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Facts:DouglasMillareswasemployedbyESSOInternationalthroughitslocalmanning

agency, TransGlobal, in 1968 as a machinist. In 1975, he was promoted as Chief


Engineerwhichpositionheoccupieduntilheoptedtoretirein1989.In1989,petitioner
Millares filed a leave of absence and applied for optional retirement plan under the
ConsecutiveEnlistmentIncentivePlan(CEIP)consideringthathehadalreadyrendered
morethantwentyyearsofcontinuousservice.EssoInternationaldeniedMillaresrequest
foroptionalretirementonthefollowinggrounds,towit:

1)hewasemployedonacontractualbasis

2)hiscontractofenlistment(COE)didnotprovideforretirementbeforetheageofsixty
years;

3)hedidnotcomplywiththerequirementforclaimingbenefitsundertheCEIP,i.e.,to
submitawrittenadvicetothecompanyofhisintentiontoterminatehisemployment
withinthirtydaysfromhislastdisembarkationdate.

Subsequently,afterfailingtoreturntoworkaftertheexpirationofhisleaveofabsence,
MillareswasdroppedfromtherosterofcrewmemberseffectiveSeptember1,1989.On
theotherhand,petitionerLagdawasemployedbyEssoInternationalaswiper/oilerin
1969.HewaspromotedasChiefEngineerin1980,apositionhecontinuedtooccupy
untilhislastCOEexpiredin1989.In1989,Lagdalikewisefiledaleaveofabsenceand
applied to avail of the optional early retirement plan in view of his twenty years
continuousserviceinthecompany.TransglobalsimilarlydeniedLagdasrequestfor
availment of the optional early retirement scheme on the same grounds upon which
Millaresrequestwasdenied.Unabletoreturnforcontractualseaserviceafterhisleaveof
absence expire, Lagda was also dropped from the roster of crew members effective
September1,1989.

MillaresandLagdafiledacomplaintaffidavitforillegaldismissalandnonpaymentof
employee benefits against private respondents Esso International and TransGlobal
beforethePOEA.ThePOEArenderedadecisiondismissingthecomplaintforlackof
merit.Onappeal,NLRCaffirmedthedecisionofthePOEAdismissingthecomplaint.
NLRCrationcinatedthatMillaresandLagda,asseamenandoverseascontractworkers
arenotcoveredbythetermregularemploymentasdefinedunderArticle280ofthe
Labor Code. The POEA, which is tasked with protecting the rights of the Filipino
workers for overseas employment to fair and equitable recruitment and employment
practices and to ensure their welfare, prescribes a standard employment contract for
seamenonboardoceangoingvesselsforafixedperiodbutinnocasetoexceedtwelve
months.

ISSUE:
I. AREPETITIONERSREGULARORCONTRACTUALEMPLOYEESWHOSE
EMPLOYMENTSARETERMINATEDEVERYTIMETHEIRCONTRACTSOF
EMPLOYMENTEXPIRE?

II. ASSUMINGTHATPETITIONERSAREREGULAREMPLOYEES,WERE
THEYDISMISSEDWITHOUTJUSTCAUSESOASTOBEENTITLEDTO
REINSTATEMENTANDBACKWAGES,INCLUDINGPAYMENTOF100%OF
THEIRTOTALCREDITEDCONTRIBUTIONSTOTHECONSECUTIVE
ENLISTMENTINCENTIVEPLAN(CEIP)?

III. DOESTHEPROVISIONOFTHEPOEASTANDARDCONTRACTFOR
SEAFARERSONBOARDFOREIGNVESSELS(SEC.C.,DURATIONOF
CONTRACT)PRECLUDETHEATTAINMENTBYSEAMENOFTHESTATUSOF
REGULAREMPLOYEES?

InanswertotheprivaterespondentsSecondMotionforReconsiderationandtoFAMEs
MotionforReconsiderationinIntervention,petitionersmaintainthattheyareregular
employeesasfoundbytheCourtintheMarch14,2000Decision.Consideringthat
petitionersperformedactivitieswhichareusuallynecessaryordesirableintheusual
businessortradeofprivaterespondents,theyshouldbeconsideredasregularemployees
pursuanttoArticle280,Par.1oftheLaborCode.i[9]Otherjustificationsforthisruling
includethefactthatpetitionershaverenderedovertwenty(20)yearsofservice,as
admittedbytheprivaterespondents;ii[10]thattheywererecipientsofMeritPaywhichis
anexpressacknowledgmentbytheprivaterespondentsthatpetitionersareregularand
notjustcontractualemployees;iii[11]thatpetitionerswereregisteredundertheSocial
SecuritySystem(SSS).

Theprivaterespondents,ontheotherhand,contendthat:(a)therulingholding
petitionersasregularemployeeswasnotinaccordwiththedecisioninCoyocav.NLRC,
243SCRA190;(b)Art.280isnotapplicableaswhatappliesisthePOEARulesand
RegulationsGoverningOverseasEmployment;(c)seafarersarenotregularemployees
basedoninternationalmaritimepractice;(d)graveconsequenceswouldresultonthe
futureofseafarersandmanningagenciesiftherulingisnotreconsidered;(e)therewas
nodismissalcommitted;(f)adismissedseafarerisnotentitledtobackwagesand
reinstatement,thatbeingnotallowedunderthePOEArulesandtheMigrantWorkers
Act;and,(g)petitionersarenotentitledtoclaimthetotalamountcreditedtotheiraccount
undertheCEIP.iv[14]

RULING:

RegularandCasualEmploymentTheprovisionsofwrittenagreementtothecontrary
notwithstandingandregardlessoftheoralagreementoftheparties,anemploymentshall
bedeemedtoberegularwheretheemployeehasbeenengagedtoperformactivities
whichareusuallynecessaryordesirableintheusualbusinessortradeoftheemployer
exceptwheretheemploymenthasbeenfixedforaspecificprojectorundertakingthe
completionorterminationofwhichhasbeendeterminedatthetimeoftheengagementof
theemployeeorwheretheworkorservicetobeemployeeisseasonalinnatureandthe
employmentisforthedurationoftheseason.

