Republic of the Philippines one person in each of the four informations.

Under the proviso in Article

SUPREME COURT 13(b), he claimed, there would be illegal recruitment only "whenever two
Manila or more persons are in any manner promised or offered any employment
for a fee. "
2

EN BANC
Denied at first, the motion was reconsidered and finally granted in the
G.R. Nos. L-58674-77 July 11, 1990 Orders of the trial court dated June 24 and September 17, 1981. The
prosecution is now before us on certiorari. 3

PEOPLE OF THE PHILIPPINES, petitioner,

vs. The posture of the petitioner is that the private respondent is being
HON. DOMINGO PANIS, Presiding Judge of the Court of First prosecuted under Article 39 in relation to Article 16 of the Labor Code;
Instance of Zambales & Olongapo City, Branch III and SERAPIO hence, Article 13(b) is not applicable. However, as the first two cited
ABUG, respondents. articles penalize acts of recruitment and placement without proper
authority, which is the charge embodied in the informations, application of
the definition of recruitment and placement in Article 13(b) is unavoidable.

CRUZ, J: The view of the private respondents is that to constitute recruitment and
placement, all the acts mentioned in this article should involve dealings
with two or mre persons as an indispensable requirement. On the other
The basic issue in this case is the correct interpretation of Article 13(b) of
hand, the petitioner argues that the requirement of two or more persons
P.D. 442, otherwise known as the Labor Code, reading as follows:
is imposed only where the recruitment and placement consists of an offer
or promise of employment to such persons and always in consideration
(b) Recruitment and placement' refers to any act of of a fee. The other acts mentioned in the body of the article may involve
canvassing, enlisting, contracting, transporting, hiring, or even only one person and are not necessarily for profit.
procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally
Neither interpretation is acceptable. We fail to see why the proviso should
or abroad, whether for profit or not: Provided, That any
speak only of an offer or promise of employment if the purpose was to
person or entity which, in any manner, offers or promises
apply the requirement of two or more persons to all the acts mentioned in
for a fee employment to two or more persons shall be
the basic rule. For its part, the petitioner does not explain why dealings
deemed engaged in recruitment and placement.
with two or more persons are needed where the recruitment and
placement consists of an offer or promise of employment but not when it
Four informations were filed on January 9, 1981, in the Court of First is done through "canvassing, enlisting, contracting, transporting, utilizing,
Instance of Zambales and Olongapo City alleging that Serapio Abug, hiring or procuring (of) workers.
private respondent herein, "without first securing a license from the
Ministry of Labor as a holder of authority to operate a fee-charging
As we see it, the proviso was intended neither to impose a condition on
employment agency, did then and there wilfully, unlawfully and criminally
the basic rule nor to provide an exception thereto but merely to create a
operate a private fee charging employment agency by charging fees and
presumption. The presumption is that the individual or entity is engaged
expenses (from) and promising employment in Saudi Arabia" to four
in recruitment and placement whenever he or it is dealing with two or
separate individuals named therein, in violation of Article 16 in relation to
more persons to whom, in consideration of a fee, an offer or promise of
Article 39 of the Labor Code. 1

employment is made in the course of the "canvassing, enlisting,

contracting, transporting, utilizing, hiring or procuring (of) workers. "
Abug filed a motion to quash on the ground that the informations did not
charge an offense because he was accused of illegally recruiting only
The number of persons dealt with is not an essential ingredient of the act SO ORDERED.
of recruitment and placement of workers. Any of the acts mentioned in
the basic rule in Article 13(b) win constitute recruitment and placement
even if only one prospective worker is involved. The proviso merely lays
down a rule of evidence that where a fee is collected in consideration of a
promise or offer of employment to two or more prospective workers, the
individual or entity dealing with them shall be deemed to be engaged in
the act of recruitment and placement. The words "shall be deemed"
create that presumption.

This is not unlike the presumption in article 217 of the Revised Penal
Code, for example, regarding the failure of a public officer to produce
upon lawful demand funds or property entrusted to his custody. Such
failure shall be prima facie evidence that he has put them to personal
use; in other words, he shall be deemed to have malversed such funds or
property. In the instant case, the word "shall be deemed" should by the
same token be given the force of a disputable presumption or of prima
facie evidence of engaging in recruitment and placement. (Klepp vs. Odin
Tp., McHenry County 40 ND N.W. 313, 314.)

It is unfortunate that we can only speculate on the meaning of the

questioned provision for lack of records of debates and deliberations that
would otherwise have been available if the Labor Code had been
enacted as a statute rather than a presidential decree. The trouble with
presidential decrees is that they could be, and sometimes were, issued
without previous public discussion or consultation, the promulgator
heeding only his own counsel or those of his close advisers in their lofty
pinnacle of power. The not infrequent results are rejection, intentional or
not, of the interest of the greater number and, as in the instant case,
certain esoteric provisions that one cannot read against the background
facts usually reported in the legislative journals.

At any rate, the interpretation here adopted should give more force to the
campaign against illegal recruitment and placement, which has victimized
many Filipino workers seeking a better life in a foreign land, and investing
hard- earned savings or even borrowed funds in pursuit of their dream,
only to be awakened to the reality of a cynical deception at the hands of
theirown countrymen.

