 It is a guarantee against "undue favor and individual or class privilege. we identified the classifications made by the reinstated clause. 103 A law that does not violate the equal protection clause prescribesa reasonable classification. "[i]mbued with the same sense of ‘obligation to afford protection to labor. In Serrano. 106 It also distinguished between overseas workers with employment contracts of less than one year and overseas workers with employment contracts of at least one year. this court in Serrano. (3) must not be limited to existing conditions only. illegally dismissed overseas .’ . In Serrano. 107 Within the class of overseas workers with at least one-year employment contracts. there was a distinction between those with at least a year left in their contracts and those with less than a year left in their contracts when they were illegally dismissed. Gallant Maritime that limiting wages that should be recovered by anillegally dismissed overseas worker to three months is both a violation of due process and the equal protection clauses of the Constitution. the legislature has the power "to make distinctions and classifications. and (4) must apply equally to all members of the same class. as well as hostile discrimination or the oppression of inequality. It distinguished between fixed-period overseas workers and fixedperiod local workers. 102 There is no violation of the equal protection clause if the law applies equally to persons within the same class and if there are reasonable grounds for distinguishing between those falling within the class and those who do not fall within the class. 108 The Congress’ classification may be subjected to judicial review." 98 In creating laws."113 The adoption of the reinstated clause in Republic Act No.

They are left with claims that are less than . 117 Observing the terminologies used inthe clause. at least for the period agreed upon in their contracts. On the other hand. 123 If anything. which they could have earned had they not been illegally dismissed. the workers are deprived of their expected salary. The rights violated when. the workers’ right to security of tenure is violated."118 We do not need strict scrutiny to conclude that these classifications do not rest on any real or substantial distinctions that would justify different treatments in terms of the computation of money claims resulting from illegal termination. the jurisdictional and enforcement issues on overseas workers’ money claims do not justify a differentiated treatment in the computation of their money claims.120 The same is true for the distinctions between overseas workers with an employment contract of less than one year and overseas workers with at least one year of employment contract. these overseas workers who are impressed with an expectation of a stable job overseas for the longer contract period disregard other opportunities only to be terminated earlier. Meanwhile. if not greater protection and assistance to overseas workers who generally are more prone to exploitation given their physical distance from our government. and between overseas workers with at least a year left in their contracts and overseas workers with less than a year left in their contracts when they were illegally dismissed. unlike local workers"121 because it already justifies differentiated treatment in terms ofthe computation of money claims. Overseas workers regardless of their classifications are entitled to security of tenure.122 Likewise. we also found that "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."124 Further. say. these issues justify an equal. Their liability for arbitrarily terminating overseas workers is decreased at the expense of the workers whose rights they violated. which is to "establish a higher standard of protection and promotion of the welfare of migrant workers. and their monetary benefits limited to their salaries for three months only.workers with employment terms of at least a year were granted a cap equivalent to three months of their salary for the unexpired portions of their contracts. We also find that the classificationsare not relevant to the purpose of the law. while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the reinstated clause. For this reason. we cannot subscribe to the argument that "[overseas workers] are contractual employeeswho can never acquire regular employment status. foreign employers are more incentivizedby the reinstated clause to enter into contracts of at least a year because it gives them more flexibility to violate our overseas workers’ rights. This means that they cannot be dismissed before the end of their contract terms without due process. their families and overseas Filipinos in distress. a fixed-period local worker is illegally terminated are neither greater than norless than the rights violated when a fixed-period overseas worker is illegally terminated." 125 Putting a cap on the money claims of certain overseas workers does not increase the standard of protection afforded to them. It is state policy to protect the rights of workers withoutqualification as to the place of employment. this deprivation translates to economic insecurity and disparity. and for other purposes. we find specious the argument that reducing the liability of placement agencies "redounds to the benefit of the [overseas] workers. For both workers. If they were illegally dismissed.119 In both cases.

Since she started working on June 26. 8042.128 Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract. . It is arbitrary as it deprives overseas workers of their monetary claims without any discernable valid purpose. but imposes the same burden on another sector. without justifiable reason. really operates to benefit the wrong party and allows that party.A. is really part of a scheme to sell Filipino overseas labor at a bargain for purposes solely of attracting the market. Because of this hidden twist. . we held that the reinstated clause violates due process rights. but also because this same lessened recovery renders a wrongful dismissal easier and less onerous to undertake. . it redounds to the benefit of whoever may be liable. Thus. What worsens the situation is the chosen mode of granting the incentive: instead of a grant that. respondent is entitled to her salary from July 15. to encourage greater efforts at recruitment. the incentive. 1998. This is effectively a legally-imposed partial condonation of their liability to OFWs. The idea thatprivate business interest can be elevated to the level of a compelling state interest is odious. to mitigate its liability for wrongful dismissals. Thus. The award of the three-month equivalence of respondent’s salary must be modified accordingly. in short. Thus. 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 takenfrom the pockets of the OFWs to whom the full salaries for the unexpired portion of the contract rightfully belong. While intended as an incentive accruing to recruitment/manning agencies. "To rule otherwise would be . therefore. Section 10.A. justified solely by the law’s intent to encourage greater deployment efforts. and in fact provides a hidden twist affecting the principal/employer’s liability. the principals/employers and the recruitment/manning agencies even profit from their violation of the security of tenure that an employment contract embodies. the law simply limits their liability for the wrongful dismissals of already deployed OFWs. not only because of the lessened recovery afforded him or her by operation of law. . "[t]here can never be a justification for any form of government action that alleviates the burden of one sector. as worded. simply limits the OFWs’ recovery in wrongfuldismissal situations. especially when the favored sector is composed of private businesses suchas placement agencies. In this sense. while the disadvantaged sector is composed ofOFWs whose protection no less than the Constitution commands. No. 1997 and was terminated on July 14. No. to borrow the term that R. the limitation ofliability under Section 10 cannot be an "appropriate" incentive. is directly related to extra efforts undertaken. creates a situation where the law meant to protect them makes violation of rights easier and simply benign to the violator. 1997 to June 25. 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. including the principal/employer – the direct employer primarily liable for the wrongful dismissal. As Justice Brion said in his concurring opinion in Serrano: Section 10 of R. 8042 itself uses to describe the incentive it envisions under its purpose clause. the lesser cost of dismissing a Filipino will always bea consideration a foreign employer will take into account in termination of employment decisions. the law.what others in the same situation would receive.from a more practical and realistic view. 1997. 8042 affects these well-laid rules and measures. . The reinstated clause. lesser protection is afforded the OFW. in accordance with Section 10 of Republic Act No. Conversely. ."127 Along the same line.126 Further.

Furthermore. the interest due should be that which may have been stipulated in writing. 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. Through the able ponencia of Justice Diosdado Peralta.applies in this case. the rate of interest. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. i. whether the case falls under paragraph 1 or paragraph 2. This Circular shall take effect on 1 July 2013. 905. When the obligation is breached. 4305S. The actual base for the computation of legal interest shall." 129 III On the interest rate. in the absence of an express contract as to such rateof interest. except when or until the demand can be established with reasonable certainty. . 2. Gallery Frames:130 II. a loan or forbearance of money.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly. 3. 2013. as well as the accrual thereof. Subsection X305. the rate of interest shall be 6% per annum to be computed from default. In the absence of stipulation. however. we laid down the guidelines in computing legal interest in Nacar v. which revised the interest rate for loan or forbearance from 12% to 6% in the absence of stipulation. be on the amount finally adjudged. where the demand is established with reasonable certainty. not constituting a loan or forbearance of money.in effect. goods or credits and the rate allowed in judgments. Series of 2013. shall be six percent (6%) per annum. shall be adjudged on unliquidated claims or damages. the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The pertinent portions of Circular No. Section 2. 799 of June 21. the Bangko Sentral ng Pilipinas Circular No. but when such certainty cannot be so reasonably established at the time the demand is made. read: The Monetary Board. is breached. Series of 1982: Section 1. as follows: 1. When an obligation. 796 dated 16 May 2013. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. in any case. this interim period being deemed to be by then an equivalent to a forbearance of credit. the interest due shall itself earn legal interest from the time it is judicially demanded. in its Resolution No.e. shall be 6% per annum from such finality until its satisfaction. Accordingly. In view of the above. is imposed..1.. When the judgment of the court awarding a sum of money becomes final and executory. 1169. and would. and it consists in the payment of a sum of money.3 and 4303P.e. i. above. 799. With regard particularly to an award of interest in the concept of actual and compensatory damages. the rate of legal interest. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art.iniquitous to petitioner and other OFWs. The rate of interest for the loan or forbearance of any money. Civil Code). No interest. thereby amending Section 2 of Circular No. approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts.1 of the Manual of Regulations for Banks and Sections 4305Q.

laws are deemed incorporated in contracts. 799 is applicable only in loans and forbearance of money. Section 10 of Republic Act No. 2013. This is despite Section 1 of Circular No. 2013 and there was no stipulation in the contract providing for a different interest rate. "[A] Central Bank Circular cannot repeal a law. goods. judgments that have become final and executory prior to July 1. shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein. Since Bangko Sentral ng Pilipinas circulars cannotrepeal Republic Act No. therefore. While the Bangko Sentral ng Pilipinas has the power to set or limit interest rates."134 For example. 799. or credits. the issuance of Circular No.131 Circular No."135 There is. This means that respondent is also entitled to an interest of 6% per annum on her money claims from the finality of this judgment. we clarify the liabilities ofWacoal as principal and petitioner as the employment agency that facilitated respondent’s overseas employment. contains not only what has been explicitly stipulated. 799 does not have the effect of changing the interest on awards for reimbursement of placement fees from 12% to 6%. which provides that the 6% interest rate applies even to judgments. if judgment did not become final and executory before July 1.132 We add that Circular No. 8042 provides that unlawfully terminated overseas workers are entitled to the reimbursement of his or her placement fee with an interest of 12% per annum. Every contract. 8042 shall be subject to the 6% interest per annum in accordance with Circular No. This implied stipulation has the effect of removing awards for reimbursement of placement fees from Circular No. 2013. and in judgments when there is no stipulation on the applicable interest rate. Moreover. Only a law can repeal another law. Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign employer and the local employment agency are jointly and severally liable for money claims including claims arising out of an employer-employee relationship and/or damages. other money claims under Section 10 of Republic Act No. but the statutory provisions that have any bearing on the matter. 799’s coverage. They do not even have to be referred to. the amount shall be subject to a 12% interest per annum. In sum. . it is only applicable if the judgment did not become final and executory before July 1. 8042. Further. 8042. 799 is not applicable when there is a law that states otherwise. 799 because the law does not provide for a specific interest rate that should apply.133 these interest rates do not apply when the law provides that a different interest rate shall be applied. thus. These awards are covered by Circular No. IV Finally. The same cannot be said for awardsof salary for the unexpired portion of the employment contract under Republic Act No. This section also provides that the performance bond filed by the local agency shall be answerable for such money claims or damages if they were awarded to the employee.And. 799. in addition to the above. "The contracting parties need not repeat them. an implied stipulation in contracts between the placement agency and the overseasworker that in case the overseas worker is adjudged as entitled to reimbursement of his or her placement fees.

Lest they risk their reputation or finances. which are businesses by nature. V . The fundamental effect of joint and several liability is that "each of the debtors is liable for the entire obligation. Hence.137 The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995 assures overseas workers that their rights will not be frustrated with these complications. be achieved even if only oneof the joint and several debtors are impleaded in an action. either the local agency or the foreign employer may be sued for all claims arising from the foreign employer’s labor law violations. This should not be an obstacle for the respondent overseas worker to proceed with the enforcement of this judgment. that the foreign employer must be impleaded in the complaint as an indispensable party without which no final determination can be had of an action. the filing of money claims against the foreign employer is attended by practical and legal complications. the provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995 shifts the burden of going after the foreign employer from the overseas worker to the local employment agency. With the present state of the pleadings. It may be argued.140 Corollary to the assurance of immediate recourse in law. This way. are inoculated with interest in being always on the lookout against foreign employers that tend to violate labor law. it must be emphasized that the local agency that is held to answer for the overseas worker’s money claims is not leftwithout remedy. local agenciesmust already have mechanisms for guarding against unscrupulous foreign employers even at the level prior to overseas employment applications. Petitioner is possessed with the resources to determine the proper legal remedies to enforce its rights against Pacific. the overseas workers are assured that someone — the foreign employer’s local agent — may be made to answer for violationsthat the foreign employer may have committed.136 In overseas employment. There are also possible conflict of laws. it is not possible to determine whether there was indeed a transfer of obligations from petitioner to Pacific. By providing that the liability of the foreign employer may be "enforced to the full extent" 139 against the local agent. However. A further implication of making localagencies jointly and severally liable with the foreign employer is thatan additional layer of protection is afforded to overseas workers.the overseas worker is assured of immediate and sufficientpayment of what is due them.This provision is in line with the state’s policy of affording protection to labor and alleviating workers’ plight. in the case of overseas employment. for instance. and procedural rules that may be raised to frustrate an overseas worker’sattempt to advance his or her claims. therefore. The law does not preclude it from going after the foreign employer for reimbursement of whatever payment it has made to the employee to answer for the money claims against the foreign employer. jurisdictional issues. The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas workers have recourse in law despite the circumstances of their employment. if any. Local agencies." 138 A final determination may.1âwphi1 The distance of the foreign employer alonemakes it difficult for an overseas worker to reach it and make it liable for violations of the Labor Code.

therefore. in their very own land. their dignity is ours as weil.Many times. usually with heavy hearts.000. "or for three (3) months for every year of the unexpired term. SO ORDERED. Whilethese workers may indeed have relatively little defense against exploitation while they are abroad. Unknown to them. The decision of the Court of Appeals is AFFIRMED with modification. While we sit. being so. 8042 is declared unconstitutional and. Cabiles the amount equivalent to her salary for the unexpired portion of her employment contract at an interest of 6% per annum from the finality of this judgment. and years yearning to see their sons and daughters. who probably feel they can do as they please in their own country. Breach of contract. The clause. patience. Indeed. Petitioner is also ORDERED to reimburse respondent the withheld NT$3. NLRC:141 The Court is not unaware of the many abuses suffered by our overseas workers in the foreign land where they have ventured. Petitioner Sameer Overseas Placement Agency is ORDERED to pay respondent Joy C.00 salary and pay respondent attorney's fees of NT$300. hours. and creativity of our people. and many other gadgets and online applications will never substitute for their lost physical presence. each of their stories as real as any other. this court will ensure that our laws will reward our overseas workers with what they deserve: their dignity. they keep our economy afloat through the ebb and flow of political and economic crises. We face a diaspora of Filipinos. months. In Prieto v. Their travails and their heroism can be told a million times over. they who show the world the resilience. This government loses its soul if we fail to ensure decent treatment for all Filipinos. whichever is less" in Section 7 of Republic Act No. Inevitably. insults and other forms of debasement. . that disadvantage must not continue to burden them when they return to their own territory to voice their muted complaint. insufficient nourishment. days. are only a few of the inhumane acts towhich they are subjected by their foreign employers. null and void. There is no reason why. subhuman lodgings. 10022 amending Section 10 of Republic Act No. the petition is DENIED. WHEREFORE. They are our true diplomats. maltreatment. Overseas Filipino workers brave alien cultures and the heartbreak of families left behind daily. this court has spoken on what Filipinos may encounter as they travel into the farthest and mostdifficult reaches of our planet to provide for their families. they remember what their work has cost them.00 at an interest of 6% per annum from the finality of this judgment. the protection of our own laws cannot be extended to them in full measure for the redress of their grievances. rape. Twitter accounts. They would count the minutes. in pursuit of a more fulfilling future. We default by limiting the contractual wages that should be paid to our workers when their contracts are breached by the foreign employers. we are a people who contribute much to the provision of material creations of this world. Facetime. We all know of the joy and sadness when they come home to see them all grown up and. 142 But it seems that we have not said enough.