Anemploymentshallbedeemedtobecasualifitisnotcoveredbythepreceding
paragraph;providedthat,anyemployeewhohasrenderedatleastoneyearofservice,
whethersuchserviceiscontinuousorbroken,shallbeconsideredaregularemployee
withrespecttotheactivityinwhichheisemployedandhisemploymentshallcontinue
whilesuchactuallyexists.

Accordingly,andsincetheentirepurposebehindthedevelopmentoflegislation
culminatinginthepresentArticle280oftheLaborcodeclearlyappearstohave
been,asalreadyobserved,topreventcircumventionoftheemployeesrighttobe
secureinhistenure,theclauseinsaidarticleindiscriminatelyandcompletelyruling
outallwrittenororalagreementsconflictingwiththeconceptofregular
employmentasdefinedthereinshouldbeconstruedtorefertothesubstantiveevil
thattheCodeitselfhassingledout;agreementsenteredintopreciselytocircumvent
securityoftenure.Itshouldhavenoapplicationtoinstanceswhereafixedperiodof
employmentwasagreeduponknowinglyandvoluntarilybytheparties,withoutany
force,duressorimproperpressurebeingbroughttobearupontheemployeeand
absentanyothercircumstancesvitiatinghisconsent,orwhereitsatisfactorily
appearsthattheemployerandemployeedealtwitheachotheronmoreorlessequal
termswithnomoraldominancewhateverbeingexercisedbytheformeroverthe
latter.Unlessthuslimitedinitspurview,thelawwouldbemadetoapplytopurposes
otherthanthoseexplicitlystatedbyitsframers;itthusbecomespointlessandarbitrary,
unjustinitseffectsandapttoleadtoabsurdandunintendedconsequences.

Again,inPabloCoyocav.NLRC,v[18]theCourtalsoheldthataseafarerisnotaregular
employeeandisnotentitledtoseparationpay.HisemploymentisgovernedbythePOEA
StandardEmploymentContractforFilipinoSeamen.

XXX. Inthisconnection,itisimportanttonotethatneitherdoesthePOEAstandard
employmentcontractforFilipinoseamenprovideforsuchbenefits.

AsaFilipinoseaman,petitionerisgovernedbytheRulesandRegulations
GoverningOverseasEmploymentandthesaidRulesdonotprovideforseparation
orterminationpay.Whatisembodiedinpetitionerscontractisthepaymentof
compensationarisingfrompermanentpartialdisabilityduringtheperiodofemployment.
Wefindthatprivaterespondentcompliedwiththetermsofcontractwhenitpaid
petitionerP42,315.00which,inouropinion,isareasonableamount,ascompensationfor
hisillness.
Lastly,petitionerclaimsthatheeventuallybecamearegularemployeeofprivate
respondentandthusfallswithinthepurviewofArticles284and95oftheLaborCode.In
supportofthiscontention,petitionercitesthecaseofWorthShippingService,Inc.,etal.
v.NLRC,etal.,whereinweheldthatthecrewmembersoftheshippingcompanyhad
attainedregularstatusandthus,wereentitledtoseparationpay.However,thefactsof
saidcasedifferfromthepresent.InWorth,weheldthattheprincipalandagenthad
operationalcontrolandmanagementovertheMVOrientCarrierandthus,werethe
actualemployersoftheircrewmembers.

Fromtheforegoingcases,itisclearthatseafarersareconsideredcontractualemployees.
TheycannotbeconsideredasregularemployeesunderArticle280oftheLaborCode.
Theiremploymentisgovernedbythecontractstheysigneverytimetheyarerehiredand
theiremploymentisterminatedwhenthecontractexpires.Theiremploymentis
contractuallyfixedforacertainperiodoftime.TheyfallundertheexceptionofArticle
280whoseemploymenthasbeenfixedforaspecificprojectorundertakingthe
completionorterminationofwhichhasbeendeterminedatthetimeofengagementofthe
employeeorwheretheworkorservicestobeperformedisseasonalinnatureandthe
employmentisforthedurationoftheseason.vi[19]Weneednotdepartfromtherulings
oftheCourtinthetwoaforementionedcaseswhichindeedconstitutestaredecisiswith
respecttotheemploymentstatusofseafarers.

Petitionersinsistthattheyshouldbeconsideredregularemployees,sincetheyhave
renderedserviceswhichareusuallynecessaryanddesirabletothebusinessoftheir
employer,andthattheyhaverenderedmorethantwenty(20)yearsofservice.Whilethis
maybetrue,theBrentcasehas,however,heldthattherearecertainformsofemployment
whichalsorequiretheperformanceofusualanddesirablefunctionsandwhichexceed
oneyearbutdonotnecessarilyattainregularemploymentstatusunderArticle280.vii[20]
Overseasworkersincludingseafarersfallunderthistypeofemploymentwhichare
governedbythemutualagreementsoftheparties.