WHEREFORE, the Orders of June 24, 1981, and September 17, 1981,
are set aside and the four informations against the private respondent
reinstated. No costs.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 84082 March 13, 1991
HELLENIC PHILIPPINE SHIPPING, INC., petitioner,
vs.
EPIFANIO C. SIETE and NATIONAL LABOR RELATIONS
COMMISSION (NLRC), respondents.
Prudencio Cruz for petitioner.
Robiso, Chavez & Romero for private respondent.
CRUZ, J.:
Challenged in this petition is the decision of the respondent NLRC
holding Hellenic Philippine Shipping Company liable for the illegal
dismissal of Capt. Epifanio Siete, herein private respondent, and
awarding him salaries and other benefits corresponding to the unexpired
portion of his employment contract. Enforcement of this decision has
meanwhile been held in abeyance pursuant to our temporary restraining
order dated August 3, 1988.
Siete was employed on May 22, 1985, as Master of M/V Houda G by
Sultan Shipping Co., Ltd., through its crewing agent, herein petitioner. He
boarded the vessel on May 24, 1985, at Cyprus. From there, it sailed on
June 1, 1985, to El Ferrol, Spain, where it loaded cargo that it
subsequently discharged at Tripoli, Lebanon, from June 25-29, 1985. It
then proceeded back to Cyprus, arriving there on June 30, 1985.
On July 8, 1985, Capt. Wilfredo Lim boarded the vessel and advised
Siete that he had instructions from the owners to take over its command.
These instructions were confirmed by a telex sent by Sultan Shipping to
Siete on July 10, 1985. Neither Lim nor the telex indicated the reason for
his relief. The private respondent claims this information was also
withheld from him by the petitioner upon his repatriation to Manila.
On July 12, 1985, Siete filed a complaint against the petitioner for illegal
dismissal and non-payment of his salary and other benefits under their
employment contract. On September 6, 1985, the petitioner alleged in its
answer that the complainant had been dismissed because of his failure to
complete with the instruction of Sultan Shipping to erase the timber load
line on the vessel and for his negligence in the discharge of the cargo at
Tripoli that endangered the vessel and stevedores. Siete denied these
averments in his reply dated September 23, 1985, and reiterated that he
had not earlier been informed of the cause of his dismissal and
repatriation, either in Cyprus or later in Manila.
After considering the position papers and documentary evidence of the
parties, Administrator Tomas D. Achacoso of the Philippine Overseas
Employment Administration (POEA) dismissed the complaint, holding that
there was valid cause for Siete's removal. The decision placed much
2
value on the various communications presented by the petitioner to show
that Siete was indeed guilty of the charges that justified his separation.
On January 4, 1988, the private respondent appealed to the NLRC,
contending that the records presented by the petitioner were prepared
long after his dismissal and were especially suspect because they came
from persons in the employ of Sultan Shipping. He insisted that he was
dismissed without even being informed of the charges against him or
given an opportunity to refute them. He added that, even assuming he
was negligent in the unloading of the cargo at Tripoli, this shortcoming did
not warrant such a severe penalty as his dismissal.
In its decision dated June 27, 1988, the public respondent reversed the
3
POEA Administrator, holding that the dismissal violated due process and
that the documents submitted by the petitioner were hearsay, self-
serving, and not verified. Accordingly, it disposed as follows:
A new decision is entered finding the dismissal of complainant as
illegal. Respondent is hereby ordered to pay to the complainant
his salaries, wages and other benefits corresponding to the
unexpired portion of his employment contract with Sultan
Shipping Company, Ltd., dated May 22, 1985.
The petitioner now faults this decision as having been reached with grave
abuse of discretion. It contends that the private respondent had been
instructed to erase the timber load line on the vessel; that he had indeed
been negligent in supervising the unloading of the cargo at Tripoli,
resulting in the replacement of certain damaged equipment; and that he
had not been denied due process, considering the summary nature of the
proceedings that had to be taken in view of the nature of his position.
Moreover, assuming the awards were justified, there was a mistake in
their computation because the amount of $400.90 previously collected by
Siete had not been deducted.
Certiorari is denied.
The findings of fact of public respondent are conclusive on this Court,
there being no showing that they were reached arbitrarily. Substantial
evidence has established that the private respondent was indeed not
notified of the charges against him and that no investigation was
conducted to justify his dismissal. Moreover, the petitioner has failed to
prove that Siete had been instructed to erase the timber load lines and
that he had been negligent in the cargo unloading at Tripoli.
The Court notes that the reports submitted by the petitioner to prove its
charges were all prepared after the fact of Siete's dismissal and were
signed by its own employees. 4 corrected by the investigation later conducted by the POEA. As the
Their motives are necessarily suspect. The mere fact that they have
made such reports does not itself prove the charges, which were
investigated ex parte, if at all. It is not denied that Siete was not informed
of the charges beforehand or that he was given an opportunity to refute
them. Even after his arrival in Manila, he was kept in the dark about the
reason for his dismissal. The excuse of the petitioner that it itself did not
know why he was dismissed, being only a crewing agent of Sultan
Shipping, deserves no comment.
The Labor Code provides as follows:
Sec. 1. Security of tenure and due process. — No worker shall be
dismissed except for a just or authorized cause provided by law
and after due process.
Sec. 2. Notice of dismissal. — Any employer who seeks to
dismiss a worker shall furnish him a written notice stating the
particular acts or omission constituting the grounds for his
dismissal. In cases of abandonment of work, the notice shall be
served at the worker's last known address.
xxx xxx xxx
Sec. 5. Answer and hearing. — The worker may answer the
allegations stated against him in the notice of dismissal within a
reasonable period from receipt of such notice. The employer shall
afford the worker ample opportunity to be heard and to defend
himself with the assistance of his representative, if he so desires.
Sec. 6. Decision to dismiss. — The employer shall immediately
notify a worker in writing of a decision to dismiss him stating
clearly the reasons therefor.
The petitioner argues that whatever defects might have tainted the
private respondent's dismissal were subsequently cured when the
charges against him were specified and sufficiently discussed in the
position papers submitted by the parties to the POEA. That argument is
unacceptable. The issue before the POEA was in fact the lack of due
process in Siete's dismissal. The law requires that the investigation be
conducted before the dismissal, not after. That omission cannot be
Solicitor General correctly maintained, the due process requirement in
the dismissal process is different from the due process requirement in the
POEA proceeding. Both requirements must be separately observed.
While it is true that in Wenphil Corp. v. NLRC and Rubberworld (Phils.)
5
v. NLRC the lack of due process before the dismissal of the employee
6
was deemed corrected by the subsequent administrative proceedings
where the dismissed employee was given a chance to be heard, those
cases involved dismissals that were later proved to be for a valid cause.
The doctrine in those cases is not applicable to the case at bar because
our findings here is that the dismissal was not justified.
The argument that the afore-quoted provisions are not applicable to the
private respondent because he was a managerial employee must also be
rejected. It is not correct to say that managerial employees may be
arbitrarily dismissed, at any time and without cause as established in an
appropriate investigation. Managerial employees, no less than rank-and-
file laborers, are entitled to due process. Loss of confidence, which is the
usual ground for the removal of the managerial employee, must be
established like any other lawful cause. Even if it be assumed that Siete
7
was a managerial employee — an issue which, incidentally, was not
earlier raised or resolved — the petitioner has not satisfactorily proved
the reason for its supposed loss of confidence in him.
It is not true that the vessel would be left unattended if the captain were Monthly Allowance 500.00
to be placed under investigation because he would not have a ready
replacement. The petitioner forgets that under Article 627 of the Code of
Commerce: Total Monthly Compensation US$1,700.00
One-Year Salary & Allowance
Art. 627. The sailing mate, as the second chief of the vessel and
(US$1,700.00 x 12) US$20,400.00
unless the ship agent does not order otherwise, shall take the
place of the captain in case of absence, sickness or death and Plus: One-Month Leave Pay 1,700.00
shall then assume all Ins powers, obligations and liabilities.
US$22,100.00
let alone the fact that in the particular case of Siete, there was actually a
ready replacement for him. This was Capt. Lim who, on instruction of
1âwphi1
Less: Cash Advances:
Sultan Shipping, boarded the vessel on July 8, 1985, purposely to take Manila US$600.00
over its command from Capt. Siete.
Spain 64.70
The Court reiterates the ruling that private employment agencies are Lebanon 500.00
jointly and severally liable with the foreign-based employer for any
violation of the recruitment agreement or the contract of employment. As 8