2005. ABAD. M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies. Chairperson. which affirmed with modification the National Labor Relations Commission (NLRC) resolution[3] dated April 20. and MENDOZA. No.. Petitioner. in behalf of its principal. Francisco B. Inc. On 23 August 2001. THENAMARIS SHIPS MANAGEMENT and INTERMARE MARITIME AGENCIES. Yap was employed as electrician of the vessel. Vulture Shipping Limited.: Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil Procedure. was for a duration of 12 months. 2007. NACHURA.R.. J. May 30. J. JJ. are as follows: [Petitioner] Claudio S. 179532 Present: . INC. 2011 x------------------------------------------------------------------------------------x DECISION NACHURA.versus - CARPIO. The contract of employment entered into by Yap and Capt. The undisputed facts.Republic of the Philippines Supreme Court Manila SECOND DIVISION CLAUDIO S. Adviento. the General Manager of Intermare. as found by the CA. YAP. Yap boarded M/T SEASCOUT and commenced his job as . seeking the reversal of the Court of Appeals (CA) Decision[2]dated February 28. G. Promulgated: Respondents. PERALTA.

They were also informed about the Advisory sent by Capt. on or about 08 November 2001. Adviento. (Intermare) and Thenamaris Ships Management (respondents). with respect to the payment of his wage. the LA opined that since the unexpired portion of petitioners contract was less than one year. among others: PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO BE TRANSFERRED TO OTHER VESSELS AFTER VESSEL S DELIVERY (GREEK VIA ATHENS-PHILIPINOS VIAMANILA FOR CREW NOT WISH TRANSFER TO DECLARE THEIR PROSPECTED TIME FOR REEMBARKATION IN ORDER TO SCHEDULE THEM ACCLY Yap received his seniority bonus. and Vulture Shipping Limited/Stejo Shipping Limited. Yap. for their part. On July 26. Subsequently. extra bonus along with the scrapping bonus. but actually he was not able to board one despite of respondents numerous vessels. he filed an amended complaint. petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine months.[4] Thus. together with C. the vessel was sold. was informed by the Master of their vessel that the same was sold and will be scrapped. as follows: . 2004. He alleged that he opted for immediate transfer but none was made. vacation bonus and extra bonus. Martionos. Claudio S. They further alleged that Yaps employment contract was validly terminated due to the sale of the vessel and no arrangement was made for Yaps transfer to Thenamaris other vessels. The LA disposed. vacation bonus. However. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and Attorneys Fees before the Labor Arbiter (LA). Interseas Trading and Financing Corporation.electrician. contended that Yap was not illegally dismissed. Moreover. They alleged that following the sale of the M/T SEASCOUT. petitioner was forced to litigate in order to vindicate his rights. 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. along with the other crewmembers. thus. finding the latter to have been constructively and illegally dismissed by respondents. Inc. He insisted that he was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from employment. The Philippine Overseas Employment Administration (POEA) was informed about the sale on 06 December 2001 in a letter signed by Capt. Lastly. Constatinou. which states. impleading Captain Francisco Adviento of respondents Intermare Maritime Agencies. [Respondents]. Petitioner made several follow-ups for his re-embarkation but respondents failed to heed his plea. Petitioner claimed that he was entitled to the salaries corresponding to the unexpired portion of his contract. the LA rendered a decision [5] in favor of petitioner. the LA found that respondents acted in bad faith when they assured petitioner of reembarkation and required him to produce an electrician certificate during the period of his contract. he refused to accept the payment of one-month basic wage. However.J.

and that the award of attorneys fees was warranted. Exemplary damages P50. 8042. SO ORDERED. premises considered. Moral damages P100. and that a new one be rendered dismissing the complaint. the decision of the Labor Arbiter finding the termination of complainant illegal is hereby AFFIRMED with a MODIFICATION. Inc. . in view of the foregoing.[. SO ORDERED. the NLRC held that instead of an award of salaries corresponding to nine months. Three (3) months basic salary US$4. However.. National Labor Relations Commission.00) are awarded plus ten percent (10%) of the total award as attorneys fees.00 or its peso equivalent at the time of payment. on the other hand. filed his own Motion for Partial Reconsideration. as awarded by the LA.000.00 or its peso equivalent at the time of actual payment. the NLRC affirmed the LAs findings that petitioner was indeed constructively and illegally dismissed. and Vulture Shipping Limited are ordered to pay jointly and severally complainant Claudio S.] Vulture Shipping Limited and Thenamaris Ship Management are hereby ordered to jointly and severally pay complainant. Complainant[s] salary for the unexpired portion of his contract should only be limited to three (3) months basic salary.WHEREFORE.[13] praying that he be paid the nine (9)-month basic salary.[6] Aggrieved.A. Inc. Accordingly. respondents sought recourse from the NLRC. Other money claims are DISMISSED for lack of merit. petitioner was only entitled to salaries for three months as provided under Section 10 [8] of Republic Act (R. the following: 1. v. Respondents Intermare Maritime Agency.[10] Hence. respondents Intermare Maritime Agency Incorporated.00 4.[11] Respondents filed a Motion for Partial Reconsideration.) No.870. Thenamaris Ships Mgt. In its decision[7] dated January 14.000. that respondents bad faith was evident on their wilful failure to transfer petitioner to another vessel. 2.290.00) and exemplary damages of FIFTY THOUSAND PESOS (P50. a decision is hereby rendered declaring complainant to have been constructively dismissed. Petitioner. Attorneys fees equivalent to 10% of the total monetary award. In addition. moral damages of ONE HUNDRED THOUSAND PESOS (P100. Yap the sum of $12.000. [12] praying for the reversal and setting aside of the NLRC decision. 2005. the NLRC ruled in this wise: WHEREFORE.[9] as enunciated in our ruling in Marsaman Manning Agency.00 3.000.

the CA upheld the lower agencies unanimous finding of bad faith. SO ORDERED. which the NLRC denied. Hence WHEREFORE. The award of three (3) months basic salary in the sum of US$4. the CA ruled that the NLRC erred in sustaining the LAs interpretation of Section 10 of R. Undaunted. complainants Motion for Partial Reconsideration is hereby granted. [R. However.On April 20. No. Likewise. the option of three months for every year of the unexpired term is applicable. No. whichever is less provided in the 5th paragraph of Section 10 of R. the employment contract concerned has a term of one year or 12 months which commenced on August 14. taken together with the other documents and additional requirements imposed on petitioner. it was preterminated without a valid cause. respondents filed a petition for certiorari[16] under Rule 65 of the Rules of Civil Procedure before the CA. [Petitioner] was paid his wages for the corresponding months he worked until the 10th of November. the CA relied on the clause or for three months for every year of the unexpired term. 2005 Decision STANDS.[15] Respondents filed a Motion for Reconsideration. 10. the CA affirmed the lower agencies findings that the advisory of Captain Constantinou.A. finding merit in petitioners arguments. premises considered. jurisprudence. 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. warranting the imposition of moral and exemplary damages and attorneys fees. No.00 or its peso equivalent at the time of actual payment. However. 2007. therefore. the NLRC reversed its earlier Decision.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. and evidence on record. only meant that the latter should have been re-embarked. The CA held that respondents failed to show that the NLRC acted without statutory authority and that its findings were not supported by law. [17] Thus. affirming the findings of Illegal Dismissal and respondents failure to transfer petitioner to another vessel.290. 8042 and held: In the present case.870. However. In the same token. 2005. the CA affirmed the findings and ruling of the LA and the NLRC that petitioner was constructively and illegally dismissed. 8042. All aspect of our January 14. to wit: .A. On February 28. In this regard. a resolution[14] was rendered by the NLRC. the CA provided.A. 2001.] 8042. Pursuant to the provisions of Sec.

Cebu City. this Petition for Certiorari is DENIED.] 8042. premises considered. 8042.[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. Costs against Petitioners. 8042. in NLRC No. 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. which the CA.290. and that said provision violates the equal protection clause under the Constitution because. denied in its Resolution[19] dated August 30. and Resolutions.A. dated April 20.A.[20] In the meantime. Unyielding. 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. whichever is less provided in the 5th paragraph of Section 10 of R. Finally.A. Gallant Maritime Services. No. [22] Article III and Section 3.00 or its peso equivalent at the time of actual payment. whichever is less is constitutional. 2007. we declared as unconstitutional the clause or for three months for every year of the unexpired term.[18] Both parties filed their respective motions for reconsideration. by virtue of Section 10 of R. V-000038-04 (RAB VIII (OFW)-04-010006) are hereby AFFIRMED with the MODIFICATION that private respondent is entitled to three (3) months of basic salary computed at US$4. Apparently. while this case was pending before this Court. petitioner posits that. to the extent that it affords an illegally dismissed migrant worker the lesser benefit of salaries for [the] unexpired portion of his employment contractor for three (3) months for every year of the unexpired term.[21] on March 24. and 2) Assuming that it is. No. the CA gravely abused its discretion when it reduced petitioners backwages from nine months to three months as his nine-month unexpired . have to waive nine months of their collectible backwages every time they have a year of unexpired term of contract to reckon with. Inc. assuming said provision of law is constitutional.WHEREFORE. however. R. 8042 in the case of Serrano v. 2009. is violative of Section 1. unaware of our ruling in Serrano. [No. petitioner claims that the 5th paragraph of Section 10. of public respondent National Labor Relations Commission-Fourth Division.A. respectively. 2005. that said provision of law has long been a source of abuse by callous employers against migrant workers. raising the following issues: 1) Whether or not Section 10 of R. No. migrant workers. 2005 and July 29. 2005. petitioner filed this petition. The Decision dated January 14.

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 petitioners tanker allowance of US$130.00
should not be included in the computation of the award as petitioners 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 ofP878,914.47 in Intermares 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 petitioners former lawyer as attorneys 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 attorneys fees. What
remains in issue, therefore, is the constitutionality of the 5 th 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
petitioners 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 OFWs 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 lumpsum 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
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 petitioners 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.

versus - GALLANT MARITIME SERVICES. CARPIO MORALES. LEONARDO-DE CASTRO. Jr. No costs. 167614 Present: PUNO. 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. they will work under sub-human conditions and accept salaries below the minimum. The Court of Appeals Decision dated February 28. VELASCO.J.00 per month. Nayona. their only hope lies in jobs they find with difficulty in our country.430. the Petition is GRANTED.[34] this Court held that: Our overseas workers belong to a disadvantaged class. JJ. Most of them come from the poorest sector of our society. Their profile shows they live in suffocating slums. TINGA. CARPIO. cross the seas. . BRION. and PERALTA. trapped in an environment of crimes. We ought to be reminded of the plight and sacrifices of our OFWs.. WHEREFORE. Out of despondence. The least we can do is to protect them with our laws. YNARES-SANTIAGO. CORONA.. QUISUMBING. SERRANO. . They will climb mountains. No. Petitioner. Their unfortunate circumstance makes them easy prey to avaricious employers. C. 2007 and Resolution dated August 30. AUSTRIA-MARTINEZ. CHICO-NAZARIO. G. Republic of the Philippines Supreme Court Manila EN BANC ANTONIO M. In Olarte v.R.A final note. Hardly literate and in ill health. All other awards are hereby AFFIRMED. endure slave treatment in foreign lands just to survive. NACHURA. SO ORDERED.