Digest

Q:AandBwereemployedbyCompanyE.Aappliedforaleaveofabsenceandinformedthe
OperationsManagerofhisintentiontoavailoftheoptionalretirementplanunderthe
ConsecutiveEnlistmentIncentivePlan(CEIP).Suchwasdenied.Balsoappliedforaleaveof
absenceandinformedtheOperationsMangerofhisintentiontoavailoftheoptionalearly
retirementplaninviewofhis20yearsofservicewhichwaslikewisedenied.AandBboth
requestedforextensionoftheirleavesofabsence.Later,theydiscoveredthattheyhadbeen
droppedfromtherosterofcrewmembers.CompanyEassertsthatAandBarecontractual
employeeswhoseemploymentareterminatedeverytimetheircontractsexpire.WereAandB
validlydismissed?

A: No. The primary standard to determine a regular employment is the reasonable


connection between the activity performed by the employee in relation to the usual
business or trade of the employer. In this case it is undisputed that petitioners were
regular employees of private respondents. Also, as they had been in the employ of
private respondents for 20 years as they were repeatedly re-hired after the expiration of
their respective contracts, it is clear that their service was necessary and indispensable
to private respondents business. Therefore, they could only be dismissed for just and
valid cause. There is no showing that they abandoned their job as there was no
showing of their unjustified refusal to resume employment. (Millares v. NLRC, G.R. No.
110524, March 14, 2000)
i
ii
iii
ivMarsamanManningAgencyvs.NLRC
G.R.No.127195,August25,1999
R.A.8042(MigrantWorkersAct)

Facts:

PrivaterespondentWilfredoT.CajeraswashiredbypetitionerMARSAMAN,thelocalmanningagentofpetitioner
DIAMANTIDES,asChiefCookStewardontheMVPrigipos,ownedandoperatedbyDIAMANTIDES,foracontract
periodoften(10)months.Cajerasstartedworkon8August1995,butlessthantwo(2)monthslater,hewasrepatriatedto
thePhilippinesallegedlyby"mutualconsent."

PrivaterespondentCajerasfiledacomplaintforillegaldismissalagainstpetitionerswiththeNLRCallegingthathewas
dismissedillegally,denyingthathisrepatriationwasbymutualconsent,andaskingforhisunpaidwages,overtimepay,
damages,andattorney'sfees.

On29January1996LaborArbiterresolvedthedisputeinfavorofprivaterespondentCajerasrulingthatthelatter's
dischargefromtheMVPrigiposallegedlyby"mutualconsent"wasnotprovedbyconvincingevidence.

PetitionersappealedtotheNLRC.On16September1996theNLRCaffirmedtheappealedfindingsandconclusionsofthe
LaborArbiter.Petitioners'motionforreconsiderationwasdeniedbytheNLRCinitsResolutiondated12November1996.

Hence,thepetitioncontendingthat,amongotherthings,theNLRCcommittedgraveabuseofdiscretioninorderinga
monetaryawardbeyondthemaximumofthree(3)months'salaryforeveryyearofservicesetbyRA8042.
v
ISSUE:

Petitioners'motionforreconsiderationwasdeniedbytheNLRCinitsResolutiondated12November1996.[9]Hence,this
petitioncontendingthattheNLRCcommittedgraveabuseofdiscretion:(a)innotaccordingfullfaithandcredittothe
officialentrybyCapt.AlekosinthevesselsDeckLogconformablywiththerulingsinHavertonShippingLtd.v.NLRC[10]
andWallemMaritimeServices,Inc.v.NLRC;[11](b)innotappreciatingtheMedicalReportissuedbyDr.WdenHoedas
conclusiveevidencethatrespondentCajeraswassufferingfromparanoiaandothermentalproblems;(c)inaffirmingthe
awardofattorneysfeesdespitethefactthatCajeras'claimforexemplarydamageswasdeniedforlackofmerit;and,(d)in
orderingamonetaryawardbeyondthemaximumofthree(3)monthssalaryforeveryyearofservicesetbyRA8042.

RULING:

Wedenythepetition.IntheContractofEmployment[12]enteredintowithprivaterespondent,petitionersconvenanted
strictandfaithfulcompliancewiththetermsandconditionsoftheStandardEmploymentContractapprovedbythe
POEA/DOLE[13]whichprovides:

1.TheemploymentoftheseamanshallceaseuponexpirationofthecontractperiodindicatedintheCrewContractunless
theMasterandtheSeaman,by
mutualconsent
,inwriting,
agreetoanearlyterminatio
nxxxx(underscoringours).

Clearly,undertheforegoing,theemploymentofaFilipinoseamanmaybeterminatedpriortotheexpirationofthe
stipulatedperiodprovidedthatthemasterandtheseaman(a)mutuallyconsenttheretoand(b)reducetheirconsentin
writing.
Intheinstantcase,petitionersdonotdenythefactthattheyhavefallenshortoftherequirement.Nodocumentexists
wherebyCapt.Alekosandprivaterespondentreducedtowritingtheirallegedmutualconsenttotheterminationoftheir
employmentcontract.Instead,petitionerspresentedthevessel'sDeckLogwhereinanentryunilaterallymadebyCapt.
Alekospurportedtoshowthatprivaterespondenthimselfaskedforhisrepatriation.However,theNLRCcorrectly
dismisseditsevidentiaryvalue.Foronething,itisaunilateralactwhichisvehementlydeniedbyprivaterespondent.
Secondly,theentryinnowaysatisfiestherequirementofabilateraldocumentationtoproveearlyterminationofan
overseasemploymentcontractbymutualconsentrequiredbytheStandardEmploymentContract.Hence,sincethelatter
setstheminimumtermsandconditionsofemploymentfortheprotectionofFilipinoseamensubjectonlytotheadoptionof
bettertermsandconditionsoverandabovetheminimumstandards,[14]theNLRCcouldnotbeaccusedofgraveabuseof
discretioninnotacceptinganythingless.