1,164.70
a requirement for the issuance to it of a license to operate a private
recruiting agency, a verified undertaking was made by the petitioner that Slapchest 28.36
it would "assume joint and solidary liability with the employer for all claims
and liabilities which (might) arise in connection with the implementation of Bal. of ship
the contract of employment." It cannot now contend that as a mere cash fund 400.90
crewing agent it cannot be made to answer for the liabilities of Sultan Total Deductions
Shipping.
1,593.96
The reason for the above-mentioned requirement is obvious. Were the Total Amount Due US$20,506.04
rule otherwise, employees with legitimate demands against the employer
would be helpless to enforce them because the latter has no office or We are not persuaded that the NLRC committed grave abuse of
properties in this jurisdiction. Violation of the employment contract would discretion in reversing the findings of the POEA sustaining the petitioner
remain unredressed. It was precisely to correct this difficulty that the and dismissing the private respondent's complaint. On the contrary, we
recruiting agent is now required, as a condition for the issuance to it of a agree that the private respondent was illegally dismissed because, first,
license to operate, to assure the employee that he has remedies he was not accorded a fair investigation as required by law, and second,
available in this country even if the culpable employer is beyond the because the grounds invoked for his separation have not been proved by
reach of our courts. the petitioner.

It need only be noted that there was a slight error in the computation of
the award due the private respondent which he himself acknowledges.
This was the failure to deduct from his total award the amount of $400.90
he admitted having earlier collected in Cyprus. As corrected, the
computation of the total award should be as follows:
WHEREFORE, the challenged decision as above modified is AFFIRMED
and the petition DISMISSED, with costs against the petitioner. The
temporary restraining order dated August 3,1988, is LIFTED.
SO ORDERED.