[2] to wit: Sec. Republic Act (R. 2004 Decision[3] and April 1. the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum. whichever is less. March 24.: For decades. Money Claims. . provided health care. societies and economies. They have provided the dynamic human link between cultures. 2005 Resolution[4] of the Court of Appeals (CA). which applied the subject clause. the last clause in the 5 th paragraph of Section 10. x x x x (Emphasis and underscoring supplied) does not magnify the contributions of overseas Filipino workers (OFWs) to national development. equipped schools and planted the seeds of businesses. entreating this Court to declare the subject clause unconstitutional. but how smart public policies can magnify this effect. . whichever is less (subject clause). the toil of solitary migrants has helped lift entire families and communities out of poverty.A.) No. 2007[1] For Antonio Serrano (petitioner). 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. Promulgated: Respondents. 2009 x----------------------------------------------------------x DECISION AUSTRIA-MARTINEZ. INC. only recently have we begun to understand not only how much international migration impacts development. Yet. July 10. a Filipino seafarer.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. 10. They have woven together the world by transmitting ideas and knowledge from country to country. By way of Petition for Review under Rule 45 of the Rules of Court.INC. and MARLOW NAVIGATION CO.x x x In case of termination of overseas employment without just.. United Nations Secretary-General Ban Ki-Moon Global Forum on Migration and Development Brussels. Their earnings have built houses. valid or authorized cause as defined by law or contract. petitioner assails the December 8. J.. plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term. 8042.

broken down as follows: May 27/31.[8] Petitioner's employment contract was for a period of 12 months or from March 19.[6] Respondents did not deliver on their promise to make petitioner Chief Officer. the date of his departure.000. and Marlow Navigation Co.00 2.90 2. Ltd. 01/30. 1998 Jan.00 days per month[5] On March 19. 1998 Nov.00.00 . 01/30. 01/31. 1998 Oct.00 Hours of work 48.00 2.590.00 2. 1999 Mar. 1998 August 01/31. 1/19. 1998.00 2.442.590.[7] Hence.590.Petitioner was hired by Gallant Maritime Services.590. leaving an unexpired portion of nine (9) months and twenty-three (23) days. 01/31.0 hours per week Overtime US$700. US$ 413. Inc.590. 1999 Feb.00 2. 01/31. but at the time of his repatriation on May 26.00 2.00 1.. 01/28.00 2. 1998 (5 days) incl. 1998.640. (respondents) under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following terms and conditions: Duration of contract 12 months Position Chief Officer Basic monthly salary US$1. 1998 up to March 19. Leave pay June 01/30.00 per month Vacation leave with pay 7. 1999. 1998.400.590. upon the assurance and representation of respondents that he would be made Chief Officer by the end of April 1998. petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1.590. 1998 Sept.00 2.73. petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May 26. 1998 Dec. he had served only two (2) months and seven (7) days of his contract. 1998 July 01/31.590.590. Petitioner filed with the Labor Arbiter (LA) a Complaint [9] against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26.

leave pay ------------------------------------------------------------------------------25. However. jointly and severally. to wit: WHEREFORE. All other claims are hereby DISMISSED.00).rather than the entire unexpired portion of nine months and 23 days of petitioner's employment contract . based on the rate of exchange prevailing at the time of payment. representing the complainants salary for three (3) months of the unexpired portion of the aforesaid contract of employment. The LA rendered a Decision dated July 15.00. declaring the dismissal of petitioner illegal and awarding him monetary benefits. the LA based his computation on the salary period of three months only -.S. 1999.50[10] 19/31.770.00). based on the rate of exchange prevailing at the time of payment.442.00.applying the subject clause. jointly and severally. SO ORDERED. the LA applied the salary rate of US$2. The respondents are likewise ordered to pay the complainant [petitioner].S. in Philippine Currency. the complainants (petitioner's) claim for attorneys fees equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under this Decision. the amount of FORTY FIVE U. judgment is hereby rendered declaring that the dismissal of the complainant (petitioner) by the respondents in the aboveentitled case was illegal and the respondents are hereby ordered to pay the complainant [petitioner].23 Amount adjusted to chief mate's salary (March 1.382. 1998 to April 1/30. . in Philippine Currency. 1998) + --------------------------------------------------------------------------------------------TOTAL US$ 26.060. consisting of petitioner's [b]asic salary. the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.590. premises considered. at the exchange rate prevailing at the time of payment. in Philippine Currency.73[11] CLAIM as well as moral and exemplary damages and attorney's fees. DOLLARS (US$ 45.770. jointly and severally. [12] representing the complainants claim for a salary differential.1999 (19 days) incl. In addition.[13] (Emphasis supplied) In awarding petitioner a lump-sum salary of US$8. The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit. DOLLARS (US $8. the respondents are hereby ordered to pay the complainant.

jointly and severally. Petitioner also appealed[16] to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services. the Decision dated 15 July 1999 is MODIFIED. to wit: WHEREFORE. which should be proven to have been actually performed.400.00 US$4. and for vacation leave pay.[21] The NLRC denied the motion. filed by petitioner. 2000.245.400 x 3 US$4. docketed as G.[22] Petitioner filed a Petition for Certiorari[23] with the CA. 10% Attorneys fees 424. 151833. 8042 does not provide for the award of overtime pay. in Philippine currency. the CA skirted the constitutional issue raised by petitioner.A.669.00 2.50 The other findings are affirmed. Respondents are hereby ordered to pay complainant.00 3. reiterating the constitutional challenge against the subject clause.[14] Respondents appealed[15] to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed.[24] After initially dismissing the petition on a technicality. the CA affirmed the NLRC ruling on the reduction of the applicable salary rate. fixed overtime pay.[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. 2004.US$1.[27] petitioner brings his cause to this Court on the following grounds: . the NLRC modified the LA Decision. v. 2003 which granted the petition for certiorari.R.[25] His Motion for Reconsideration[26] having been denied by the CA. as directed by this Court in its Resolution dated August 7.590.200. + US$490. but this time he questioned the constitutionality of the subject clause.[18] In a Decision dated June 15. National Labor Relations Commission[17] that in case of illegal dismissal.00 to US$1.50 TOTAL US$4. In a Decision dated December 8.00/month. vacation leave pay = US$2. No.[20] Petitioner filed a Motion for Partial Reconsideration. Three (3) months salary $1. Inc. at the prevailing rate of exchange at the time of payment the following: 1. SO ORDERED. however. Salary differential 45.00 because R.00/month. the CA eventually gave due course to it.00/month + US$700. OFWs are entitled to their salaries for the unexpired portion of their contracts.00/compensation per month.400.590. No.

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 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. computed at the monthly rate of US$2. 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. Likewise not disputed is the salary differential of US$45.400.00. the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1.23. and he intends to make use of the monetary award for his medical treatment and medication.590.[30] Considering that the parties have filed their respective memoranda. the constitutional issues raised by the petitioner on the constitutionality of said law. at the same time. equivalent to his salaries for the entire nine months and 23 days left of his employment contract. NLRC and CA that the dismissal of petitioner was illegal is not disputed. What remains disputed is only the computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal. 2008. counsel for petitioner filed a motion. petitioner wrote the Court to withdraw his petition as he is already old and sickly. urging the court to allow partial execution of the undisputed monetary award and. 8042. the Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional question raised therein. praying that the constitutional question be resolved.00 awarded by the NLRC and the CA.200.182.[29] Required to comment.382. unfairly and arbitrarily limits payment of the award for back wages of overseas workers to three (3) months. particularly. in addition to the US$4. Impugning the constitutionality of the subject clause.00.23 more or a total of US$25. which unreasonably.00 awarded to petitioner in all three fora. 10 of Republic Act No.200. Applying the subject clause.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. he is entitled to US$21. the Court of Appeals gravely erred in law in excluding from petitioners award the overtime pay and vacation pay provided in his contract since under the contract they form part of his salary. petitioner contends that. On the first and second issues The unanimous finding of the LA.[31] The Arguments of Petitioner . III Even without considering the constitutional limitations [of] Sec.[28] On February 26.

placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer.[36] Petitioner further underscores that the insertion of the subject clause into R. Though there are conflicting rulings on this.A. following well-entrenched and unequivocal jurisprudence on the matter.A. 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. As petitioner puts it: In terms of practical application. Not only that. the local employers are not limited to the amount of backwages they have to give their employees they have illegally dismissed. viz. [37] (Emphasis supplied) Petitioner argues that in mitigating the solidary liability of placement agencies. that the disparate treatment is not reasonable as there is no substantial distinction between the two groups. while setting no limit to the same monetary award for local workers when their dismissal is declared illegal. placement agencies. petitioner urges the Court to sort them out for the guidance of affected OFWs. 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.[33] and that it defeats Section 18. the provision makes foreign employers better off than local employers because in cases involving the illegal dismissal of employees. 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.[35] Moreover. No. No. petitioner claims that the subject clause violates the due process clause.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.: Often. 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. He marks the statement made by the Solicitor General in his Memorandum.[34] Article II of the Constitution which guarantees the protection of the rights and welfare of all Filipino workers. whether deployed locally or overseas. for it deprives him of the salaries and other emoluments he is entitled to under his fixed-period employment contract. liability for money claims was reduced under Section 10 of R. On the other hand. Hence. their liability being solidary. [32] It also impinges on the equal protection clause. 8042 serves no other purpose but to benefit local placement agencies.[39] . the subject clause sacrifices the well-being of OFWs. 8042. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers. 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.

No. or against whom it is almost impossible to enforce judgment. The OSG enumerates the essential elements that distinguish OFWs from local workers: first.The Arguments of Respondents In their Comment and Memorandum.[47] (2) that the constitutional question is raised by a proper party[48] and at the earliest opportunity. as held in Coyoca v. When the Court is called upon to exercise its power of judicial review of the acts of its coequals.A. the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment. 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. OFWs perform their jobs for foreign employers.[42] Moreover. Hence. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions.[51] .[50] otherwise the Court will dismiss the case or decide the same on some other ground. National Labor Relations Commission. and second.[46] The Court's Ruling The Court sustains petitioner on the first and second issues.[40] The Arguments of the Solicitor General The Solicitor General (OSG)[41] points out that as R. 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. Rather. and not at the earliest opportunity. unlike local workers who are or can become regular employees. National Labor Relations Commission[43] and Millares v. over whom it is difficult for our courts to acquire jurisdiction. but not available to OFWs. such that their rights to monetary benefits must necessarily be treated differently. No. [49] and (3) that the constitutional question is the very lis mota of the case. Article II of the Constitution.A. 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.[45] Lastly. respondents contend that the constitutional issue should not be entertained. the OSG posits that there are rights and privileges exclusive to local workers. 1995. the provisions thereof are deemed part of the minimum terms of petitioner's employment. R. while local workers perform their jobs within Philippine territory. 8042 took effect on July 15. such as the Congress. as this was not stipulated upon by the parties. the provision does not violate the equal protection clause nor Section 18. for this was belatedly interposed by petitioner in his appeal before the CA. especially on the matter of money claims. its provisions could not have impaired petitioner's 1998 employment contract. 8042 having preceded petitioner's contract. Thus.[44] OFWs are contractual employees who can never acquire regular employment status. which was when he filed an appeal before the NLRC.

The constitutional challenge is also timely. on the other hand. not in petitioner's appeal with the NLRC. strikes at the very core of the subject clause. 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.A.A. it cannot be considered on appeal. No. it cannot be considered at the trial and. and not just for a period of three months. the issue is deemed seasonably raised because it is not the NLRC but the CA which has the competence to resolve the constitutional issue. 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.[53] and reiterated in his Petition for Certiorari before the CA. if not considered in the trial.[56] Petitioner's interposition of the constitutional issue before the CA was undoubtedly seasonable. 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. Does the subject clause violate Section 10.[54] Nonetheless. 8042. Article III of the Constitution on non-impairment of contracts? The answer is in the negative. No. Article III of the Constitution provides: No law impairing the obligation of contracts shall be passed. .Without a doubt. such that. The CA. if the issue is not raised in the pleadings before that competent court. [52] Records disclose that the issue on the constitutionality of the subject clause was first raised. 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 receive [57] is not tenable. Thus. the stage is all set for the determination of the constitutionality of the subject clause. Section 10. is vested with the power of judicial review or the power to declare unconstitutional a law or a provision thereof. The NLRC is a labor tribunal that merely performs a quasi-judicial function its function in the present case is limited to determiningquestions of fact to which the legislative policy of R. 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 a competent court. and not to inquire into the validity of its provisions. but in his Motion for Partial Reconsideration with said labor tribunal. The CA was therefore remiss in failing to take up the issue in its decision. such as the subject clause.

impaired the employment contract of the parties. it cannot be argued that R.A. No. Article III of the Constitution guarantees: No person shall be deprived of life. none should be denied the protection of the laws which is enjoyed by. But even if the Court were to disregard the timeline. and Section 18. full protection of their rights and welfare. 8042. while all monetary obligations should be borne by them in equal degree. and general welfare of the people are generally applicable not only to future contracts but even to those already in existence. No. morals. for the law was enacted in the exercise of the police power of the State to regulate a business. 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. the non-impairment clause under Section 10. As aptly observed by the OSG. [60] Thus.[65] Such rights are not absolute but subject to the inherent power of Congress to incorporate. peace.[62] Does the subject clause violate Section 1. liberty.A. the classification . their provisions are read into contracts and deemed a part thereof.[58] and cannot affect acts or contracts already perfected.The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation. as to laws already in existence. or spared the burden imposed on.[63] Article II and Section 3.A. a system of classification into its legislation. when the parties executed their 1998 employment contract. others in like circumstances. without distinction as to place of deployment.[64] Article XIII accord all members of the labor sector. 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. Hence. good order. they were deemed to have incorporated into it all the provisions of R. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in 1998.[59] however. for all private contracts must yield to the superior and legitimate measures taken by the State to promote public welfare. the enactment of R. To Filipino workers. when it sees fit. to be valid. 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. 8042. education. Article III of the Constitution. Article XIII on labor as a protected sector? The answer is in the affirmative. safety. [61] Police power legislations adopted by the State to promote the health. profession or calling. abridging or in any manner changing the intention of the parties thereto. Section 18. No. however. the subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause. or property without due process of law nor shall any person be denied the equal protection of the law. particularly the subject clause. Section 1. Rather. Article II and Section 3.

it was in this case that the Court revealed the broad outlines of its judicial philosophy. they are persuasive and have been used to support many of our decisions. Bangko Sentral ng Pilipinas. 3) it is not limited to existing conditions only. 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.[67] b) the middle-tier or intermediate scrutiny in which the government must show that the challengedclassification serves an important state interest and that the classification is at least substantially related to serving that interest. 2) it is germane to the purposes of the law. even when the rank-and-file employees of other GFIs had been exempted from the SSL by their respective charters. to wit: Congress retains its wide discretion in providing for a valid classification. these foreign decisions and authorities are not per se controlling in this jurisdiction. this Court must discharge its primary role as the vanguard of constitutional guaranties. Inc.[72] Under American jurisprudence. At best.[68] and c) strict judicial scrutiny[69] 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. Finding that the disputed provision contained a suspect classification based on salary grade.[76] It is different in the Philippine setting. and 4) it applies equally to all members of the class. 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 . When these violations arise. Admittedly. was challenged for maintaining its rank-and-file employees under the Salary Standardization Law (SSL). The deference stops where the classification violates a fundamental right. v.[77] the constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas (BSP). More significantly. Nevertheless. and its policies should be accorded recognition and respect by the courts of justice except when they run afoul of the Constitution. a government financial institution (GFI).[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. the Court deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said provision. and require a stricter and more exacting adherence to constitutional limitations. Rational basis should not suffice. or prejudices persons accorded special protection by the Constitution. strict judicial scrutiny is triggered by suspect classifications[73] based on race[74] or gender[75] but not when the classification is drawn along income categories. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association. 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.must comply with these requirements: 1) it is based on substantial distinctions.