Howeverpetitionerscontendthattheentryshouldbeconsideredprimafacieevidencethatrespondenthimselfrequestedhis
repatriationconformablywiththerulingsinHavertonShippingLtd.v.NLRC[15]andAbacastShippingandManagement
Agency,Inc.v.NLRC.[16]Indeed,Havertonsaysthatavesselslogbookisprimafacieevidenceofthefactsstatedtherein
astheyareofficialentriesmadebyapersonintheperformanceofadutyrequiredbylaw.However,thisjurisprudential
principledoesnotapplytowinthecaseforpetitioners.InWallemMaritimeServices,Inc.v.NLRC[17]theHavertonruling
wasnotgivenunqualifiedapplicationbecausethelogbookpresentedthereinwasameretypewrittencollationofexcerpts
fromwhatcouldbethelogbook.[18]TheCourtreasonedthatsincethelogbookwastheonlypieceofevidencepresented
toprovejustcausefortheterminationofrespondenttherein,thelogbookhadtobedulyidentifiedandauthenticatedlestan
injusticewouldresultfromablindadoptionofitscontentswhichwerebutprimafacieevidenceoftheincidentsstated
therein.

Intheinstantcase,thedisputedentryintheDeckLogwasneitherauthenticatednorsupportedbycredibleevidence.
AlthoughpetitionersclaimthatCajerassignedhisSeamansServiceRecordBooktosignifyhisconformitytothe
repatriation,theNLRCfoundtheallegationtobeactuallyuntruesincenosignatureofprivaterespondentappearedinthe
RecordBook.

NeithercouldtheMedicalReportpreparedbyDr.Hoedbeconsideredcorroborativeandconclusiveevidencethatprivate
respondentwassufferingfromparanoiaandothermentalproblems,supposedlyjustcausesforhisrepatriation.Firstly,
absolutelynoevidence,notevenanallegation,wasofferedtoenlightentheNLRCorthisCourtastoDr.Hoed's
qualificationstodiagnosementalillnesses.Itisamatterofjudicialnoticethattherearevariousspecializationsinmedical
scienceandthatageneralpractitionerisnotcompetenttodiagnoseanyandallkindsofillnessesanddiseases.Hence,the
findingsofdoctorswhoarenotprovenexpertsarenotbindingonthisCourt.[19]Secondly,theMedicalReportpreparedby
Dr.Hoedcontainedonlyageneralstatementthatprivaterespondentwassufferingfromparanoiaandothermentalproblems
withoutprovidingthedetailsonhowthediagnosiswasarrivedatorinwhatstagetheillnesswas.IfDr.Hoedindeed
competentlyexaminedprivaterespondentthenhewouldhavebeenabletodiscussatlengththecircumstancesand
precedentsofhisdiagnosis.Petitionerscannotrelyonthepresumptionofregularityintheperformanceofofficialdutiesto
maketheMedicalReportacceptablebecausethepresumptionappliesonlytopublicofficersfromthehighesttothelowest
intheserviceoftheGovernment,departments,bureaus,offices,and/oritspoliticalsubdivisions,[20]whichDr.WdenHoed
wasnotshowntobe.Furthermore,neitherdidpetitionersprovethatprivaterespondentwasincompetentorcontinuously
incapacitatedforthedutiesforwhichhewasemployedbyreasonofhisallegedmentalstate.Onthecontraryhisabilityas
ChiefCookSteward,uptotheverymomentofhisrepatriation,wasratedVeryGoodinhisSeamansServiceRecordBook
ascorrectlyobservedbypublicrespondent.

ConsideringalltheforegoingwecannotascribegraveabuseofdiscretiononthepartoftheNLRCinrulingthatpetitioners
failedtoprovejustcausefortheterminationofprivaterespondent'soverseasemployment.Graveabuseofdiscretionis
committedonlywhenthejudgmentisrenderedinacapricious,whimsical,arbitraryordespoticmanner,whichisnottruein
thepresentcase.[21]
SERRANOV.GALLANTMARITIMESERVICES,INC.

BywayofPetitionforReviewunderRule45oftheRulesofCourt,petitionerassailstheDecisionandResolutionofthe
CourtofAppeals(CA).

FACTS:

PetitionerwashiredbyGallantMaritimeServices,Inc.andMarlowNavigationCo.,Ltd.(respondents)underaPhilippine
OverseasEmploymentAdministration(POEA)approvedContractofEmploymentwiththefollowingtermsand
conditions:

Durationofcontract12months

PositionChiefOfficer

BasicmonthlysalaryUS$1,400.00

Hoursofwork48.0hoursperweek

OvertimeUS$700.00permonth

Vacationleavewithpay7.00dayspermonth

OnMarch19,1998,thedateofhisdeparture,petitionerwasconstrainedtoacceptadowngradedemploymentcontractfor
thepositionofSecondOfficerwithamonthlysalaryofUS$1,000.00,upontheassuranceandrepresentationofrespondents
thathewouldbemadeChiefOfficerbytheendofApril1998.