Monthly Basic Pay US$1,200.00

 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 171644 November 23, 2011
DELIA D. ROMERO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, ROMULO pADLAN and ARTURO
SIAPNO, Respondents.
DECISION
PERALTA, J.:
This is to resolve the Petition for Review on Certiorari1 dated March 25,
2006 of petitioner Delia D. Romero assailing the Decision2 dated July 18,
2005 and Resolution3 dated February 13, 2006 of the Court of Appeals
(CA), affirming the Decision4 dated February 24, 2004 of the Regional
Trial Court (RTC), Branch 44, Dagupan City, finding petitioner guilty
beyond reasonable doubt of the crime of Illegal Recruitment as defined in
paragraph (a) of Article 38 of Presidential Decree (P.D.) No. 2018.
The records contain the following antecedent facts:
Private respondent Romulo Padlan (Romulo) was a former classmate of
petitioner in college. Sometime in September 2000 Romulo went to
petitioner's stall (wedding gown rentals) at W. A. Jones St., Calasiao,
Pangasinan to inquire about securing a job in Israel. Convinced by
petitioner's words of encouragement and inspired by the potential salary
of US$700.00 to US$1,200.00 a month, Romulo asked petitioner the
amount of money required in order for him to be able to go to Israel.
Petitioner informed him that as soon as he could give her US$3,600.00,
his papers would be immediately processed. To raise the amount,
Romulo secured a loan from a bank and borrowed some more from his
friends. When he was able to raise the amount, Romulo went back to
petitioner and handed her the money. Petitioner contacted Jonney Erez
Mokra who instructed Romulo to attend a briefing at his (Jonney's) house
in Dau, Mabalacat, Pampanga. Romulo was able to leave for Israel on
October 26, 2000 and was able to secure a job with a monthly salary of
US$650.00. Unfortunately, after two and a half months, he was caught by
Israel's immigration police and detained for 25 days. He was
subsequently deported because he did not possess a working visa. On
his return, Romulo demanded from petitioner the return of his money, but
the latter refused and failed to do so.
On the other hand, private respondent Arturo Siapno is petitioner's
nephew. Sometime in August 2000, he went to petitioner's stall. He was
convinced by the petitioner that if he could give her US$3,600.00 for the
processing of his papers, he could leave the country within 1 to 2 weeks
for a job placement in Israel. Arturo contacted a relative in the U.S. to ask
the latter to cover the expenses for the former's overseas job placement.
The relative sent the US$3,000.00 to Teresita D. Visperas, petitioner's
sister in Israel. Petitioner processed Arturo's papers and contacted
Jonney Erez Mokra. Jonney instructed Arturo to attend a briefing in Dau,
Mabalacat, Pampanga. Afterwards, Arturo left for Israel sometime in
September 2000. He was able to work and receive US$800.00 salary per
month. After three months of stay in Israel, he was caught by the
immigration officials, incarcerated for ten days and was eventually
deported. After arriving in the country, Arturo immediately sought the
petitioner. Petitioner promised him that she would send him back to
Israel, which did not happen.
Arturo, after learning that Romulo suffered the same fate, checked with
the Department of Labor and Employment (DOLE) Dagupan District
Office whether petitioner, Teresita D. Visperas and Jonney Erez Mokra
had any license or authority to recruit employees for overseas
employment. Finding that petitioner and the others were not authorized to
recruit for overseas employment, Arturo and Romulo filed a complaint
against petitioner, Teresita and Jonney before the National Bureau of
Investigation (NBI).
Consequently, an Information dated June 18, 2001 was filed against
petitioner and Jonney Erez Mokra for the crime of Illegal Recruitment
which reads as follows:
That sometime in the month of August and September 2000 in the
Municipality of Calasiao, Province of Pangasinan, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused, not
being licensee or holder of authority, conspiring, confederating and
mutually helping one another, did then and there, wilfully, unlawfully and
feloniously undertake and perform recruitment activity by recruiting
ARTURO SIAPNO and ROMULO PADLAN to a supposed job abroad
particularly in Israel, for a fee, without first securing the necessary license
and permit to do the same.
CONTRARY to Art. 38 (a) of P.D. 442, as amended by P.D. 2018.
Upon arraignment on August 20, 2001, petitioner, with the assistance of
her counsel pleaded not guilty, whereas accused Jonney Erez Mokra was
and is still at-large. Thereafter, trial on the merits ensued.
To establish the facts earlier mentioned, the prosecution presented the
testimonies of Romulo Padlan and Arturo Siapno. Petitioner, on the other
hand, offered her own testimony, as well as Satchi Co Pontace’s to prove
that petitioner did not recruit the private respondents. According to
petitioner, private respondents went to her to inquire about the working
status of her sister in Israel. She told them that her sister was doing well.
When private respondents asked her how her sister was able to go to
Israel, petitioner told them that she does not know and that she will have
to ask her sister about that matter. Petitioner then called her sister and
told her that the private respondents wanted to ask for her help in going
to Israel. It was petitioner's sister and the private respondents who
communicated with each other, and the petitioner had no knowledge as
to the content of the former's conversations and agreements.
The RTC found petitioner guilty as charged. The dispositive portion of its
decision reads as follows:
WHEREFORE, the Court finds accused Delia Romero guilty beyond
reasonable doubt of the crime of Illegal Recruitment as defined in
paragraph (a) of Article 38 of Presidential Decree No. 442, as amended
by Presidential Decree No. 2018, and pursuant to law hereby sentences
accused Delia Romero to suffer the penalty of Eight (8) Years and a fine
of ₱100,000.00 plus costs.
Accused Delia Romero is directed to return the amount of $3,600.00 or
its equivalent to complainant Romulo Padlan and the amount of
$3,600.00 or its equivalent to Arturo Siapno.
The case as against Jonney Mokra aka Erez, is hereby ordered archived
subject to reinstatement upon his arrest.
SO ORDERED.
On appeal, the CA affirmed in toto the decision of the RTC, the fallo of
which states:
WHEREFORE, premises considered, the appealed Decision is
AFFIRMED in toto.
SO ORDERED.
Hence, the present petition after petitioner's motion for reconsideration
was denied by the CA. Petitioner enumerates the following assignment of
errors:
First Assignment of Error
The Court of Appeals erred in affirming the conviction of the
accused of the offense charged (Illegal Recruitment) for said
finding is contrary to law and evidence in record.
Second Assignment of Error
The Court of Appeals erred in affirming the conviction of the
accused in interpreting the gesture of good faith of the petitioner
as referral in the guise of illegal recruitment.
Third Assignment of Error
The Court of Appeals erred in affirming the conviction of the
accused based merely on a certification from the DOLE-Dagupan
District Office without said certification being properly identified
and testified thereto.
Fourth Assignment of Error
The Court of Appeals erred in affirming the conviction of accused
based on speculations and probabilities and not on the evidence
on record.
Fifth Assignment of Error
The Court of Appeals erred in not acquitting the accused on the
ground of reasonable doubt.
Illegal recruitment is defined in Article 38 of the Labor Code, as amended,
as follows:
ART. 38. Illegal Recruitment. - (a) Any recruitment activities, including the
prohibited practices enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of authority, shall be deemed
illegal and punishable under Article 39 of this Code. The [Department] of
Labor and Employment or any law enforcement officer may initiate
complaints under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage and shall be
penalized in accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring and/or confederating with
one another in carrying out any unlawful or illegal transaction, enterprise
or scheme defined under the first paragraph hereof. Illegal recruitment is
deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
Article 13 (b) of the same Code defines, "recruitment and placement" as:
"any act of canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring workers, and includes referrals, contract services, promising
or advertising for employment, locally or abroad, whether for profit or not:
Provided, that any person or entity which, in any manner, offers or
promises for a fee, employment to two or more persons shall be deemed
engaged in recruitment and placement."
The crime of illegal recruitment is committed when two elements concur,
namely: (1) the offender has no valid license or authority required by law
to enable one to lawfully engage in recruitment and placement of
workers; and (2) he undertakes either any activity within the meaning of
"recruitment and placement" defined under Article 13 (b), or any
prohibited practices enumerated under Article 34 of the Labor Code. 5
In disputing the absence of the first element, petitioner offers her opinion
that the CA erred in affirming the trial court's reliance on a mere
certification from the DOLE Dagupan District Office that she does not
have the necessary licence to recruit workers for abroad. She claims that
the prosecution committed a procedural lapse in not procuring a
certification from the agency primarily involved, the Philippine Overseas
Employment Administration (POEA). The said argument, however, is
flawed.
Under the first element, a non-licensee or non-holder of authority is any
person, corporation or entity which has not been issued a valid license or
authority to engage in recruitment and placement by the Secretary of
Labor, or whose license or authority has been suspended, revoked or
cancelled by the POEA or the Secretary.6 Clearly, the creation of the
POEA did not divest the Secretary of Labor of his/her jurisdiction over
recruitment and placement of activities. The governing rule is still Article
357 of the Labor Code. This is further discussed in this Court's ruling
in Trans Action Overseas Corp. v. Secretary of Labor,8 wherein it was
ruled that:
In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor,
we held that:
The penalties of suspension and cancellation of license or authority are
prescribed for violations of the above-quoted provisions, among others.
And the Secretary of Labor has the power under Section 35 of the law to
apply these sanctions, as well as the authority, conferred by Section 36,
not only to "restrict and regulate the recruitment and placement activities
of all agencies," but also to "promulgate rules and regulations to carry out
the objectives and implement the provisions" governing said activities.
Pursuant to this rule-making power thus granted, the Secretary of Labor
gave the POEA, on its own initiative or upon a filing of a complaint or
report or upon request for investigation by any aggrieved person, "xxx
(authority to) conduct the necessary proceedings for the suspension or
cancellation of the license or authority of any agency or entity" for certain
enumerated offenses including -
1) the imposition or acceptance, directly or indirectly, of any
amount of money, goods or services, or any fee or bond in
excess of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code
and other relevant laws, rules and regulations.
The Administrator was also given the power to "order the dismissal of the
case or the suspension of the license or authority of the respondent
agency or contractor or recommend to the Minister the cancellation
thereof."
This power conferred upon the Secretary of Labor and Employment was and Arturo Siapno to give her US$3,600.00 for the processing of their
echoed in People v. Diaz, viz.: papers, thus:

A non-licensee or non-holder of authority means any person, corporation Q: In September 2000, did you see the accused?
or entity which has not been issued a valid license or authority to engage
in recruitment and placement by the Secretary of Labor, or whose license A: There was, sir.
or authority has been suspended, revoked or cancelled by the POEA or
the Secretary.9 Q: Where did you see each other?