More importantly. and always with our own concept of law and justice. Judicial scrutiny would be based on the rational basis test. xxxx Under most circumstances. they must be construed to serve our own public interest which is the be-all and the end-all of all our laws. 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. further explicitated in Article XIII. or the perpetuation of prejudice against persons favored by the Constitution with special protection. But if the challenge to the statute is premised on the denial of a fundamental right. We live in a different ambience and must decide our own problems in the light of our own interests and needs. The command to promote social justice in Article II. 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. are clear commands to the State to take affirmative action in the direction of greater equality. 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. the Court will exercise judicial restraint in deciding questions of constitutionality. recognizing the broad discretion given to Congress in exercising its legislative power.our own endowments. And it need not be stressed that our public interest is distinct and different from others. including labor. and of our qualities and even idiosyncrasies as a people. xxxx . in all phases of national development. This is true whether the actor committing the unconstitutional act is a private person or the government itself or one of its instrumentalities. 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. and the legislative discretion would be given deferential treatment. Equality is one ideal which cries out for bold attention and action in the Constitution. xxxx Further. Oppressive acts will be struck down regardless of the character or nature of the actor. A weak and watered down view would call for the abdication of this Courts solemn duty to strike down any law repugnant to the Constitution and the rights it enshrines. Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society. Section 10. The Preamble proclaims equality as an ideal precisely in protest against crushing inequities in Philippine society. judicial scrutiny ought to be more strict. the quest for a better and more equal world calls for the use of equal protection as a tool of effective judicial intervention. 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. Under the policy of social justice.

whether his salaries for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term. Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass muster..[78] it was in Marsaman Manning Agency. low-salaried employees are limited to the rates prescribed by the SSL. a closer examination reveals that the subject clause has a discriminatory intent against. and improve the quality of life for all. Upon cursory reading. if not all. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker. the Court in the present case also employs the standard of strict judicial scrutiny. OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or more As pointed out by petitioner. whichever is less. among OFWs with employment contracts of more than one year. extend to them a decent standard of living. to wit: A plain reading of Sec.and not the officers . This is evident from the words for every year of the unexpired term which follows the words salaries x x x for three months. the challenged proviso operates on the basis of the salary grade or officer-employee status. the subject clause appears facially neutral. especially in terms of job marketability. OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or more. 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 . To follow petitioners thinking that private respondent is entitled to . and an invidious impact on. This is in accord with the policy of the Constitution "to free the people from poverty. (Emphasis supplied) Imbued with the same sense of obligation to afford protection to labor.A. and Second. OFWs at two levels: First.who have the real economic and financial need for the adjustment . it is they . for it perceives in the subject clause a suspect classification prejudicial to OFWs. 804. the rank-and-file employees consist of people whose status and rank in life are less and limited. 1999) that the Court laid down the following rules on the application of the periods prescribed under Section 10(5) of R. No.In the case at bar. It is akin to a distinction based on economic class and status. National Labor Relations Commission[79] (Second Division. Third. Inc. However. OFWs vis--vis local workers with fixed-period employment. comes into play only when the employment contract concerned has a term of at least one (1) year or more. Considering that majority. v.e.are given higher compensation packages to entice them to stay. while the poorer. i. provide adequate social services. for it applies to all OFWs. 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.

and the Court awarded her salaries for the entire unexpired portion of four and one-half months of her contract.00 as lump-sum salary covering eight months. but was awarded his salaries for the remaining 8 months and 6 days of his contract. The Marsaman interpretation of Section 10(5) has since been adopted in the following cases: Case Title Contract Period of Unexpired Period Service Period Skippers v. however. The LA declared his dismissal illegal and awarded him SR13. National Labor Relations Commission (Second Division.600. 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. but was dismissed after working for one year and two months.[82] Another was Triple-Eight Integrated Services. National Labor Relations Commission (Third Division. December 1998). October 1998).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. respondent Osdana was illegally dismissed. whichever is less. [81] which involved an OFW who was awarded a two-year employment contract.600. to wit: Under Section 10 of R. the unexpired portion of his contract.[83] which involved an OFW (therein respondent Erlinda Osdana) who was originally granted a 12-month contract. there were two cases in which the Court made conflicting rulings on Section 10(5).[80] (Emphasis supplied) In Marsaman. After serving for one year and seven-and-a-half months. Ut res magis valeat quam pereat. One was Asian Center for Career and Employment System and Services v. a worker dismissed from overseas employment without just. the Court reduced the award to SR3. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute. the unexpired portion of private respondents employment contract is eight (8) months. No. 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.600.A.00 equivalent to his three months salary. In the case at bar. Inc. the OFW involved was illegally dismissed two months into his 10-month contract. 8042. 6 months 2 months 4 months Maguad[84] Period Applied in the Computation of the Monetary Award 4 months . v. On appeal. Private respondent should therefore be paid his basic salary corresponding to three (3) months or a total of SR3. this being the lesser value. Prior to Marsaman. which was deemed renewed for another 12 months.

in case of illegal dismissal. in case of illegal dismissal. 12 months 3 months 9 months 3 months Univan v. they are entitled to monetary award equivalent to only 3 months of the unexpired portion of their contracts. s et al. CA [88] 12 months 3 months 9 months 3 months Oriental v. 12 months 9 months 2 months and 2 months and Adelantar[93] and 7 days 23 days 23 days Phil. The second category consists of OFWs with fixed-period employment contracts of one year or more. 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. but was awarded his salaries for the remaining 4 months. they are entitled to their salaries for the entire unexpired portion of their contract. Paramio. . Reynaldo Chua[85] 4 months Centennial 9 months 4 months 5 months Transmarine v. In contrast. The first category includes OFWs with fixed-period employment contracts of less than one year. the subject clause classifies OFWs into two categories. 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. Almanzor [95] 26 days Athenna 1 year.[94] Flourish 2 years Maritime v. Employ 12 months 10 month 2 months v. dela Cruz l[86] 5 months Talidano Falcon[87] v.Bahia Shippin 9 months 8 months 4 months g v. 10 1 month Manpower v. 9 6 months or 3 months and months for 28 days each year of contract As the foregoing matrix readily shows. the respondent OFW worked for only 2 months out of his 6-month contract. months Villanos [96] and 28 days Unexpired portion 23 months and 6 months or 3 4 days months for each year of contract 1 year. 12 months more than more or less 9 3 months 2 months months Olarte Nayona[91] v. 12 months 21 days 11 months and 3 months 9 days 12 months 16 days 11 months and 3 months 24 days JSS v. In Skippers. CA [89] 12 months more than 10 months 2 months 3 months PCL NLRC[90] v. Ferrer[92] Pentagon v. The disparity in the treatment of these two groups cannot be discounted.

2 years et al.000. Under the subject clause. No.A. were entitled to their salaries for the entire unexpired portions of their contracts. NLRC[99] 7 days 23 months 23 months and 23 and 23 days days JGB NLC[100] v. The matrix below speaks for itself: Case Title Contract Period Period of Unexpired Period Applied in Service Period the Computation of the Monetary Award ATCI v. all OFWs.[102] 5 months 19 months 19 months Barros v. and were illegally dismissed after one month of work. .000. Both commenced work on the same day and under the same employer. equivalent to his salaries for the remaining 9 months of his contract. et al. whereas OFW-B will be entitled to only US$3. 8042 on July 14. 8042.00. equivalent to his salaries for 3 months of the unexpired portion of his contract.To illustrate the disparity even more vividly. 2 years 2 months 22 months 22 months EDI v.000. 12 months NLRC. no matter how long the period of their employment contracts.00 is the lesser amount.00. CA.A. Their claims were subjected to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of their employment contracts. 2 years 9 months 15 months 15 months Agoy NLRC[101] v.000. 1995. NLRC. the Court assumes a hypothetical OFW-A with an employment contract of 10 months at a monthly salary rate of US$1. were treated alike in terms of the computation of their monetary benefits in case of illegal dismissal.000. as the US$3. prior to the effectivity of R. 2 years Integrated v. regardless of contract periods or the unexpired portions thereof. et al. No. OFW-A will be entitled to US$9.00 for the unexpired portion of 14 months of his contract.000. instead of US$14. The disparity becomes more aggravating when the Court takes into account jurisprudence that. 4 months 8 months 8 months 22 months [103] Philippine Transmarine v.[98] 2 years 2 months 22 months Phil.[97] illegally dismissed OFWs. Carilla[104] 12 months 6 months 5 months 5 months and 18 and 22 and 18 days days days It is plain that prior to R.00.00 and a hypothetical OFW-B with an employment contract of 15 months with the same monthly salary rate of US$1.

but all the while sparing the other category from such prejudice. and their monetary benefits limited to their salaries for three months only. the subject clause applies to the computation of the latter's monetary benefits. for otherwise.A. the unexpired term mustbe at least one year. simply because the latter's unexpired contractsfall short of one year. Considering that there is at least 12 months remaining in the contract period of OFW-C. the Court now has misgivings on the accuracy of the Marsaman interpretation. OFW-C is illegally dismissed on the 12th month. the word term means a limited or definite extent of time. Viewed in that light.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the contract. 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. not to US$12. [105] Corollarily.00 or the latter's total salaries for the 12 months unexpired portion of the contract.the subject clause applies in cases when the unexpired portion of the contract period is at least one year. and second. Thus. whichever is less contains the qualifying phrases every year and unexpired term. The Court notes that the subject clause or for three (3) months for every year of the unexpired term. who each have a 24-month contract at a salary rate of US$1. on the 13th month. 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 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. whichever is less. Consequently. 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed OFWs based on their employment periods. while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the subject clause. the more decisive factor in the determination of when the subject clause for three (3) months forevery year of the unexpired term. OFW-C will be entitled.000.The enactment of the subject clause in R.000.000. Among OFWs With Employment Contracts of More Than One Year Upon closer examination of the terminology employed in the subject clause. whatever would be the unexpired term thereof will not reach even a year. the original term must be more than one year.00 per month. which arithmetically requires that the original contract period be more than one year. but to the lesser amount of US$3. To concretely illustrate the application of the foregoing interpretation of the subject clause. there would be no occasion for such unexpired term to be measured by every year. No. On the other . the Court assumes hypothetical OFW-C and OFW-D. for if it were any shorter. By its ordinary meaning. and OFW-D. that every year is but part of an unexpired term is significant in many ways: first.

v. which is equivalent to his/her total salaries for the entire 11-month unexpired portion. 8042. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage. prior to R. This uniform system was applicable even to local workers with 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. may withdraw from the fulfillment of said contract until the termination of the period agreed upon. except for reasons of insubordination in serious matters. for there are only 11 months left in the latter's contract period. without the consent of the other.[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.[111] Article 299 of the Code of Commerce was replaced by Art. robbery. Field hands. Thus.[108] to wit: Article 299.) .00. In Reyes v.hand. none of the contracting parties. theft.A. OFWs vis--vis Local Workers With Fixed-Period Employment As discussed earlier. The Compaia Maritima. (Emphasis supplied. 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.[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. No. If the contracts between the merchants and their shop clerks and employees should have been made of a fixed period. While Article 605 has remained good law up to the present. Inc. and damage caused to the vessel or to its cargo by malice or manifest or proven negligence. artisans.[107] The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce (1888). Ogilvie. to wit: Article 1586. they cannot be discharged until the fulfillment of their contracts. with the exception of the provisions contained in the following articles. There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which provides: Article 605. 1586 of the Civil Code of 1889. OFW-D will be entitled to US$11. a uniform system of computation of the monetary awards of illegally dismissed OFWs was in place. Article 605 was applied to Madrigal Shipping Company. OFW-D is spared from the effects of the subject clause. Persons violating this clause shall be subject to indemnify the loss and damage suffered. habitual drunkenness.000. mechanics.

[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. Chapter 3. but who was illegally dismissed after only nine months on the job -. Y. v. National Labor Relations Commission.Citing Manresa. Inc. the unexpired portion of his contract. the Court in Aldaz v. for the purpose of reducing the damages resulting from such wrongful discharge. was awarded salaries corresponding to the unexpired portion of her contract. Hotel de France Company. School District No. However.[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. such as in First Asian Trans & Shipping Agency.. Inc. This interpretation of Article 1586 was reiterated in Garcia Palomar v. National Labor Relations Commission. is upon the defendant. 61 N.. In Asia World Recruitment. [120] an OFW who was illegally dismissed prior to the expiration of her fixed-period employment contract as a baby sitter. v. when the new Civil Code was already in effect. Daly. . Title I. 98 Mich. 99 Mich.)[115] (Emphasis supplied) On August 30. However. Farrell vs. Inc.[119] involving seafarers who were illegally discharged..[113] And in both Lemoine and Palomar. the Court in Lemoine v.[116] Much like Article 1586 of the Civil Code of 1889. Chapter 3. that when an employee is wrongfully discharged it is his duty to seek other employment of the same kind in the same community. Inc.The Court arrived at the same ruling in Anderson v.[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. Alkan[112] 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. Rich. Whitlark. v. 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. Gay[114] held: The doctrine is well-established in American jurisprudence. In Teknika Skills and Trade Services. in Vinta Maritime Co.[121] which involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years. and that other employment of a like nature was obtainable.[118] More significantly. Title VIII. the same principles were applied to cases involving overseas Filipino workers whose fixed-term employment contracts were illegally terminated. 362. 2. the burden of showing that he failed to make an effort to secure other employment of a like nature. 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. it is noted that in Mackay Radio & Telegraph Co. Allen vs. Book IV. the Court adopted the general principle that in actions for wrongful discharge founded on Article 1586. while this is the general rule. 492. and nothing has been brought to our attention to the contrary under Spanish jurisprudence. and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work). Inc.. v. v. On the computation of the amount of such damages. 1950. National Labor Relations Commission. Ople. the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations with a Period). National Labor Relations Commission. Finally. the new provisions of the Civil Code do not expressly provide for the remedies available to a fixed-term worker who is illegally discharged. (Howard vs. 43..the Court awarded him salaries corresponding to 15 months.