RespondentsdidnotdeliverontheirpromisetomakepetitionerChiefOfficer.Hence,petitionerrefusedtostayonas
SecondOfficerandwasrepatriatedtothePhilippinesonMay26,1998.

Petitionersemploymentcontractwasforaperiodof12monthsorfromMarch19,1998uptoMarch19,1999,butatthe
timeofhisrepatriationonMay26,1998,hehadservedonlytwo(2)monthsandseven(7)daysofhiscontract,
leavinganunexpiredportionofnine(9)monthsandtwentythree(23)days.

PetitionerfiledwiththeLaborArbiter(LA)aComplaintagainstrespondentsforconstructivedismissalandfor
paymentofhismoneyclaimsinthetotalamountofUS$26,442.73.

TheLArenderedaDecisiondatedJuly15,1999,declaringthedismissalofpetitionerillegalandawardinghim
monetarybenefits,towit:

WHEREFORE,premisesconsidered,judgmentisherebyrendereddeclaringthatthedismissalofthecomplainant
(petitioner)bytherespondentsintheaboveentitledcasewasillegalandtherespondentsareherebyorderedtopaythe
complainant[petitioner],jointlyandseverally,inPhilippineCurrency,basedontherateofexchangeprevailingat
thetimeofpayment,theamountofEIGHTTHOUSANDSEVENHUNDREDSEVENTYU.S.DOLLARS(US
$8,770.00),representingthecomplainantssalaryforthree(3)monthsoftheunexpiredportionoftheaforesaid
contractofemployment.

TheclaimsofthecomplainantformoralandexemplarydamagesareherebyDISMISSEDforlackofmerit.
InawardingpetitioneralumpsumsalaryofUS$8,770.00,theLAbasedhiscomputationonthesalaryperiodof
threemonthsonlyratherthantheentireunexpiredportionofninemonthsand23daysofpetitioners
employmentcontractapplyingthesubjectclause.However,theLAappliedthesalaryrateofUS$2,590.00,
consistingofpetitioners[b]asicsalary,US$1,400.00/month+US$700.00/month,fixedovertimepay,+
US$490.00/month,vacationleavepay=US$2,590.00/compensationpermonth.

RespondentsappealedtotheNationalLaborRelationsCommission(NLRC)toquestionthefindingoftheLAthat
petitionerwasillegallydismissed.

TheNLRCmodifiedtheLADecisionandcorrectedtheLAscomputationofthelumpsumsalaryawardedtopetitionerby
reducingtheapplicablesalaryratefromUS$2,590.00toUS$1,400.00becauseR.A.No.8042doesnotprovideforthe
awardofovertimepay,whichshouldbeproventohavebeenactuallyperformed,andforvacationleavepay.

PetitionerfiledaMotionforPartialReconsideration,butthistimehequestionedtheconstitutionalityofthesubject
clause.TheNLRCdeniedthemotion.

PetitionerfiledaPetitionforCertiorariwiththeCA,reiteratingtheconstitutionalchallengeagainstthesubjectclause.After
initiallydismissingthepetitiononatechnicality,theCAeventuallygaveduecoursetoit,asdirectedbythisCourtinits
Resolutionwhichgrantedthepetitionforcertiorari,filedbypetitioner.

TheCAaffirmedtheNLRCrulingonthereductionoftheapplicablesalaryrate;however,theCAskirtedthe
constitutionalissueraisedbypetitioner.

HisMotionforReconsiderationhavingbeendeniedbytheCA,petitionerbringshiscausetothisCourtonthefollowing
grounds:

TheCourtofAppealsandthelabortribunalshavedecidedthecaseinawaynotinaccordwithapplicabledecisionofthe
SupremeCourtinvolvingsimilarissueofgrantinguntothemigrantworkerbackwagesequaltotheunexpiredportionof
hiscontractofemploymentinsteadoflimitingittothree(3)months.

Evenwithoutconsideringtheconstitutionallimitations[of]Sec.10ofRepublicActNo.8042,theCourtofAppeals
gravelyerredinlawinexcludingfrompetitionersawardtheovertimepayandvacationpayprovidedinhis
contractsinceunderthecontracttheyformpartofhissalary.

TheCourtnowtakesupthefullmeritofthepetitionmindfuloftheextremeimportanceoftheconstitutionalquestionraised
therein.

ISSUES:

WhetherSection10(par5)ofRA8042isunconstitutional

PropercomputationoftheLumpsumsalarytobeawardedtopetitionerbyreasonofhisillegaldismissal

Whethertheovertimeandleavepayshouldformpartofthesalarybasisinthecomputationofhismonetary
award

TheunanimousfindingoftheLA,NLRCandCAthatthedismissalofpetitionerwasillegalisnotdisputed.Likewise
notdisputedisthesalarydifferentialofUS$45.00awardedtopetitionerinallthreefora.

Applyingthesubjectclause,theNLRCandtheCAcomputedthelumpsumsalaryofpetitioneratthemonthlyrateof
US$1,400.00coveringtheperiodofthreemonthsoutoftheunexpiredportionofninemonthsand23daysofhis
employmentcontractoratotalofUS$4,200.00.