Thus, the trial court did not err in considering the certification from the A: At her stall, sir.
DOLE-Dagupan District Office stating that petitioner has not been issued
any license by the POEA nor is a holder of an authority to engage in
xxxx
recruitment and placement activities. The Office of the Solicitor General
(OSG), in its Comment10 dated October 9, 2006, also gives a valid
observation as to the admissibility of the certification as evidence for the Q: What was your purpose in going to her stall?
prosecution, thus:
A: My purpose is to inquire about my application to Israel, sir.
x x x Notably, there is nothing on record to show that petitioner objected
to the admissibility of the certification for the purpose for which it was Q: What happened when you inquired from her about your
offered. Thus, petitioner's argument that the certification was inadmissible application in going to Israel?
because it was not properly identified by the issuing officer should be
rejected. It is well-settled that "[e]very objections to the admissibility of A: I inquired from her and she responded with me with sweet
evidence shall be made at the time such evidence is offered or as soon words, sir.
thereafter as the ground for objection shall have become apparent,
otherwise the objection shall be considered waived." Accordingly, the Q: What did you ask her when you first met her in her stall [in]
certification has been accepted as admissible by the trial court and September 2000?
properly considered as evidence for the party who submitted it.11
A: I asked her about the possible placement and the condition
Anent the second element, petitioner insists that the CA was wrong in about the job in Israel.
affirming the factual findings of the trial court. According to her, the
accommodation extended by the petitioner to the private respondents is Q: And what was her response?
far from the referral as contemplated in Article 13 (b) of the Labor Code.
A: Her response was positive and very encouraging, sir.
It is a settled rule that factual findings of the trial courts, including their
assessment of the witnesses' credibility, are entitled to great weight and Q: What was the very good and very encouraging response of the
respect by the Supreme Court, particularly when the CA affirmed such accused?
findings.12 After all, the trial court is in the best position to determine the
value and weight of the testimonies of witnesses.13
A: Regarding the salary amounting to $700.00 to $1,000.00
dollars a month, sir.
Nevertheless, the testimonies of the private respondents clearly establish
the fact that petitioner's conduct falls within the term recruitment as
defined by law. As testified by Romulo Padlan, petitioner convinced him Q: When you were informed that the salary is quite good in Israel,
what did you do, if any?
A: I planned to produce money so that I can apply for Israel, sir.
Q: And what transpired next after that?
A: She told me that, "If you can produce $3,600.00 dollars then I
will begin to process your papers.
Q: After telling you that, what did you do, if any?
A: So I planned to have a loan [from] Rural Bank of Central
Pangasinan and borrow some money [from] my other friends, sir.
xxxx
Q: After producing that money, what did you do?
xxxx
A: I [went] to her stall [in] September 26 around 10:00 P.M. and
handed the money to Mrs. Delia Romero, sir.
xxxx
Q: How much money did you give to the accused [in] September
2000?
A: [In] September 2000, I gave her $1,500.00 US dollars, sir. 14
Arturo Siapno also testified as to how petitioner convinced him to
apply for a job in Israel and offered her services for a fee, thus:
Q: [I]n August 2000, where were you?
A: I was residing in Puelay-Carangalaan. Dagupan City.
Q: On the same month, did you have any transaction with the
accused?
A: Yes sir[.] I met the accused at the appliance store which is
located at Puelay and she offered me a job in Israel.
Q: [When] she offered you a job in Israel, what did you do?
A: I went to their stall which is located [in] Calasiao, and in the
same place I also met several applicants.
Q: When did you go to the stall of the accused?
A: The following day, sir.
xxxx
Q: And what did you do at the stall of the accused in Calasiao,
Pangasinan?
A: When I went to the stall of the accused, since I saw other
applicants, I was convinced to apply and I called up my aunt and
asked for help.
Q: Since you were at the stall of the accused in Calasiao, what
transpired next?
A: When I talked to her, she told me if I have a money of
₱3,600.00 I could easily depart within one (1) week or two (2)
weeks.15
From the above testimonies, it is apparent that petitioner was able to
convince the private respondents to apply for work in Israel after parting
with their money in exchange for the services she would render. The said
act of the petitioner, without a doubt, falls within the meaning of
recruitment and placement as defined in Article 13 (b) of the Labor Code.
As to petitioner's contention that the testimony of Arturo Siapno that the
latter paid a certain amount of money to the former must not be given any
credence due to the absence of any receipt or any other documentary
evidence proving such, the same is without any merit. In People v.
Alvarez,16 this Court ruled that in illegal recruitment cases, the failure to
present receipts for money that was paid in connection with the
recruitment process will not affect the strength of the evidence presented
by the prosecution as long as the payment can be proved through clear
and convincing testimonies of credible witnesses. It was discussed that:
In illegal recruitment, mere failure of the complainant to present written
receipts for money paid for acts constituting recruitment activities is not
fatal to the prosecution, provided the payment can be proved by clear
and convincing testimonies of credible witnesses.
xxxx
x x x The Court has already ruled that the absence of receipts in a case
for illegal recruitment is not fatal, as long as the prosecution is able to
establish through credible testimonial evidence that accused-appellant
has engaged in illegal recruitment. Such case is made, not by the
issuance or the signing of receipts for placement fees, but by
engagement in recruitment activities without the necessary license or
authority.
In People v. Pabalan, the Court held that the absence of receipts for
some of the amounts delivered to the accused did not mean that the
appellant did not accept or receive such payments. Neither in the Statute
of Frauds nor in the rules of evidence is the presentation of receipts
required in order to prove the existence of a recruitment agreement and
the procurement of fees in illegal recruitment cases. Such proof may
come from the testimonies of witnesses.17
With regard to the penalty imposed by the RTC and affirmed by the CA,
this Court finds it to be inappropriate. The trial court imposed the penalty
of eight (8) years imprisonment and a fine of ₱100,000.00 plus cost and
ordered petitioner to return the amount of US$3,600.00 or its equivalent
to Romulo Padlan and the amount of US$3,600.00 or its equivalent to
Arturo Siapno. Under Article 39 (c) of the Labor Code, which prescribes
the penalty for illegal recruitment, any person who is neither a licensee
nor a holder of authority under the law and found violating any provision
thereof or its implementing rules and regulations shall, upon conviction
thereof, suffer the penalty of imprisonment of not less than four (4) years
but not more than eight (8) years or a fine of not less than ₱20,000.00
nor more than ₱100,000.00 or both such imprisonment and fine, at the
discretion of the court. Clearly, the trial court, by imposing a straight
penalty, disregarded the application of the Indeterminate Sentence
Law.18 In Argoncillo v. Court of Appeals,19 this Court ruled that the
application of the Indeterminate Sentence Law is mandatory to both the
Revised Penal Code and the special laws, and in the same ruling, this
Court summarized the application and non-application of the
Indeterminate Sentence Law, to wit:
x x x It is basic law that x x x the application of the Indeterminate
Sentence Law is mandatory where imprisonment exceeds one (1) year,
except only in the following cases:
a. Offenses punished by death or life imprisonment.
b. Those convicted of treason (Art. 114) conspiracy or proposal to
commit treason (Art. 115).
c. Those convicted of misprision of treason (Art. 116), rebellion
(Art. 134), sedition (Art. 139) or espionage (Art. 117).
d. Those convicted of piracy (Art. 122).
e. Habitual delinquents (Art. 62, par. 5).
Recidivists are entitled to an Indeterminate sentence. (People v.
Jaramilla, L-28547, February 22, 1974) Offender is not
disqualified to avail of the benefits of the law even if the crime is
committed while he is on parole. (People v. Calreon, CA 78 O. G.
6701, November 19, 1982).
f. Those who escaped from confinement or those who evaded
sentence.
g. Those granted conditional pardon and who violated the terms
of the same. (People v. Corral, 74 Phil. 359).
h. Those whose maximum period of imprisonment does not
exceed one (1) year.
Where the penalty actually imposed does not exceed one (1)
year, the accused cannot avail himself of the benefits of the law,
the application of which is based upon the penalty actually
imposed in accordance with law and not upon that which may be
imposed in the discretion of the court. (People v. Hidalgo, [CA]
G.R. No. 00452-CR, January 22, 1962).
i. Those who are already serving final judgment upon the
approval of the Indeterminate Sentence Law.
The need for specifying the minimum and maximum periods of the
indeterminate sentence is to prevent the unnecessary and excessive
deprivation of liberty and to enhance the economic usefulness of the
accused, since he may be exempted from serving the entire sentence,
depending upon his behavior and his physical, mental, and moral record.
The requirement of imposing an indeterminate sentence in all criminal
offenses whether punishable by the Revised Penal Code or by special
laws, with definite minimum and maximum terms, as the Court deems
proper within the legal range of the penalty specified by the law must,
therefore, be deemed mandatory.20 1âwphi1