[124] It is akin to the paramount interest of the state[125] for which some individual liberties must give way. whereas no such limitation is imposed on local workers with fixed-term employment. the Court now subjects the classification to a strict judicial scrutiny. No. There being a suspect classification involving a vulnerable sector protected by the Constitution. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers. it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts. 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. What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by history.In sum. but none on the claims of other OFWs or local workers with fixed-term employment. such as the public interest in safeguarding health or maintaining medical standards. The Court concludes that the subject clause contains a suspect classification in that. Hence. The OSG defends the subject clause as a police power measure designed to protect the employment of Filipino seafarers overseas x x x. placement agencies. By limiting the liability to three months [sic]. liability for money are reduced under Section 10 of RA 8042.A. The limitation also protects the interest of local placement agencies. placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. their liability being solidary.[128] The OSG explained further: Often. specifically the adoption of the subject clause. No. Filipino seafarers have better chance of getting hired by foreign employers. prior to R.A.[127] In the present case. which otherwise may be made to shoulder millions of pesos in termination pay. the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve. But with the enactment of R. and determines whether it serves a compelling state interest through the least restrictive means. 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. 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. in the computation of the monetary benefits of fixed-term employees who are illegally discharged. . 8042. 8042.[126] or in maintaining access to information on matters of public concern.

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. 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. the claims arising out of an employer-employee relationship or by virtue of the complaint. 8042 in the speech of Rep. 2077 (SB 2077) contains a provision on money claims. if applicable. from which the law originated. The OSG locates the purpose of R. The liability of the principal and the recruitment/placement agency or any and all claims under this Section shall be joint and several. to satisfy any such compromise or voluntary settlement shall not be more than two (2) months. Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314). 10. [129] (Emphasis supplied) However. or caused to be. withheld until the said official complies therewith. (2) Suspension for not more than ninety (90) days. Any compromise/voluntary agreement in violation of this paragraph shall be null and void. 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. exemplary and other forms of damages. Money Claims. or (3) Dismissal from the service with disqualification to hold any appointive public office for five (5) years. Provided. That any installment payments. . 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. [130] but the speech makes no reference to the underlying reason for the adoption of the subject clause. moral. within ninety (90) calendar days after the filing of the complaint.Notwithstanding any provision of law to the contrary.A. the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide. however. Senate Bill No. On the other hand. That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause. to wit: Sec. No. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions.This measure redounds to the benefit of the migrant workers whose welfare the government seeks to promote. . 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.

the Court finds no discernible state interest. 2003. imposes administrative disciplinary measures on erring foreign employers who default on their contractual obligations to migrant workers and/or their Philippine agents. 8042. the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary liability of placement agencies. as advanced by the OSG. the subject clause in the 5th paragraph of Section 10 of R. There can never be a justification for any form of government action that alleviates the burden of one sector. These disciplinary measures range from temporary disqualification to preventive suspension. that is sought to be protected or advanced by the adoption of the subject clause. especially when the favored sector is composed of private businesses such as placement agencies. In fine. However. No. 2002. dated February 4.But significantly. while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands.A. Section 10 of SB 2077 does not provide for any rule on the computation of money claims. even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vis their foreign principals. such callous and cavalier rationale will have to be rejected. 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. The POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers. . dated May 23.A. 2077 and House Bill No. The idea that private business interest can be elevated to the level of a compelling state interest is odious. Moreover. contains similar administrative disciplinary measures against erring foreign employers. let alone a compelling one. there are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs. Assuming that. 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. 14314). 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. No. 8042 is violative of the right of petitioner and other OFWs to equal protection. 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. Thus. The POEA Rules and Regulations Governing the Recruitment and Employment of LandBased Overseas Workers. but imposes the same burden on another sector.

and the broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal regardless of circumstance. It must be stressed that Section 3. 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. not only the rights of the labor sector. penned by then Associate Justice now Chief Justice Reynato S. [133] particularly Section 3 thereof. to protect the welfare of the working class. The espousal of such view presents the dangerous tendency of being overbroad and exaggerated. Puno. However.. and the realization of ideals therein expressed.[131] Article XIII of the Constitution. 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 -. 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. but for the judiciary as well.such as the . when examined in isolation. Inc. And it was in fact consistent with that constitutional agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association. judicial bodies will be at a loss. 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. National Labor Relations Commission. v. doubtless-but still hardly within the contemplation of the framers. the provisions on social justice require legislative enactments for their enforceability. if not unrealistic. be a source of a positive enforceable right to stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing.[135] (Emphasis added) Thus. in Agabon v. Bangko Sentral ng Pilipinas.[132] there are some which this Court has declared not judicially enforceable. Without specific and pertinent legislation. As manifested by several framers of the 1987 Constitution. this Court. Section 3 of Article XIII cannot.[134] has described to be not self-actuating: Thus. Section 3. This interpretation implies an unimpeachable right to continued employment-a utopian notion. but merely clothes it with the status of a sector for whom the Constitution urges protection through executive or legislative action and judicial recognition. therefore. While all the provisions of the 1987 Constitution are presumed self-executing. 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. are facially unqualified. to declare that the constitutional provisions are enough to guarantee the full exercise of the rights embodied therein.Further. Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure the protection and promotion. Its utility is best limited to being an impetus not just for the executive and legislative departments. but of the employers' as well. The guarantees of "full protection to labor" and "security of tenure". formulating their own conclusion to approximate at least the aims of the Constitution. Ultimately. on its own. the nature of which. would be impractical. Article XIII being one. Article XIII does not directly bestow on the working class any actual enforceable right.

The subject clause being unconstitutional. . 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. 8042. provides a Standard Employment Contract of Seafarers.A. DOLE Department Order No. pursuant to law and jurisprudence prior to the enactment of R. petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract. but also her right to substantive due process under Section 1. The word salaries in Section 10(5) does not include overtime and leave pay. without the application of the equal protection clause. 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. Central Bank applied Article XIII in conjunction with the equal protection clause. exclusive of overtime.[137] Article III of the Constitution. is to give them a better chance of getting hired by foreign employers. Article XIII is a groundless apprehension. and it is for that precise reason that the clause violates not just petitioner's right to equal protection. whereas overtime pay is compensation for all work performed in excess of the regular eight hours. the Court further holds that the subject clause violates petitioner's right to substantive due process. The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee Association exaggerate the significance of Section 3. leave pay and other bonuses. 33. that the actual purpose of the subject clause of limiting the entitlement of OFWs to their three-month salary in case of illegal dismissal. has no life or force of its own as elucidated in Agabon.working class or a section thereof -. by itself. because these are fixed benefits that have been stipulated into his contract. This is plain speculation. and holiday pay is compensation for any work performed on designated rest days and holidays. No. As earlier discussed.the Court may recognize the existence of a suspect classification and subject the same to strict judicial scrutiny. for it deprives him of property. Article XIII. series 1996. or even just a pretext of one. without any existing valid governmental purpose. For seafarers like petitioner. Petitioner is mistaken. consisting of monetary benefits.[136] The argument of the Solicitor General. in which salary is understood as the basic wage. Along the same line of reasoning. The subject clause does not state or imply any definitive governmental purpose.

INC. 175558 SKIPPERS MARITIME SERVICES. and the December 8. there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's monetary award. 8042 is DECLARED UNCONSTITUTIONAL. WHEREFORE. No.By the foregoing definition alone. In the same vein. SECOND DIVISION SKIPPERS UNITED PACIFIC. No costs... The subject clause or for three months for every year of the unexpired term.R.400.[138] However. LTD. v. C . As the Court held in Centennial Transmarine. In short. National Labor Relations Commission. the Court GRANTS the Petition. Present: Petitioners. SO ORDERED. Inc. and G. 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.00 per month. 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. Dela Cruz. whichever is less in the 5th paragraph of Section 10 of Republic Act No. INC.. the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. 2004 Decision and April 1. the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. CARPIO. J. unless there is evidence that he performed work during those periods. 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.

(Skippers) for unremitted home allotment for the month of December 1998...... Skippers. exemplary damages. and attorneys fees... Lata (Lata).3 This arose from consolidated labor case4 filed by seafarers Napoleon De Gracia (De Gracia)... 88148. 2012 x. Promulgated: Respondents.. ...SERENO. J.. answered with a claim for reimbursement of De Gracia. LATA.. Charlie Aprosta (Aprosta). NAPOLEON DE GRACIA. as well as award of moral damages and attorneys fees. ISIDRO L..... moral damages.. Aprosta and Latas repatriation expenses.BRION... February 8.. salaries for the unexpired portion of their employment contracts.. and its foreign principal...... Inc...... ...R... Skippers Maritime Services.. on the other hand.-x DECISION CARPIO.. PEREZ... Isidro L... Inc. and Nathaniel Doza (Doza) against local manning agency Skippers United Pacific.versus . SP No.... and REYES NATHANIEL DOZA. and CHARLIE APROSTA...: The Case This is a Petition for Review under Rule 45 assailing the 5 July 2006 Decision 1 and 7 November 2006 Resolution2 of the Court of Appeals in CA-G... Ltd.

Inc.9 so they filed a Petition for Certiorari with the Court of Appeals (CA).11 No award was given to Doza for lack of factual basis. et al.5 The Labor Arbiter also dismissed Skippers claims. three months salary each representing the unexpired portion of their employment contracts and attorneys fees. under the following terms and conditions: Name: Napoleon O. De Gracia Position: 3rd Engineer Contract Duration: 10 months Basic Monthly Salary: US$800. deployed.6 De Gracia. et al. Lata Position: 4th Engineer Contract Duration: 12 months Basic Monthly Salary: US$600.12 The CA denied Skippers Motion for Partial Reconsideration.00 Contract Date: 17 April 199815 Name: Charlie A.00 . et al.De Gracia. Lata. appealed7 the Labor Arbiters decision with the National Labor Relations Commission (NLRC). De Gracia.00 Contract Date: 17 July 199814 Name: Isidro L.10 The CA granted the petition.13 Hence. The Facts Skippers United Pacific. and awarded to De Gracia.8 Doza. Aprosta and Dozas (De Gracia.s Motion for Reconsideration was likewise denied by the NLRC. Aprosta Position: Third Officer Contract Duration: 12 months Basic Monthly Salary: US$600. reversed the Labor Arbiter and NLRC Decisions. and Aprosta to work on board the vessel MV Wisdom Star. Lata. but the First Division of the NLRC dismissed the appeal for lack of merit. in behalf of Skippers. Lata and Aprosta their unremitted home allotment. this Petition.) claims were dismissed by the Labor Arbiter for lack of merit.

exemplary damages. late provisions.18 On 16 December 1998. it was suggested that Polish seafarers be utilized instead of Filipino seamen. namely Aprosta. arrived in the masters cabin and demanded immediate repatriation because they were not satisfied with the ship. on the other hand. both series of 1996 shall be strictly and faithfully observed. and was rude. compelling them to air their grievances with the Romanian Seafarers Free Union. lack of laundry services (only one washing machine). 19 To date. which however bears conflicting dates of 22 January 1998 and 22 January 1999.24 This incident was evidenced by the Captains Report sent via telex to Skippers on said date.28 Skippers also claims that. relaying the complaints of his crew.m.27 This is evidenced by a telex of Cosmoship MV Wisdom to Skippers.21 Upon arrival in the Philippines. threatened that they may become crazy any moment and demanded for all outstanding payments due to them.. 17 other seafarers disembarked under abnormal circumstsances. 30 This is again evidenced by a fax of Cosmoship MV Wisdom to Skippers. et al. and lack of maintenance of the vessel (perforated and unrepaired deck). 55. et al. however. unpaid salaries (only advances). due to the disembarkation of De Gracia. four Filipino seafarers. on 3 December 1998. namely: home allotment delay. filed a complaint for illegal dismissal with theLabor Arbiter on 4 April 1999 and prayed for payment of their home allotment for the month of December 1998.25 Skippers also claims that at 12:00 noon on 22 January 1999. Master of MV Wisdom Stars. and attorneys fees. Skippers only failed to remit the home allotment for the month of December 1998. claimed that Skippers failed to remit their respective allotments for almost five months. claims that at around 2:00 a. smelling strongly of alcohol. De Gracia. et al. De Gracia.17 No employment contract was submitted for NathanielDoza. et al. 23 De Gracia left the masters cabin after a few minutes and was heard shouting very loudly somewhere down the corridors. De Gracia. et al. were unceremoniously discharged from MV Wisdom Stars and immediately repatriated. which bears conflicting dates of 24 January 1998 and 24 January 1999. De Gracia. 33 and Memorandum Circular No.31 . De Gracia. 20 On 28 January 1999. 26 De Gracia. moral damages.22 Skippers. ITF Inspector Adrian Mihalcioiu of the Romanian Seafarers Union sent Captain Savvas of Cosmos Shipping a fax letter. went to the cabin of Gabriel Oleszek. shouting noisily to the master. 29 For this reason. Lata and Doza.Contract Date: 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. salaries for the unexpired portion of their contracts.

00 US$440. Respondents claim for reimbursement of the expenses they incurred in the repatriation of complainant Nathaniel Doza is likewise dismissed.340. assume the transportation cost of the seafarers replacement.00 US$900. in case of compassionate grounds. et al. . Skippers also prayed for payment of moral damages and attorneys fees. 55.00 Lata US$1. series of 1996 which states: G. in its Position Paper.00 US$600. Skippers claims they are liable for their repatriation expenses33 in accordance with Section 19(G) of Philippine Overseas Employment Administration (POEA) Memorandum Circular No. but prayed for the offsetting of such amount with the repatriation expenses in the following manner:32 Seafarer Repatriation Expense Home Allotment Balance De Gracia US$1. 34 The Decision of the Labor Arbiter The Labor Arbiter rendered his Decision on 18 February 2002. with its dispositive portion declaring: WHEREFORE. The employer may.00 US$740. pre-terminated their contracts. admitted non-payment of home allotment for the month of December 1998. judgment is hereby rendered dismissing herein action for lack of merit.00 Since De Gracia.Skippers.340. 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.00 US$600.340.00 US$740.00 Aprosta US$1.

voluntarily preterminated their contracts and demanded immediate repatriation due to their dissatisfaction with the ships operations. et al. De Gracia.SO ORDERED. granted De Gracia. et al. al. on 28 October 2002. et al. Skippers claim for reimbursement of repatriation expenses was likewise denied. 42 Lastly.s complaint for illegal dismissal because the seafarers voluntarily pre-terminated their employment contracts by demanding for immediate repatriation due to dissatisfaction with the ship.39 The Labor Arbiter also dismissed De Gracia et al. Series of 1996 allows the employer. such claim was dismissed. et al.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. to assume the repatriation cost of the seafarer on compassionate grounds. were not able to refute the telex received by Skippers from the vessels master that De Gracia. et al. claiming that De Gracia.s petition and reversed the decisions of the Labor Arbiter and NLRC. 36 The Labor Arbiter held that such voluntary pre-termination of employment contract is akin to resignation.45 The NLRC also denied the claim for illegal dismissal because De Gracia. et al. since home allotment is a benefit which De Gracia. 37 a form of termination by employee of his employment contract under Article 285 of the Labor Code. 55. The Labor Arbiter gave weight and credibility to the telex of the master of the vessel to Skippers. et al.s claim for home allotment for December 1998. must prove their entitlement to. 43 The Decision of the NLRC The NLRC. in case the seafarer voluntarily pre-terminates his contract.s claim for salaries representing the unexpired portion of their employment contracts was dismissed. its dispositive portion reading as follows: . since Article 19(G) of POEA Memorandum Circular No.35 The Labor Arbiter dismissed De Gracia. et al.38 Due to the absence of illegal dismissal. et al. 41 Since De Gracia.44 The NLRC considered De Gracia. et. were not able to prove their entitlement to home allotment.s claim for home allotment for December 1998 unsubstantiated. demanded for immediate repatriation.46 The Decision of the Court of Appeals The CA. dismissed De Gracia. on 5 July 2006.s appeal for lack of merit and affirmed the Labor Arbiters decision.