Impugningtheconstitutionalityofthesubjectclause,petitionercontendsthat,inadditiontotheUS$4,200.00awardedby
theNLRCandtheCA,heisentitledtoUS$21,182.23moreoratotalofUS$25,382.23,equivalenttohissalariesforthe
entireninemonthsand23daysleftofhisemploymentcontract,computedatthemonthlyrateofUS$2,590.00.31

ArgumentsofthePetitioner

ForAntonioSerrano(petitioner),aFilipinoseafarer,thelastclauseinthe5thparagraphofSection10,RepublicAct(R.A.)
No.8042,violatestheOFWsconstitutionalrightsinthatitimpairsthetermsoftheircontract,deprivesthemofequal
protectionanddeniesthemdueprocess.

TheArgumentsofRespondents

Respondentscontendthattheconstitutionalissueshouldnotbeentertained,forthiswasbelatedlyinterposedbypetitioner
inhisappealbeforetheCA,andnotattheearliestopportunity,whichwaswhenhefiledanappealbeforetheNLRC.40

TheArgumentsoftheSolicitorGeneral

TheSolicitorGeneral(OSG)41pointsoutthatasR.A.No.8042tookeffectonJuly15,1995,itsprovisionscouldnothave
impairedpetitioners1998employmentcontract.Rather,R.A.No.8042havingprecededpetitionerscontract,the
provisionsthereofaredeemedpartoftheminimumtermsofpetitionersemployment,especiallyonthematterofmoney
claims,asthiswasnotstipulateduponbytheparties.

TheCourtsRuling:

FirstIssue

DoesthesubjectclauseviolateSection1,ArticleIIIoftheConstitution,andSection18,ArticleIIandSection3,
ArticleXIIIonLaborasprotectedsector?

Theanswerisintheaffirmative.

Section1,ArticleIIIoftheConstitutionguarantees:

Nopersonshallbedeprivedoflife,liberty,orpropertywithoutdueprocessoflawnorshallanypersonbedeniedtheequal
protectionofthelaw.

Section18,ArticleIIandSection3,ArticleXIIIaccordallmembersofthelaborsector,withoutdistinctionastoplaceof
deployment,fullprotectionoftheirrightsandwelfare.

ToFilipinoworkers,therightsguaranteedundertheforegoingconstitutionalprovisionstranslatetoeconomicsecurityand
parity:allmonetarybenefitsshouldbeequallyenjoyedbyworkersofsimilarcategory,whileallmonetaryobligations
shouldbebornebytheminequaldegree;noneshouldbedeniedtheprotectionofthelawswhichisenjoyedby,orspared
theburdenimposedon,othersinlikecircumstances.

Imbuedwiththesamesenseofobligationtoaffordprotectiontolabor,theCourtinthepresentcasealsoemploys
thestandardofstrictjudicialscrutiny,foritperceivesinthesubjectclauseasuspectclassificationprejudicialto
OFWs.

Uponcursoryreading,thesubjectclauseappearsfaciallyneutral,foritappliestoallOFWs.However,acloserexamination
revealsthatthesubjectclausehasadiscriminatoryintentagainst,andaninvidiousimpactonOFWs

Thesubjectclausedoesnotstateorimplyanydefinitivegovernmentalpurpose;anditisforthatprecisereasonthatthe
clauseviolatesnotjustpetitionersrighttoequalprotection,butalsoherrighttosubstantivedueprocessunder
Section1,ArticleIIIoftheConstitution.

SecondIssue

ItisplainthatpriortoR.A.No.8042,allOFWs,regardlessofcontractperiodsortheunexpiredportionsthereof,were
treatedalikeintermsofthecomputationoftheirmonetarybenefitsincaseofillegaldismissal.Theirclaimsweresubjected
toauniformruleofcomputation:theirbasicsalariesmultipliedbytheentireunexpiredportionoftheiremployment
contracts.

TheenactmentofthesubjectclauseinR.A.No.8042introducedadifferentiatedruleofcomputationofthemoney
claimsofillegallydismissedOFWsbasedontheiremploymentperiods,intheprocesssinglingoutonecategorywhose
contractshaveanunexpiredportionofoneyearormoreandsubjectingthemtothepeculiardisadvantageofhavingtheir
monetaryawardslimitedtotheirsalariesfor3monthsorfortheunexpiredportionthereof,whicheverisless,butallthe
whilesparingtheothercategoryfromsuchprejudice,simplybecausethelattersunexpiredcontractsfallshortofoneyear.

PriortoR.A.No.8042,auniformsystemofcomputationofthemonetaryawardsofillegallydismissedOFWswasinplace.
Thisuniformsystemwasapplicableeventolocalworkerswithfixedtermemployment.

Thesubjectclausedoesnotstateorimplyanydefinitivegovernmentalpurpose;anditisforthatprecisereasonthatthe
clauseviolatesnotjustpetitionersrighttoequalprotection,butalsoherrighttosubstantivedueprocessunder
Section1,ArticleIIIoftheConstitution.

Thesubjectclausebeingunconstitutional,petitionerisentitledtohissalariesfortheentireunexpiredperiodofnine
monthsand23daysofhisemploymentcontract,pursuanttolawandjurisprudencepriortotheenactmentofR.A.
No.8042.

ThirdIssue

Petitionercontendsthathisovertimeandleavepayshouldformpartofthesalarybasisinthecomputationofhismonetary
award,becausethesearefixedbenefitsthathavebeenstipulatedintohiscontract.

Petitionerismistaken.