The Indeterminate Sentence Law provides that if, as in this case, the
offense is punished by a law other than the Revised Penal Code, the
court shall sentence the accused to an indeterminate sentence, the
maximum term of which shall not exceed the maximum fixed by said law
and the minimum shall not be less than the minimum term prescribed by
the same. The imposable penalty is imprisonment of not less than four (4)
years but not more than eight (8) years; hence, the proper penalty
imposed should be within the range of four (4) years to eight (8) years.
Thus, applying the Indeterminate Sentence Law, the Court can impose
the minimum and maximum terms of the penalty of imprisonment within
the range of four (4) years to eight (8) years.

WHEREFORE, the Petition for Review on Certiorari dated March 25,

2006 of petitioner Delia D. Romero is hereby DENIED. Consequently, the
Decision dated July 18, 2005 and Resolution dated February 13, 2006 of
the Court of Appeals, affirming the Decision dated February 24, 2004 of
the Regional Trial Court, finding petitioner guilty beyond reasonable
doubt of the crime of Illegal Recruitment as defined in paragraph (a) of
Article 38 of Presidential Decree (P.D.) No. 2018, are
hereby AFFIRMED with the MODIFICATION that the penalty imposed
should be imprisonment of four (4) years, as minimum, to seven (7)
years, as maximum, and a fine of ₱100,000.00 plus cost and for
petitioner to return the amount of $3,600.00 or its equivalent to Romulo
Padlan and the amount of $3,600.00 or its equivalent to Arturo Siapno.

SO ORDERED.
 CONTRACT DURATION TO POSITION VESSEL COMPANY
FROM

SECOND DIVISION

[G.R. NO. 158324. March 14, 2005]

ROBERTO RAVAGO, Petitioners, v. ESSO EASTERN MARINE, LTD. and

TRANS-GLOBAL MARITIME AGENCY, INC., Respondents.

DECISION

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the 1997

Rules of Court, as amended, of the Decision1 of the Court of Appeals (CA)
as well as its Resolution in CA-G.R. SP No. 66234 which denied the motion
for reconsideration thereof.

The Factual Antecedents

The Esso Eastern Marine Ltd. (EEM), now the Petroleum Shipping Ltd., is a
foreign company based in Singapore and engaged in maritime commerce.
It is represented in the Philippines by its manning agent and co-
respondent Trans-Global Maritime Agency, Inc. (Trans-Global), a
corporation organized under the Philippine laws.

Roberto Ravago was hired by Trans-Global to work as a seaman on board

various Esso vessels. On February 13, 1970, Ravago commenced his duty
as S/N wiper on board the Esso Bataan under a contract that lasted until
February 10, 1971. Thereafter, he was assigned to work in different Esso
vessels where he was designated diverse tasks, such as oiler, then
assistant engineer. He was employed under a total of 34 separate and
unconnected contracts, each for a fixed period, by three different
companies, namely, Esso Tankers, Inc. (ETI), EEM and Esso International
Shipping (Bahamas) Co., Ltd. (EIS), Singapore Branch. Ravago worked
with Esso vessels until August 22, 1992, a period spanning more than 22
years, thus:
3 Feb 70 10 Feb 71 SN/Wiper Esso Bataan ETI2 25 Jun 79 16 Jul 79 3AE Esso Yokohama EEM

7 May 71 27 May 72 Wiper Esso Yokohama EEM3 17 Jul 79 05 Dec 79 3AE Esso Orient EEM

7 Aug 72 02 Jul 73 Oiler Esso Kure EEM 10 Feb 80 25 Oct 80 3AE Esso Orient EEM

3 Oct 73 30 Jun 74 Oiler Esso Bangkok ETI 19 Jan 81 03 Jun 81 3AE Esso Port EEM
Dickson

8 Sep 74 26 July 75 Oiler Esso Yokohama EEM

04 Jun 81 11 Sep 81 3AE Esso Orient EEM

3 Oct 75 22 Jun 76 Oiler Esso Port EEM

Dickson 06 Dec 81 20 Apr 82 3AE Esso Chawan EEM

0 Sep 76 26 Dec 76 Oiler Esso Bangkok ETI 21 Apr 82 01 Aug 82 Temporary 2AE Esso Chawan EEM*

7 Dec 76 29 Apr 77 Temporary Jr. Esso Bangkok ETI 03 Nov 82 06 Feb 83 2AE Esso Jurong EEM
3AE

07 Feb 83 10 Jul 83 2AE Esso Yokohama EEM

8 Jul 77 15 Mar 78 Jr. 3AE Esso Bombay ETI

31 Aug 83 13 Mar 84 2AE Esso Tumasik EEM

3 Jun 78 03 Feb 79 Temporary 3AE Esso Hongkong ETI

04 May 84 08 Jan 85 2AE Esso Port EEM

4 Apr 79 24 Jun 79 3AE Esso Orient EEM Dickson
3 Mar 85 31 Oct 85 2AE Esso Castellon EEM 09 Feb 91 06 Oct 91 1AE Esso Melbourne EIS