00 c.00 2. voluntarily pre-terminated their contracts. the repatriation expenses are for the account of Skippers. 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: 1.00 b. Unremitted home allotment pay for the month of December.48 The telex message was a self-serving document that does not satisfy the requirement of substantial evidence. De Gracia = US$2. et al. and cannot be offset with the home allotment pay for December 1998. 1998 or the equivalent thereof in Philippine pesos: a.50 In addition.00 b. Aprosta = US$600. De Gracia = US$900. Aprosta = US$1.53 Attorneys fees equivalent to 10% of the total claims was granted since it . or the equivalent thereof in Philippine pesos: a.49 For this reason. 51 Since there is no proof that DeGracia. et al. whichever is less. et al.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. The Resolution dated October 28. 2002 and the Order dated August 31.400. Attorneys fees and litigation expenses equivalent to 10% of the total claims.00 3. Lata = US$1.00 c. SO ORDERED. Lata = US$600. the failure to remit home allotment pay was effectively admitted by Skippers. and prayed to be offset from the repatriation expenses. the instant petition for certiorari is GRANTED. voluntarily pre-terminated their contracts and demanded immediate repatriation.800. prior to the expiration of their contracts showed they were illegally dismissed from employment. the repatriation of De Gracia. or that amount of relevant evidence which a reasonable mind might accept as adequate to justify the conclusion that petitioners indeed voluntarily demanded their immediate repatriation. Salary for the unexpired portion of the employment contract or for 3 months for every year of the unexpired term.800.WHEREFORE.52 No relief was granted to Doza due to lack of factual basis to support his petition.

For a workers dismissal to be considered valid.54 The Issues Skippers. c) The Court of Appeals seriously erred in awarding attorneys 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. assigned the following errors in the CA Decision: a) The Court of Appeals seriously erred in not giving due credence to the masters telex message showing that the respondents voluntarily requested to be repatriated. while the legality of the act of dismissal constitutes substantive due process. The legality of the manner of dismissal constitutes procedural due process. it must comply with both procedural and substantive due process.involved an action for recovery of wages or where the employee was forced to litigate and incur expenses to protect his rights and interest. and (2) . 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. but modify the award. 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. in its Petition for Review on Certiorari. 55 The Ruling of this Court We deny the petition and affirm the CA Decision.56 Procedural due process in dismissal cases consists of the twin requirements of notice and hearing.

In this case. et al. et al. On the issue of home allotment pay. the local manning agency. the law contemplates the requirement of a written notice of resignation. series of 1996. It is not necessary that an actual hearing be conducted. was illegal. voluntarily pre-terminated their contracts. Before the issuance of the second notice. et al. The allotment shall be at least eighty percent (80%) of the seafarers monthly basic salary including backwages. However. it is safe to presume that the employer terminated the seafarers. if any. there was no written notice furnished to De Gracia. Cosmoship furnished a written notice (telex) to Skippers.s dismissal was illegal. 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. Given that provision. et al. et al. 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. as correctly ruled by the CA. De Gracia. requires that dismissal by the employer be made under a just or authorized cause under Articles 282 to 284 of the Labor Code. If. (Emphasis supplied) . Section 8 of POEA Memorandum Circular No. the telex message relied upon by the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22 January 1999. For these reasons.57 Substantive due process.the second notice informs the employee of the employers decision to dismiss him. should have submitted their written resignations. since De Gracia. were repatriated because the latter voluntarily pre-terminated their contracts. 55. on the other hand. In 22 January 1998. the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. et al. indeed. 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. giving doubt to the veracity and authenticity of the document. their repatriation expenses were for the account of Skippers and could not be offset with the home allotment pay. et al. Skippers effectively admitted non-remittance of home allotment pay for the month of December 1998 in its Position Paper. were not even employed yet by the foreign principal. De Gracia. the telex message is a biased and self-serving document that does not satisfy the requirement of substantial evidence. regarding the cause of their dismissal. claiming that De Gracia. Skippers sought the repatriation expenses to be offset with the home allotment pay. states that the allotment actually constitutes at least eighty percent (80%) of the seafarers 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. In addition. In the absence of a written resignation. then De Gracia. However. the dismissal of De Gracia. The master/employer/agency shall provide the seafarer with facilities to do so at no expense to the seafarer.

Damages As admitted by Skippers in its Position Paper. Section 10 of Republic Act No. For this reason. according to his employment contract. 55.00 Aprosta US$600. et al. in the employment contracts. the home allotment pay for December 1998 due to De Gracia.00. on 28 January 1999.00. we award the higher amount of home allotment pay for De Gracia in the amount of US$900. However. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment contracts: . home allotment pay is not in the nature of an extraordinary money or benefit. for the month of December 1998. Since the home allotment pay can be considered as unpaid salaries. and Skippers shall be liable to pay the home allotment pay of De Gracia. is only US$800.00 The monthly salary of De Gracia. series of 1996. such non-remittance of home allotment pay should be considered as unpaid salaries.Paragraph 2 of the employment contracts of De Gracia. since Skippers admitted in its Position Paper a higher home allotment pay for DeGracia. et al. Since said memorandum states that home allotment of seafarers actually constitutes at least eighty percent (80%) of their salary. but should actually be considered as salary which should be paid for services rendered.00 Lata US$600. Lata and Aprosta is: Seafarer Home Allotment Pay De Gracia US$900. Lata and Aprosta incorporated the provisions of above Memorandum Circular No. 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.

imposes no duties and affords no protection. The unconstitutional provision is inoperative. as if it was not passed into law at all.34 Lata 12 months 17 Apr. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act.In case of termination of overseas employment without just.58 the Court.. in an En Banc Decision. we compute the claims as follows: Seafarer Contract Term Contract Date Repatriation Date Unexpired Monthly Term Salary Total Claims De Gracia 10 months 17 Jul. plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term. in cases of illegal dismissal. 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. On 8 March 2010.59 As such. valid or authorized cause as defined by law or contract. however. whichever is less. 28 Jan. without touching on the constitutionality of Section 7 of RA 10022. 28 Jan. whichever is less. whichever is less. 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. Section 7 of Republic Act No. shall be awarded to the overseas Filipino worker. since the termination occurred on January 1999 before the passage of the amendatory RA 10022. Gallant Maritime Services and Marlow Navigation Co. in 24 March 2009. 1999 3 months US$800 1998 & 20 days US$2933. 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. the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum. Inc. However. whichever is less and awarded the entire unexpired portion of the employment contract to the overseas Filipino worker. The declaration in March 2009 of the unconstitutionality of the clause or for three months for every year of the unexpired term. as unamended. declared unconstitutional the clause or for three months for every year of the unexpired term. Serrano v. Nevertheless. we shall apply RA 8042. 1999 2 months US$600 1998 & 20 days US$1600 .

(5) Illegal or arbitrary detention or arrest. The spouse. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries. descendants. 1999 2 months US$600 1998 & 20 days US$1600 Given the above computation.Aprosta 12 months 17 Apr. rape. 27. 2219. (7) Libel. we modify the CAs imposition of award. 9 of this article. and grant to De Gracia. 29. (10) Acts and actions referred to in Articles 21. (9) Acts mentioned in Article 309. referred to in No. slander or any other form of defamation. (6) Illegal search. et al. ascendants. in the order named. (2) Quasi-delicts causing physical injuries. may also recover moral damages. instead of salaries for three (3) months. (3) Seduction. 26. 28 Jan. 3 of this article. salaries representing the unexpired portion of their contracts. 28. (8) Malicious prosecution. and brothers and sisters may bring the action mentioned in No. 32. and 35. or abused. abducted. or other lascivious acts. 34. 30. raped. abduction. The parents of the female seduced. Article 2219 of the Civil Code of the Philippines provides for recovery of moral damages in certain cases: Art. . (4) Adultery or concubinage.

. (7) In actions for the recovery of wages of household helpers. In all cases. on the other hand. (10) When at least double judicial costs are awarded. (6) In actions for legal support. temperate. in addition to the moral. except: (1) When exemplary damages are awarded. cannot be recovered. Article 2208 of the Civil Code provides for recovery of attorneys fees and expenses of litigation: Art. (3) In criminal cases of malicious prosecution against the plaintiff. Exemplary or corrective damages are imposed. the attorneys fees and expenses of litigation must be reasonable. 2208. Lastly. provides for recovery of exemplary damages: Art. In this case. other than judicial costs. just and demandable claim. liquidated or compensatory damages. we agree with the CA in not awarding moral and exemplary damages for lack of factual basis. laborers and skilled workers.Article 2229 of the Civil Code. (11) In any other case where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered. (8) In actions for indemnity under workmens compensation and employers liability laws. 2229. In the absence of stipulation. (9) In a separate civil action to recover civil liability arising from a crime. by way of example or correction for the public good. (2) When the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. (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 plaintiffs plainly valid. attorneys fees and expenses of litigation.

attorneys fees which exceed ten percent of the amount of wages recovered. had to secure the services of the lawyer to recover their unpaid salaries and protect their interest. Aprosta = US$1. we agree with the CAs imposition of attorneys fees in the amount of ten percent (10%) of the total claims.34 b. and Skippers Maritime Services Inc. Republic SUPREME Manila SECOND DIVISION of the Philippines COURT .600. Petitioners Skippers United Pacific.00 2) Salary for the unexpired portion of the employment contract or its current equivalent in Philippine Pesos: a. 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. SO ORDERED. It shall be unlawful for any person to demand or accept. in any judicial or administrative proceedings for the recovery of wages.00 b. De Gracia = US$2. In cases of unlawful withholding of wages. 111. we AFFIRM the Decision of the Court of Appeals dated 5 July 2006 with MODIFICATION. Inc. b. Lata = US$600. the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages recovered. De Gracia = US$900. a.600.Article 111 of the Labor Code provides for a maximum award of attorneys fees in cases of recovery of wages: Art.933.00 c. Lata = US$1. WHEREFORE.00 c.00 3) Attorneys fees and litigation expenses equivalent to 10% of the total claims. Attorneys fees. Since De Gracia. Ltd. et al. Aprosta = US$600..

Kingdom of Saudi Arabia on February 7. Kingdom of Saudi Arabia. To Order "Valid Dismissal" click the Book Upon arrival in Riyadh. his employment was terminated through OAB’s July 9. No. OAB informed EDI that. Gran (Gran) the amount of USD 16. . NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. However. Non-compliance to contract requirements by the recruitment agency primarily on your salary and contract duration. petitioner.G. from the applicants’ curricula vitaesubmitted to it for evaluation. EDI-Staffbuilders International. 8 After accepting OAB’s offer of employment. EDI may arrange for Gran’s immediate dispatch. and deployed by ESI to work for OAB. SP No. Gran questioned the discrepancy in his monthly salary—his employment contract stated USD 850.150. DECISION VELASCO.250. in Riyadh. 56120 which affirmed the January 15.5 ESI is another recruitment agency which collaborated with EDI to process the documentation and deployment of private respondent to Saudi Arabia.00). 1993.” The faxed letter also stated that if Gran agrees to the terms and conditions of employment contained in it.: The Case This Petition for Review on Certiorari1 seeks to set aside the October 18. Inc..11 on the following grounds: 1. through the assistance of the EDI office in Riyadh. it selected Gran for the position of “Computer Specialist. 2000 Decision2 of the Court of Appeals (CA) in CA-G. GRAN.00 only.00. 1994 letter.00 as unpaid salaries.6 It appears that OAB asked EDI through its October 3. INC. one of which was a monthly salary of SR (Saudi Riyal) 2. ordering Expertise Search International (ESI). Private respondent Gran was an OFW recruited by EDI. (OAB) jointly and severally to pay Eleazar S. while his Philippine Overseas Employment Agency (POEA) Information Sheet indicated USD 600. 1994.” 7 In a facsimile transmission dated November 29.00 (USD 600. (EDI). respondents.R. and Omar Ahmed Ali Bin Bechr Est.00 a month. 1999 Decision3 and September 30.00 for a period of two years. vs. 1999 Resolution4 rendered by the National Labor Relations Commission (NLRC) (Third Division) in POEA ADJ (L) 9406-2194. The Facts Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino Workers (OFWs). Gran signed an employment contract 9 that granted him a monthly salary of USD 850. 10 After Gran had been working for about five months for OAB. Gran was then deployed to Riyadh. OAB agreed to pay Gran USD 850..R. J. 145587 October 26. JR. 2007 EDI-STAFFBUILDERS INTERNATIONAL. 1993 letter for curricula vitae of qualified applicants for the position of “Computer Specialist.