ThewordsalariesinSection10(5)doesnotincludeovertimeandleavepay.Forseafarerslikepetitioner,DOLEDepartment
OrderNo.33,series1996,providesaStandardEmploymentContractofSeafarers,inwhichsalaryisunderstoodasthe
basicwage,exclusiveofovertime,leavepayandotherbonuses;whereasovertimepayiscompensationforallwork
performedinexcessoftheregulareighthours,andholidaypayiscompensationforanyworkperformedon
designatedrestdaysandholidays.
Inthesamevein,theclaimforthedaysleavepayfortheunexpiredportionofthecontractisunwarrantedsincethesameis
givenduringtheactualserviceoftheseamen.

WHEREFORE,theCourtGRANTSthePetition.Thesubjectclauseorforthreemonthsforeveryyearofthe
unexpiredterm,whicheverislessinthe5thparagraphofSection10ofRepublicActNo.8042isDECLARED
UNCONSTITUTIONAL;andtheDecember8,2004DecisionandApril1,2005ResolutionoftheCourtofAppeals
areMODIFIEDtotheeffectthatpetitionerisAWARDEDhissalariesfortheentireunexpiredportionofhis
employmentcontractconsistingofninemonthsand23dayscomputedattherateofUS$1,400.00permonth

vi
viiDigest

Q:IsetannDeptStoredismissedBduetoretrenchment.Howeverinsteadofgivingtherequired30daynotice,thecompany
gave30dayspayarguingthatthisiseffectivenotice.TheymadeBsignquitclaimssothattherewouldbenomoreclaims
fromthem.TheLaborArbiterruledthattheBwasillegallydismissedbecausetheywerenotaffordeddueprocessbecause
theyfailedtoproveretrenchmentduetolosses.TheNLRCreversedtherulingsayingthatthedismissalwasjustified
becauseitwasduetoredundancyandnotretrenchment.TheNLRChoweverdidnotruleonwhetherthe30daypaywasa
sufficientsubstituteforthe30daynotice.Thepetitionerarguesfurtherthattheyshouldbegiventhechancetopresenthis
side.Wasthe30dayspaysufficientreplacementfor30daynotice?

A:No.TheCourtruledthatsincethedismissalisduetoanauthorizedcauseonlynoticeisrequiredandthattheemployee
hasnorighttopresenthisside.The30daynoticeisneededinordertoaffordtheemployeeenoughtimetolookforwork
andtogivetheDOLEtimetolookintothevalidityoftheauthorizedcause.30dayspayisnotenoughtoreplacethenotice
requirementbecauseitwouldnotservethepurposeofthenotice. Additionally,backwagesarenotaseverepunishment
becauseitisaconsequenceoftheemployers failuretogivenoticeanddueprocessandtheemployeeisthereforenot
deemedterminatedsoheshouldbecompensatedforthatperiod.(SerranovsNLRC,GRNo117040,May4,2000)

EDIStaffbuildersv.NLRC

In1993,EDIStaffbuilders,Inc.(EDI),uponrequestofOmarAhmedAliBinBechrEst.(OAB),acompanyinSaudi
Arabia,senttoOABresumesfromwhichOABcanchooseacomputerspecialist.EleazarGranwasselected.Itwasagreed
thathismonthlysalaryshallbe$850.00.ButfivemonthsintohisserviceinSaudiArabia,Granreceivedaterminationletter
andrightthereandthenwasremovedfromhispost.Theterminationletterstatesthathewasincompetentbecausehedoes
notknowtheACADsystemwhichisrequiredinhislineofwork;thathefailedtoenrichhisknowledgeduringhis5month
staytoprovehiscompetence;thatheisdisobedientbecausehefailedtosubmittherequireddailyreportstoOAB.Gran
thensignedaquitclaimwherebyhedeclaredthatheisreleasingOABfromanyliabilityinexchangeof2,948.00Riyal.

WhenGranreturned,hefiledalaborcaseforillegaldismissalagainstEDIandOAB.EDIinitsdefenseaverredthatthe
dismissalisvalidbecausewhenGranandOABsignedtheemploymentcontract,bothpartiesagreedthatSaudilaborlaws
shallgovernallmattersrelatingtotheterminationofGransemployment;thatunderSaudilaborlaws,Granstermination
duetoincompetenceandinsubordinationisvalid;thatGransinsubordinationandincompetenceisoutlinedinthe
terminationletterGranreceived.Thelaborarbiterdismissedthelaborcasebutonappeal,theNationalLaborRelations
Commission(NLRC)reversedthedecisionofthearbiter.TheCourtofAppealslikewiseaffirmedtheNLRC.

ISSUE:WhetherornottheSaudilaborlawsshouldbeapplied.

HELD:No.ThespecificSaudilaborlawswerenotprovenincourt.EDIdidnotpresentproofastotheexistenceandthe
specificprovisionsofsuchforeignlaw.Hence,processualpresumptionappliesandPhilippinelaborlawsshallbeused.
Underourlaws,anemployeelikeGranshallonlybeterminateduponjustcause.Theallegationsagainsthim,atworst,shall
onlymeritasuspensionnotadismissal.HisincompetenceisnotprovenbecausepriortobeingsenttoSaudiArabia,he
underwenttherequiredtradetesttoprovehiscompetence.Thepresumptionthereforeisthatheiscompetentandthatitis
uponOABandEDItoproveotherwise.Noproofofhisincompetencewaseveradducedincourt.Hisalleged
insubordinationislikewisenotproven.Itwasnotproventhatthesubmissionofdailytrackrecordsispartofhisjobasa
computerspecialist.Therewasalsoalackofdueprocess.Underourlaws,Granisentitledtothetwonoticerulewhereby
priortoterminationheshouldreceivetwonotices.Inthecaseatbar,heonlyreceivedoneandhewasimmediately
terminatedonthesamedayhereceivedthenotice.