9 Dec 85 22 Jul 86 2AE Esso Jurong EIS4 16 Dec 91 22 Aug 92 1AE Esso Orient EIS

* Upgraded/Confirmed on regular rank on board. 5

3 Sep 86 09 Jan 87 2AE Esso Orient EIS
On August 24, 1992, or shortly after completing his latest contract with
EIS, Ravago was granted a vacation leave with pay from August 23, 1992
until October 28, 1992. Preparatory to his embarkation under a new
1 Mar 87 15 Oct 87 2AE Esso Port EIS contract, he was ordered to report, on September 28, 1992, for a Medical
Dickson Pre-Employment Examination.6 The Pre-Employment Physical Examination
Record shows that Ravago passed the medical examination conducted by
the O.P. Jacinto Medical Clinic, Inc. on October 6, 1992. 7 He, likewise,
attended a Pre-Departure Orientation Seminar conducted by the Capt. I.P.
0 Nov 87 18 Dec 87 1AE Esso Chawan EIS Estaniel Training Center, a division of Trans-Global, on October 7, 1992. 8
Temporary
On the night of October 12, 1992, a stray bullet hit Ravago on the left leg
while he was waiting for a bus ride in Cubao, Quezon City. He fractured his
left proximal tibia and was hospitalized at the Philippine Orthopedic
9 Dec 87 25 Jun 88 2AE Esso Melbourne EIS Hospital. Ravago's wife, Lolita, informed Trans-Global and EIS of the
incident on October 13, 1992 for purposes of availing medical benefits. As
a result of his injury, Ravago's doctor opined that he would not be able to
cope with the job of a seaman and suggested that he be given a desk
job.9 Ravago's left leg had become apparently shorter, making him walk
4 Aug 88 19 Mar 89 Temporary 1AE Esso Port EIS
with a limp. For this reason, the company physician, Dr. Virginia G. Manzo,
Dickson
found him to have lost his dexterity, making him unfit to work once again
as a seaman.10 Citing the opinion of Ravago's doctor, Dr. Manzo wrote:

'Because of his unsteady gait, pronounced limp, and loss of normal

0 Mar 89 19 May 89 1AE Esso Port EIS* dexterity of his leg and foot, we doubted whether Mr. Ravago can
Dickson physically tackle the usual activities of a seaman in the course of his work
without any added risk over and above the ordinary or standard risk
inherent to his job. These activities include climbing up and down the
engine room through a long flight of iron stairs with narrow steps which
8 Jul 89 17 Feb 90 1AE Esso Melbourne EIS could be slippery at times due to grease or oil, jumping from an unsteady
and floating motor launch or boat to board or alight a tanker through a
flight of steps or climbing up and down a pilot ladder, wearing of heavy
safety shoes, etc.
6 Apr 90 11 Dec 90 1AE Esso Orient EIS
Mr. Ravago's doctor replied that, after being informed about the nature of
the job, he believes that Mr. Ravago would not be able to cope with these
kinds of activities. In effect, the Orthopedic doctor said Mr. Ravago is not
fit to go back to his work as a seaman.
We concur with the opinion of the doctor that Mr. Ravago is not fit to go
back to his job as a seaman in view of the risk of physical injury to himself
as result of the deformity and loss of dexterity of his injured leg.
As a seaman, we consider his inability partial permanent. His injury
corresponds to Grade 13 in the Schedule of Disability of the Standard
Employment Contract. '11
Consequently, instead of rehiring Ravago, EIS paid him his Career
Employment Incentive Plan (CEIP) 12 as of March 1, 1993 and his final tax
refund for 1992. After deducting his Social Security System and medical
contributions from November 1992 to February 1993, EIS remitted the net
amount of P162,232.65, following Ravago's execution of a Deed of
Quitclaim and/or Release.13
However, on March 22, 1993, Ravago filed a complaint14 for illegal
dismissal with prayer for reinstatement, backwages, damages and
attorney's fees against Trans-Global and EIS with the Philippine Overseas
Employment Administration Adjudication Office.
In their Answer dated April 14, 1993, respondents denied that Ravago was
dismissed without notice and just cause. Rather, his services were no
longer engaged in view of the disability he suffered which rendered him
unfit to work as a seafarer. This fact was further validated by the company
doctor and Ravago's attending physician. They averred that Ravago was a
contractual employee and was hired under 34 separate contracts by
different companies.
In his position paper, Ravago insisted that he was fit to resume pre-injury
activities as evidenced by the certification15 issued by Dr. Marciano Foronda
M.D., one of his attending physicians at the Philippine Orthopedic Hospital,
that "at present, fracture of tibia has completely healed and patient is fit to
resume pre-injury activities anytime."16 Ravago, likewise, asserted that he
was not a mere contractual employee because the respondents regularly
and continuously rehired him for 23 years and, for his continuous service,
was awarded a CEIP payment upon his termination from employment.
On December 15, 1996, Labor Arbiter Ramon Valentin C. Reyes rendered a
decision in favor of Ravago, the complainant. He ruled that Ravago was a
regular employee because he was engaged to perform activities which
were usually necessary or desirable in the usual trade or business of the
employer. The Labor Arbiter noted that Ravago's services were repeatedly
contracted; he was even given several promotions and was paid a monthly
service experience bonus. This was in keeping with the increasing number
of long term careers established with the respondents. Finally, the Labor
Arbiter resolved that an employer cannot terminate a worker's
employment on the ground of disease unless there is a certification by a
competent public health authority that the said disease is of such nature or
at such a stage that it cannot be cured within a period of six months even
with proper medical treatment. He concluded that Ravago was illegally
dismissed. The decretal portion of the Labor Arbiter's decision reads:
WHEREFORE, premises considered, judgment is hereby rendered finding
the dismissal illegal and ordering respondents to reinstate complainant to
his former position without loss of seniority rights and other benefits.
Further, the respondents are jointly and severally liable to pay
complainant backwages from the time of his dismissal up to the
promulgation of this decision. Such backwages is provisionally fixed at
US$96,285.00 less the P162,285.83 (sic) paid to the complainant as
Career Employment Incentive Plan. And ordering respondents to pay
complainant 10% of the total monetary award as attorney's fees.
All other claims are dismissed for lack of merit.
SO ORDERED.17
Aggrieved, the respondents appealed the decision to the National Labor
Relations Commission (NLRC) on July 3, 1997, raising the following
grounds:
THE DECISION IS VITIATED BY SERIOUS ERRORS IN THE FINDINGS OF
FACT WHICH, IF NOT CORRECTED, WOULD CAUSE GRAVE OR
IRREPARABLE DAMAGE OR INJURY TO THE RESPONDENTS. THESE
FINDINGS ARE:
(A) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS
HIRED AND REHIRED IN VARIOUS CAPACITIES ON BOARD ESSO VESSELS
IN A SPAN OF 23 YEARS;
(B) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS
ENGAGED IN THE SERVICES INDISPENSABLE IN THE OPERATION OF THE
VARIOUS VESSELS OF RESPONDENTS;
(C) THAT COMPLAINANT WAS FIT TO RESUME PRE-INJURY ACTIVITIES
AND HIS FRACTURE COMPLETELY HEALED NOTWITHSTANDING A
CONTRARY MEDICAL OPINION OF COMPLAINANT'S OWN PHYSICIAN AND
RESPONDENTS' COMPANY PHYSICIAN; AND