which was docketed as POEA ADJ (L) 94-06-2194 for underpayment of wages/salaries and illegal dismissal. Arbiter Caday also cited the Declaration executed by Gran. 1993. With regard to the issue of illegal dismissal.00. 1998 with the NLRC. OAB. The alleged non-compliance with contractual stipulations relating to Gran’s salary and contract duration. to whom Gran’s case was assigned.] vide OAB letter ref. and USD 350. against ESI/EDI.00 monthly as food allowance. namely. which was equivalent to USD 600. F-5751-93. Insubordination or disobedience to Top Management Order and/or instructions (non-submittal of daily activity reports despite several instructions). (2) that he was not qualified for the job as computer specialist due to his insufficient knowledge in programming and lack of knowledge in ACAD system. he executed a Declaration 13 releasing OAB from any financial obligation or otherwise.00. Quezon City. on February 10.2.948. The Ruling of the NLRC The NLRC held that EDI’s seemingly harmless transfer of Gran’s contract to ESI is actually “reprocessing. Dissatisfied.” which is a prohibited transaction under Article 34 (b) of the Labor Code. the Labor Arbiter found that Gran failed to refute EDI’s allegations. After his arrival in the Philippines.00. Arbiter Caday dismissed Gran’s complaint for lack of merit. and Gran was not even afforded the required notice and investigation on his alleged offenses. In addition. Caday. dated October 3. The Labor Arbiter reasoned that there was no underpayment of salaries since according to the POEA-Overseas Contract Worker (OCW) Information Sheet. The Ruling of the Labor Arbiter In his February 10. and Western Guaranty Corporation with the NLRC.00 representing his final pay. towards him. and the absence of prequalification requirements cannot be attributed to Gran but to EDI. This scheme constituted misrepresentation through the conspiracy between EDI and ESI in misleading Gran and even POEA of the actual terms and conditions of the OFW’s employment. 1998. Gran received from OAB the total amount of SR 2. ruled that there was neither underpayment nor illegal dismissal.500. on July 21. to justify that Gran had no claim for unpaid salaries or wages against OAB.12 3. his monthly basic salary was fixed at SR 2. Country Bankers Insurance Corporation. . and on the same day. Gran instituted a complaint. On July 11. (3) that Gran refused to follow management’s instruction for him to gain more knowledge of the job to prove his worth as computer specialist. 1994. (5) and that Gran was paid a monthly salary of USD 850.14 Labor Arbiter Manuel R. 1998 Decision. Gran’s monthly salary was USD 600. disobedience.00. 1994. (1) that Gran did not submit a single activity report of his daily activity as dictated by company policy. Non-compliance to pre-qualification requirements by the recruitment agency[. and his failure to submit daily activity reports. Accordingly. it was found that Gran did not commit any act that constituted a legal ground for dismissal. (4) that Gran’s employment contract had never been substituted. National Capital Region. it appears from the records that Gran failed to furnish EDI with a copy of his Appeal Memorandum. the charge of insubordination was not substantiated. Gran filed an Appeal15 on April 6. Thus. Third Division. and in his Confirmation of Appointment as Computer Specialist. However. In addition. which dealt directly with OAB. the Labor Arbiter decided that Gran was validly dismissed from his work due to insubordination.

1999.. the appellate court held that “Gran’s failure to furnish a copy of his appeal memorandum [to EDI was] a mere formal lapse. he would not have been hired and deployed abroad.20 The NLRC then issued a Resolution21 denying petitioner’s Motion for Reconsideration. and ruled upon” in the Decision. Seeing that the NLRC did not act on Gran’s motion after EDI had filed its Opposition. and that Gran’s Declaration releasing OAB from any monetary obligation had no force and effect. other than the termination letter.” 22 The court also held that petitioner EDI failed to prove that private respondent was terminated for a valid cause and in accordance with due process.16 Gran then filed a Motion for Execution of Judgment 17 on March 29. The CA also held that Gran was not afforded due process.” Unconvinced of the NLRC’s reasoning. The court also held that even if Gran was guilty of insubordination. On the procedural issue. petitioner filed an Opposition 19 to Gran’s motion arguing that the Writ of Execution cannot issue because it was not notified of the appellate proceedings before the NLRC and was not given a copy of the memorandum of appeal nor any opportunity to participate in the appeal. 1999 with the NLRC and petitioner receiving a copy of this motion on the same date. 18 To prevent the execution. and Omar Ahmed Ali Bin Bechr Est. the dispositive portion of which reads: WHEREFORE. and that there was “no cogent reason or patent or palpable error that warrant any disturbance thereof. (OAB) are hereby ordered jointly and severally liable to pay the complainant Eleazar Gran the Philippine peso equivalent at the time of actual payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS (US$16. and as such is frowned upon as contrary to . considered. Gran must have been competent and qualified.150.. SO ORDERED. but not dismissed. the NLRC reversed the Labor Arbiter’s Decision and rendered a new one. As for the charge of insubordination and disobedience due to Gran’s failure to submit a “Daily Activity Report. ratiocinating that the issues and arguments raised in the motion “had already been amply discussed. Inc. EDI Staffbuilders Int’l. The Ruling of the Court of Appeals The CA subsequently ruled on the procedural and substantive issues of EDI’s petition. The court held that since the law requires the recruitment agencies to subject OFWs to trade tests before deployment. The appellate court ratiocinated that EDI had the burden of proving Gran’s incompetence. The appellate court found that the Declaration was in the form of a quitclaim. he should have just been suspended or reprimanded.” the appellate court found that EDI failed to show that the submission of the “Daily Activity Report” was a part of Gran’s duty or the company’s policy. Finally. The court found that Gran was terminated on the same day he received the termination letter. Inc. the CA held that the Declaration signed by Gran did not bar him from demanding benefits to which he was entitled. given that OAB did not abide by the twin notice requirement. no evidence was presented to show how and why Gran was considered to be incompetent. an excusable neglect and not a jurisdictional defect which would justify the dismissal of his appeal. Petitioner claimed in its petition that the NLRC committed grave abuse of discretion in giving due course to the appeal despite Gran’s failure to perfect the appeal.00) representing his salaries for the unexpired portion of his contract. on August 26. 1999.Thus. the assailed decision is SET ASIDE. Respondents Expertise Search International. a Motion for Reconsideration of the NLRC Decision after receiving a copy of the Decision on August 16. EDI filed a Petition for Certiorari before the CA. petitioner filed. without having been apprised of the bases of his dismissal or afforded an opportunity to explain his side. however. otherwise.

AS APPLIED BY THE COURT OF APPEALS. The Court ratiocinated as follows: . III. the order of dismissal of an appeal to the NLRC based on the ground that “there is no showing whatsoever that a copy of the appeal was served by the appellant on the appellee“25 was annulled. COROLLARY HERETO.D. IV. Also.23 The Court’s Ruling The petition lacks merit except with respect to Gran’s failure to furnish EDI with his Appeal Memorandum filed with the NLRC. V. v.24 this Court set aside the order of the NLRC which dismissed an appeal on the sole ground that the appellant did not furnish the appellee a memorandum of appeal contrary to the requirements of Article 223 of the New Labor Code and Section 9. In Estrada v. Hence. NLRC RULING. in J. it was ruled that failure of appellant to furnish a copy of the appeal to the adverse party is not fatal to the appeal.public policy especially where the monetary consideration given in the Declaration was very much less than what he was legally entitled to—his backwages amounting to USD 16. NLRC. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A JURISDICTIONAL DEFECT AND A DEPRIVATION OF PETITIONER EDI’S RIGHT TO DUE PROCESS AS WOULD JUSTIFY THE DISMISSAL OF GRAN’S APPEAL. National Labor Relations Commission. Magpayo Customs Brokerage Corp. this instant petition is before the Court. As a result of these findings. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN’S TERMINATION WAS JUSTIFIABLE BY REASON OF INCOMPETENCE. This position is devoid of merit. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED PORTION OF HIS CONTRACT. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN’S TERMINATION WAS JUSTIFIABLE BY REASON OF INSUBORDINATION AND DISOBEDIENCE. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO TERMINATION. 2000.150.00. on October 18. First Issue: NLRC’s Duty is to Require Respondent to Provide Petitioner a Copy of the Appeal Petitioner EDI claims that Gran’s failure to furnish it a copy of the Appeal Memorandum constitutes a jurisdictional defect and a deprivation of due process that would warrant a rejection of the appeal. IS APPLICABLE IN THE INSTANT CASE. In a catena of cases. WHETHER THE PRIETO VS. The Issues Petitioner raises the following issues for our consideration: I. the appellate court denied the petition to set aside the NLRC Decision. Rule XIII of its Implementing Rules and Regulations. II.

—Proof of personal service shall consist of a written admission of the party served or the official return of the server. 13. Inc. National Labor Relations Commission.—The return is prima facie proof of the facts indicated therein. the doctrine that evolved from these cases is that failure to furnish the adverse party with a copy of the appeal is treated only as a formal lapse. nor is it . the appeal should not be dismissed.32 Proof and completeness of service. the NLRC Rules do not state what would constitute proper proof of service.26 (Emphasis supplied.) The J.D. service shall take effect after such time. 1998. Time and again We have acted on petitions to review decisions of the Court of Appeals even in the absence of proof of service of a copy thereof to the Court of Appeals as required by Section 1 of Rule 45. provides for proofs of service: Section 13. Service by registered mail is complete upon receipt by the addressee or his agent. NLRC. in such a situation. Manila—both of whom are not connected with petitioner. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW v. proof shall be made by such affidavit and registry receipt issued by the mailing office. Based on the foregoing provision. Accordingly. Sec. While Gran’s failure to furnish EDI with a copy of the Appeal Memorandum is excusable. an excusable neglect. in such a case. However. Sec.The failure to give a copy of the appeal to the adverse party was a mere formal lapse. NLRC. however. The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the Appeal Memorandum. Garcia (or Gran). however.) Hence. 30 The post office’s list shows that private respondent Gran sent two pieces of mail on the same date: one addressed to a certain Dan O. As enunciated in J. it should not be given due course either. The NLRC then ordered Gran to present proof of service. We act on the petitions and simply require the petitioners to comply with the rule. If service is made by registered mail. if the service is done through registered mail. and the other appears to be addressed to Neil B. The registry return card shall be filed immediately upon its receipt by the sender. de Guzman of Legaspi Village. Magpayo.D. is to require the appellant to comply with the rule that the opposing party should be provided with a copy of the appeal memorandum. or the affidavit of the party serving. not a jurisdictional defect. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of service in proceedings before the NLRC: Section 5. but if the addressee fails to claim his mail from the post office within five (5) days from the date of first notice of the postmaster. Rule 13 of the Rules of Court. it is obvious that the list submitted by Gran is not conclusive proof that he had served a copy of his appeal memorandum to EDI. and hence. containing a full statement of the date.31of Ermita. Makati. This mailing list. 27Pagdonsalan v. it is only deemed complete when the addressee or his agent received the mail or after five (5) days from the date of first notice of the postmaster. is not a conclusive proof that EDI indeed received a copy of the Appeal Memorandum.29 Thus. or in lieu thereof the unclaimed letter together with the certified or sworn copy of the notice given by the postmaster to the addressee (emphasis supplied). the abject failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum constitutes grave abuse of discretion. In compliance with the order. the duty that is imposed on the NLRC. Gran submitted a copy of Camp Crame Post Office’s list of mail/parcels sent on April 7. Rules of Court. v. Proof of service. place and manner of service. (Emphasis supplied. proof thereof shall consist of an affidavit of the person mailing of facts showing compliance with section 7 of this Rule. If the service is by ordinary mail.28 and in Sunrise Manning Agency. an excusable neglect.

even if pleaded. the parties may establish such stipulations. the presumption is that foreign law is the same as ours. instead of annulling the dispositions of the NLRC and remanding the case for further proceedings we will resolve the petition based on the records before us to avoid a protracted litigation. they will be discussed jointly. after seeing that Gran failed to attach the proof of service. The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a copy of the Appeal Memorandum before rendering judgment reversing the dismissal of Gran’s complaint constitutes an evasion of the pertinent NLRC Rules and established jurisprudence.). terms and conditions as they may deem convenient. we apply Philippine labor laws in determining the issues presented before us. the party who wants to have a foreign law applied to a dispute or case has the burden of proving the foreign law.D. public order. One can only surmise the shock and dismay that OAB. or public policy. the International Law doctrine of presumed-identity approach or processual presumption comes into play.36 Where a foreign law is not pleaded or. this failure deprived EDI of procedural due process guaranteed by the Constitution which can serve as basis for the nullification of proceedings in the appeal before the NLRC. the NLRC should not have simply accepted the post office’s list of mail and parcels sent. Being the law intended by the parties (lex loci intentiones) to apply to the contract. morals. Petitioner EDI claims that it had proven that Gran was legally dismissed due to incompetence and insubordination or disobedience. He should have submitted an affidavit proving that he mailed the Appeal Memorandum together with the registry receipt issued by the post office. Gran should have immediately filed the registry return card. the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for in the contract (e. specific causes for termination. the rights and obligations among and between the OFW. In international law. it did not prove the pertinent Saudi laws on the matter. Hence. The foreign law is treated as a question of fact to be properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of a foreign law. and disobedience In cases involving OFWs. insubordination. clauses. and hence. should be respected. Magpayo and the other cases. provided they are not contrary to law. the local recruiter/agent. He is presumed to know only domestic or forum law. EDI. is not proved.34 In the present case. termination procedures.33 The second and third issues have a common matter—whether there was just cause for Gran’s dismissal—hence. Second and Third Issues: Whether Gran’s dismissal is justifiable by reason of incompetence. good customs. A contract freely entered into is considered law between the parties. and ESI experienced when they thought that the dismissal of Gran’s complaint became final. In formulating the contract. However. . Worse. as this constitutes grave abuse of discretion. The NLRC should not have proceeded with the adjudication of the case. Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran. etc. thus. and the foreign employer/principal are governed by the employment contract. 35 Unfortunately for petitioner. afterwards. only to receive a copy of Gran’s Motion for Execution of Judgment which also informed them that Gran had obtained a favorable NLRC Decision.g. This is not level playing field and absolutely unfair and discriminatory against the employer and the job recruiters. 37 Thus. but it should have required Gran to properly furnish the opposing parties with copies of his Appeal Memorandum as prescribed in J. The rights of the employers to procedural due process cannot be cavalierly disregarded for they too have rights assured under the Constitution.conclusive proof that EDI received its copy of the Appeal Memorandum.