Lastly,thequitclaimmaynotalsoreleaseOABfromliability.PhilippinelawsisagainappliedheresansproofofSaudi
laws.UnderPhilippineLaws,aquitclaimisgenerallyfrowneduponandarestrictlyexamined.Inthiscase,basedonthe
circumstances,Granatthattimehasnooptionbuttosignthequitclaim.Thequitclaimisalsovoidbecausehisseparation
paywasmerely2,948Riyalwhichislowerthanthe$850.00monthlysalary(3,190Riyal)

SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v. NATIONAL LABOR RELATIONS


COMMISSIONetal.
480SCRA146(2006)

FACTS:RespondentDivinaMontehermozoisadomestichelperdeployedtoTaiwanbySunaceInternationalManagement
Services (Sunace) under a 12month contract. Such employment was made with the assistance of Taiwanese broker
Edmund Wang. After the expiration of the contract, Montehermozo continued her employment with her Taiwanese
employerforanother2years.

WhenMontehermozoreturnedtothePhilippines,shefiledacomplaintagainstSunace,Wang,andherTaiwaneseemployer
beforetheNationalLaborRelationsCommission(NLRC).Sheallegesthatshewasunderpaidandwasjailedforthree
monthsinTaiwan.Shefurtherallegesthatthe2yearextensionofheremploymentcontractwaswiththeconsentand
knowledgeofSunace.Sunace,ontheotherhand,deniedalltheallegations.

The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable thereof. The National Labor Relations
CommissionandCourtofAppealsaffirmedthelaborarbitersdecision.Hence,thefilingofthisappeal.

ISSUE:Whetherornotthe2yearextensionofMontehermozosemploymentwasmadewiththeknowledgeandconsentof
Sunace

HELD:Thereisanimpliedrevocationofanagencyrelationshipwhenaftertheterminationoftheoriginalemployment
contract,theforeignprincipaldirectlynegotiatedwiththeemployeeandenteredintoanewandseparateemployment
contract.

ContrarytotheCourtofAppealsfinding,theallegedcontinuouscommunicationwaswiththeTaiwanesebrokerWang,not
withtheforeignemployer.

ThefindingoftheCourtofAppealssolelyonthebasisofthetelefaxmessagewrittenbyWangtoSunace,thatSunace
continuallycommunicatedwiththeforeign"principal"(sic)andthereforewasawareofandhadconsentedtotheexecution
oftheextensionofthecontractismisplaced.ThemessagedoesnotprovideevidencethatSunacewasprivytothenew
contractexecutedaftertheexpirationonFebruary1,1998oftheoriginalcontract.ThatSunaceandtheTaiwanesebroker
communicatedregardingMontehermozosallegedlywithheldsavingsdoesnotnecessarilymeanthatSunaceratifiedthe
extensionofthecontract.

Ascanbeseenfromthatlettercommunication,itwasjustaninformationgiventoSunacethatMontehermozohadtaken
alreadyhersavingsfromherforeignemployerandthatnodeductionwasmadeonhersalary.Itcontainsnothingaboutthe
extensionorSunacesconsentthereto.

Parenthetically,sincethetelefaxmessageisdatedFebruary21,2000,itissafetoassumethatitwassenttoenlighten
Sunacewhohadbeendirected,bySummonsissuedonFebruary15,2000,toappearonFebruary28,2000foramandatory
conferencefollowingMontehermozosfilingofthecomplaintonFebruary14,2000.
RespectingthedecisionofCourtofAppealsfollowingasagentofitsforeignprincipal,[Sunace]cannotprofessignorance
ofsuchanextensionasobviously,theactofitsprincipalextending[Montehermozos]employmentcontractnecessarily
boundit,ittooisamisapplication,amisapplicationofthetheoryofimputedknowledge.

Thetheoryofimputedknowledgeascribestheknowledgeoftheagent,Sunace,totheprincipal,employer,nottheother
wayaround.Theknowledgeoftheprincipalforeignemployercannot,therefore,beimputedtoitsagentSunace.

TherebeingnosubstantialproofthatSunaceknewofandconsentedtobeboundunderthe2yearemploymentcontract
extension,itcannotbesaidtobeprivythereto.Assuch,itandits"owner"cannotbeheldsolidarilyliableforanyof
Montehermozosclaimsarisingfromthe2yearemploymentextension.AstheNewCivilCodeprovides,Contractstake
effectonlybetweentheparties,theirassigns,andheirs,exceptincasewheretherightsandobligationsarisingfromthe
contractarenottransmissiblebytheirnature,orbystipulationorbyprovisionoflaw.Furthermore,asSunacecorrectly
pointsout,therewasanimpliedrevocationofitsagencyrelationshipwithitsforeignprincipalwhen,afterthetermination
oftheoriginalemploymentcontract,theforeignprincipaldirectlynegotiatedwithMontehermozoandenteredintoanew
andseparateemploymentcontractinTaiwan.Article1924oftheNewCivilCodestatesthattheagencyisrevokedifthe
principaldirectlymanagesthebusinessentrustedtotheagent,dealingdirectlywiththirdpersons.