40 Taking into account the character of the charges and the penalty meted to an employee. without any other evidence. the employer has the burden of proving that the dismissal is for just and valid causes. from Andrea E. Nicolaou. .43 addressed to Gran. that is. x x x In many cases. Incompetence may be shown by weighing it against a standard. To prove its allegations. 1995 letter 44 from OAB addressed to EDI and ESI. the elements that must concur for the charge of insubordination or willful disobedience to prosper were not present. no other evidence was presented to show how and why Gran was considered incompetent. accurate. or criterion.This claim has no merit. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. 1994 termination letter. The first is the July 9. due to incompetence and insubordination or disobedience. which outlined the reasons why OAB had terminated Gran’s employment. EDI submitted two letters as evidence. consistent. cannot be given credence. Section 33 of Article 277 of the Labor Code38 states that: ART. In illegal dismissal cases. In Micro Sales Operation Network v. Any decision taken by the employer shall be without prejudice to the right of the workers to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. we held that: For willful disobedience to be a valid cause for dismissal. EDI failed to establish any such bases to show how petitioner found Gran incompetent. other than the abovementioned letters. 41 This is consistent with the principle ofsecurity of tenure as guaranteed by the Constitution and reinforced by Article 277 (b) of the Labor Code of the Philippines. Petitioner EDI had clearly failed to overcome the burden of proving that Gran was validly dismissed. the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. it has been held that in termination disputes or illegal dismissal cases. petitioner claims that private respondent Gran was validly dismissed for just cause. Petitioner claims that Gran was incompetent for the Computer Specialist position because he had “insufficient knowledge in programming and zero knowledge of [the] ACAD system. it has been established by Philippine law and jurisprudence that the employer should prove that the dismissal of employees or personnel is legal and just. NLRC. In addition. the employer is bound to adduce clear. 277. The second is an unsigned April 11. and failure to do so would necessarily mean that the dismissal was not justified and therefore illegal.42 In the instant case. MISCELLANEOUS PROVISIONS39 (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code.”45 Petitioner also claims that Gran was justifiably dismissed due to insubordination or disobedience because he continually failed to submit the required “Daily Activity Reports. the following twin elements must concur: (1) the employee’s assailed conduct must have been willful. insubordinate. or disobedient. Managing Director of OAB. Petitioner’s imputation of incompetence on private respondent due to his “insufficient knowledge in programming and zero knowledge of the ACAD system” based only on the above mentioned letters. benchmark. However. An allegation of incompetence should have a factual foundation.”46 However. and convincing evidence to prove that the dismissal is valid and legal.

NLRC. It is supposed to reveal applicants with false educational backgrounds. Fourth Issue: Gran was not Afforded Due Process As discussed earlier. Petitioner also raised the issue that Prieto v. lawful. Even if there was no objective trade test done by EDI. more particularly by a Computer Specialist. Gran’s job description. thus. insubordination. Jr. or willful disobedience. using the ruling in the said case. or any other document that would show that the “Daily Activity Reports” were required for submission by the employees.47 EDI failed to discharge the burden of proving Gran’s insubordination or willful disobedience. in the absence of proof of Saudi laws. Thus. and pertains to the duties which he had been engaged to discharge. as enunciated in Santos. the Prieto ruling is not applicable because in the case at hand. The burden devolves not only upon the foreign-based employer but also on the employment or recruitment agency for the latter is not only an agent of the former. this Court ruled that “[i]t is presumed that before their deployment. in order to justify willful disobedience. Petitioner EDI claims that private respondent Gran was afforded due process. The CA is correct in applying Prieto. he would not have been hired. As indicated by the second requirement provided for in Micro Sales Operation Network. it was still EDI’s responsibility to subject Gran to a trade test. they should have adduced additional evidence to convincingly show that Gran’s employment was validly and legally terminated. but is also solidarily liable with the foreign principal for any claims or liabilities arising from the dismissal of the worker.”50 The CA. Even though EDI and/or ESI were merely the local employment or recruitment agencies and not the foreign employer. and its failure to do so only weakened its position but should not in any way prejudice Gran. The purpose of the required trade test is to weed out incompetent applicants from the pool of available workers. Therefore.53 cited by the CA in its Decision. otherwise. Since EDI deployed Gran to Riyadh. In the case at bar.characterized by a wrongful and perverse attitude. v.48 Thus. In Prieto. In any case. Inc. Before the Labor Arbiter. ruled that Gran must have passed the test. This position is untenable. is not applicable to the present case. were properly observed in the present case. According to petitioner. . he was not qualified for the job for which he was hired. lawful. made known to the employee. our laws and rules on the requisites of due process relating to termination of employment shall apply. v. NLRC. NLRC. petitioner failed to show that the order of the company which was violated—the submission of “Daily Activity Reports”—was part of Gran’s duties as a Computer Specialist. EDI should have provided a copy of the company policy. since he was allowed to work and improve his capabilities for five months prior to his termination. EDI was at fault when it deployed Gran who was allegedly “incompetent” for the job. Gran misrepresented himself in his curriculum vitae as a Computer Specialist. the petitioners were subjected to trade tests required by law to be conducted by the recruiting agency to insure employment of only technically qualified workers for the foreign principal.52and Malaya Shipping Services. petitioner failed to prove that Gran was justifiably dismissed due to incompetence. and (2) the order violated must have been reasonable.49 as used by the CA in its Decision. and expose bogus qualifications. it can be presumed that Gran had passed the required trade test and that Gran is qualified for the job. made known to the employee and must pertain to the duties which he had been engaged to discharge. Philippine Labor laws and regulations shall govern the relationship between Gran and EDI. we must determine whether the order violated by the employee is reasonable. the issue is rendered moot and academic because Gran’s incompetency is unproved.51 EDI also claims that the requirements of due process. We disagree.

when the termination of employment is without just. In addition. The relevant portions of the Declaration are as follows: . the employees must be given two (2) notices before their employment could be terminated: (1) a first notice to apprise the employees of their fault. Fifth and Last Issue: Gran is Entitled to Backwages We reiterate the rule that with regard to employees hired for a fixed period of employment. 8042 58 (Migrant Workers and Overseas Filipinos Act) on August 25.A. 8042. Since OAB was in breach of the due process requirements under the Labor Code and its regulations. (1) if the dismissal is based on a just cause under Article 282. 1996. NLRC. before the effectivity of R. the July 9. OAB. they are entitled to the payment of their salaries corresponding to the unexpired portion of their contract.55 A careful examination of the records revealed that. 59 On the other hand. While it furnished Gran the written notice informing him of his dismissal. the employment contract provides that the employment contract shall be valid for a period of two (2) years from the date the employee starts to work with the employer.54 this Court held that: Procedurally. Obviously. indeed. and EDI. Summing up. Since he was illegally dismissed on July 9. Gran was not afforded due process. In between the first and second notice. it failed to furnish Gran the written notice apprising him of the charges against him. even before Gran was furnished the termination letter. This shows that OAB had already condemned Gran to dismissal.A. which was equivalent to USD 16. as prescribed by the Labor Code.150. 1995. there was no intention to provide Gran with due process. in cases arising before the effectivity of R. 1994. Pursuant to the doctrine laid down in Agabon. the employees should be given a hearing or opportunity to defend themselves personally or by counsel of their choice. 56 Consequently. the worker shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum. the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. and (2) if the dismissal is based on authorized causes under Articles 283 and 284. and for unjustified grounds. the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard. It should also be pointed out that OAB failed to give Gran the chance to be heard and to defend himself with the assistance of a representative in accordance with Article 277 of the Labor Code. 1994. Clearly. No. jointly and solidarily.57 an employer is liable to pay nominal damages as indemnity for violating the employee’s right to statutory due process. 8042.60 In the present case. Moreover. 1994 termination letter was effective on the same day. are liable to Gran in the amount of PhP 30. he was denied the opportunity to respond to said notice.62hence. No. No. he is therefore entitled to backwages corresponding to the unexpired portion of his contract. Gran was notified and his employment arbitrarily terminated on the same day.A. valid or authorized cause as defined by law or contract. through the same letter.00 as indemnity. Saudi Arabia and started to work on February 7. and (2) a second notice to communicate to the employees that their employment is being terminated.61 Gran arrived in Riyadh. ESI.000. Under the twin notice requirement. OAB did not schedule a hearing or conference with Gran to defend himself and adduce evidence in support of his defenses.In Agabon v. Petitioner EDI questions the legality of the award of backwages and mainly relies on the Declaration which is claimed to have been freely and voluntarily executed by Gran. 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. his employment contract is until February 7. for cases arising after the effectivity of R. OAB’s manner of dismissing Gran fell short of the two notice requirement. a notice of the decision to dismiss. that when the contract is for a fixed term and the employees are dismissed without just cause.

I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY SIGNATURE VOLUNTARILY. I STATE FURTHER THAT OAB EST.00 (SAUDI RIYALS TWO THOUSAND NINE HUNDRED FORTY EIGHT ONLY) REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES I RENDERED TO OAB ESTABLISHMENT. Esquillo: Quitclaims. the payment of SR 2.190.00 which is the amount Gran is legally entitled to get from petitioner EDI as backwages.I. 2. the transaction must be recognized as a valid and binding undertaking. but also the factual circumstances under which they have been executed.00). (Emphasis supplied. As correctly pointed out by the courta quo. ELEAZAR GRAN Courts must undertake a meticulous and rigorous review of quitclaims or waivers. waivers. citing Periquet v. more particularly those executed by employees. I HEREBY DECLARE THAT OAB EST.948. it is also very much less than the USD 16. releases and other waivers of benefits granted by laws or contracts in favor of workers should be strictly scrutinized to protect the weak and the disadvantaged. In addition. 2. The Declaration reveals that the payment of SR 2. The salary paid to Gran upon his termination. The waivers should be carefully examined. Panganiban in Land and Housing Development Corporation v. If the agreement was voluntarily entered into and represents a reasonable settlement. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person.) Is the waiver and quitclaim labeled a Declaration valid? It is not. HAS NO FINANCIAL OBLIGATION IN MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH. in regard not only to the words and terms used.948.00 is even lower than his monthly salary of SR 3. This requirement was clearly articulated by Chief Justice Artemio V. ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL SETTLEMENT ON THIS DATE THE AMOUNT OF: S.) This Court had also outlined in Land and Housing Development Corporation. with full understanding of what he was doing.00 (USD 850.948.00 is actually the payment for Gran’s salary for the services he rendered to OAB as Computer Specialist. NLRC.63 (Emphasis supplied. and the consideration for the quitclaim is credible and reasonable. SIGNED. is unreasonably low. or the terms of settlement are unconscionable on its face. The Court finds the waiver and quitclaim null and void for the following reasons: 1.00.64 the parameters for valid compromise agreements. and quitclaims: Not all waivers and quitclaims are invalid as against public policy.948.150. in the amount of SR 2. If the . that the law will step in to annul the questionable transaction. HAS NO OBLIGATION TOWARDS ME IN WHATEVER FORM. it is binding on the parties and may not later be disowned simply because of a change of mind. But where it is shown that the person making the waiver did so voluntarily.R.

or in the dialect known to the employees—that by signing the waiver or quitclaim. On July 12. which the employees are giving up in consideration of the fixed compromise amount. Consider the following chronology of events: a. 1994. 4. The foregoing events readily reveal that Gran was “forced” to sign the Declaration and constrained to receive the amount of SR 2. The factual circumstances surrounding the execution of the Declaration would show that Gran did not voluntarily and freely execute the document. On July 11. 1994. Gran was instructed to depart Saudi Arabia and required to pay his plane ticket. A quitclaim will understandably be lower than the sum total of the amounts and benefits that can possibly be awarded to employees or to be earned for the remainder of the contract period since it is a compromise where the employees will have to forfeit a certain portion of the amounts they are claiming in exchange for the early payment of a compromise amount. Certainly.00 (USD 850.00 even if it was against his will—since he was told on July 10. In order to prevent disputes on the validity and enforceability of quitclaims and waivers of employees under Philippine laws.00 for the payment of his ticket. He could have entertained some apprehensions as to the status of his stay or safety in Saudi Arabia if he would not sign the quitclaim. then the consideration should be much much more than the monthly salary of SR 3. 3. On July 9. Gran departed from Riyadh. 1994. 2. the amount is unreasonably small compared to the future wages of Gran.Declaration is a quitclaim. the employer is being unjust to the employee as there is no meaningful choice on the part of the employee while the terms are unreasonably favorable to the employer.948. 1994. He had no other choice but to sign the Declaration as he needed the amount of SR 2. b. the Declaration purporting to be a quitclaim and waiver is unenforceable under Philippine laws in the absence of proof of the applicable law of Saudi Arabia. On July 21. In the case of the Declaration. Gran filed the Complaint before the NLRC. Saudi Arabia. The benefits of the employees if possible with the corresponding amounts. OAB.66 Thus. d.948. A statement that the employer has clearly explained to the employee in English. and e. Gran received a copy of his letter of termination. 1994. 1994.190.65 c. said agreements should contain the following: 1. The court a quo is correct in its finding that the Declaration is a contract of adhesion which should be construed against the employer. they are forfeiting or relinquishing their right to receive the benefits which are due them under the law. 3. On July 10. A fixed amount as full and final compromise settlement. he signed the Declaration. and .00)—although possibly less than the estimated Gran’s salaries for the remaining duration of his contract and other benefits as employee of OAB. The court may however step in when such amount is unconscionably low or unreasonable although the employee voluntarily agreed to it. An adhesion contract is contrary to public policy as it leaves the weaker party—the employee—in a “take-it-or-leave-it” situation. Filipino. 1994 to leave Riyadh on July 12.

A statement that the employees signed and executed the document voluntarily. The October 18. 2000 Decision in CA-G. the petition is DENIED.00 to respondent Gran as nominal damages for non-compliance with statutory due process. 56120 of the Court of Appeals affirming the January 15. or undue influence exerted on their person.000. or coercion. 1999 Resolution of the NLRC is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders International. . The document should be subscribed and sworn to under oath preferably before any administering official of the Department of Labor and Employment or its regional office. SP No. duress. the NLRC or a labor attaché in a foreign country. violence. the Bureau of Labor Relations. 1999 Decision and September 30. the foreign laws shall apply.67 This compromise settlement becomes final and binding under Article 227 of the Labor Code which provides that: [A]ny compromise settlement voluntarily agreed upon with the assistance of the Bureau of Labor Relations or the regional office of the DOLE. There should be two (2) witnesses to the execution of the quitclaim who must also sign the quitclaim. SO ORDERED.4. Such official shall assist the parties regarding the execution of the quitclaim and waiver. shall pay the amount of PhP 30. Inc. and had fully understood the contents of the document and that their consent was freely given without any threat.R. misrepresentation. It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor contracts of OFWs in the absence of proof of the laws of the foreign country agreed upon to govern said contracts. intimidation. shall be final and binding upon the parties and the NLRC or any court “shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud. It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the employee. No costs. Otherwise. WHEREFORE.