(D) THAT COMPLAINANT WAS ILLEGALLY DISMISSED BY RESPONDENTS. 18
On April 26, 2001, the NLRC rendered a decision affirming that of the
Labor Arbiter. The NLRC based its decision in the case of Millares v.
National Labor Relations Commission,19 wherein it was held that:
It is, likewise, clear that petitioners had been in the employ of the private
respondents for 20 years. The records reveal that petitioners were
repeatedly re-hired by private respondents even after the expiration of
their respective eight-month contracts. Such repeated re-hiring which
continued for 20 years, cannot but be appreciated as sufficient evidence of
the necessity and indispensability of petitioners' service to the private
respondents' business or trade.
Verily, as petitioners had rendered 20 years of service, performing
activities which were necessary and desirable in the business or trade of
private respondents, they are, by express provision of Article 280 of the
Labor Code, considered regular employees.20
The NLRC, likewise, declared that Ravago was illegally dismissed and that
the quitclaim executed by him could not be considered as a waiver of his
right to question the validity of his dismissal and seek reinstatement and
other reliefs. According to the NLRC, such quitclaim is against public
policy, considering the economic disadvantage of the employee and the
inevitable pressure brought about by financial capacity.
The respondents filed a motion for reconsideration of the decision,
claiming that the ruling of the Court in Millares v. NLRC21 had not yet
become final and executory. However, the NLRC denied the motion.
Thereafter, the respondents filed a petition for certiorari before the CA on
the following grounds: (a) the ruling in Millares v. NLRC had not yet
acquired finality, nor has it become a law of the case or stare
decisis because the Court was still resolving the pending motion for
reconsideration; (b) Ravago was not illegally dismissed because after the
expiration of his contract, there was no obligation on the part of the
respondents to rehire him; and (c) the quitclaim signed by Ravago was
voluntarily entered into and represented a reasonable settlement of the
account due him.
On August 29, 2001, the respondents filed an Urgent Application for the
Issuance of a Temporary Restraining Order and Writ of Preliminary
Injunction to enjoin and restrain the Labor Arbiter from enforcing his
decision. On September 5, 2001, the CA issued a Resolution 22 temporarily
restraining NLRC Sheriff Manolito Manuel from enforcing and/or
implementing the decision of the Labor Arbiter as affirmed by the NLRC.
On November 14, 2001, the CA granted the application for preliminary
injunction upon filing by the respondents of a bond in the amount
of P500,000.00. Thus, the respondents filed the surety bond as directed by
the appellate court. Before the approval thereof, however, Ravago filed a
motion to set aside the Resolution dated November 14, 2001, principally
arguing that the instant case was a labor dispute, wherein an injunction is
proscribed under Article 25423 of the Labor Code of the Philippines.
In their comment on Ravago's motion, the respondents professed that the
case before the CA did not involve a labor dispute within the meaning of
Article 212(l)24 of the Labor Code of the Philippines, but a money claim
against the employer as a result of termination of employment.
On August 28, 2002, the CA rendered a decision in favor the respondents.
The fallo of the decision reads:
WHEREFORE, the petition is GRANTED. The assailed decisions of the
NLRC are hereby REVERSED and SET ASIDE and the injunctive writ
issued on November 14, 2001, is hereby made PERMANENT.
SO ORDERED.25
The CA ratiocinated as follows:
The employment, deployment, rights and obligation of Filipino seafarers
are particularly set forth under the rules and regulations governing
overseas employment promulgated by the POEA. Section C, Part I of the
Standard Employment Contract Governing the Employment of All Filipino
Seamen on Board Ocean-Going Vessels emphatically provides the
following:
"SECTION C. DURATION OF CONTRACT
The period of employment shall be for a fix (sic) period but in no case to
exceed 12 months and shall be stated in the Crew Contract. Any extension
of the Contract period shall be subject to the mutual consent of the
parties."
It is clear from the foregoing that seafarers are contractual employees
whose terms of employment are fixed for a certain period of time. A fixed
term is an essential and natural appurtenance of seamen's employment
contracts to which, whatever the nature of the engagement, the concept of
regular employment under Article 280 of the Labor Code does not find
application. The contract entered into by a seafarer with his employer sets
in detail the nature of his job, the amount of his wage and, foremost, the
duration of his employment. Only a satisfactory showing that both parties
dealt with each other on more or less equal terms with no dominance
exercised by the employer over the seafarer is necessary to sustain the
validity of the employment contract. In the absence of duress, as it is in
this case, the contract constitutes the law between the parties. 26
The CA noted that the employment status of seafarers has been
established with finality by the Court's reconsideration of its decision
in Millares v. National Labor Relations Commission,27 wherein it was ruled
that seamen are contractual employees. According to the CA, the fact that
Ravago was not rehired upon the completion of his contract did not result
in his illegal dismissal; hence, he was not entitled to reinstatement or
payment of separation pay. The CA, likewise, affirmed the writ of
preliminary injunction it earlier issued, declaring that an injunction is a
preservative remedy issued for the protection of a substantive right or
interest, an antidote resorted to only when there is a pressing necessity to
avoid injurious consequences which cannot be rendered under any
standard compensation.
Hence, the present recourse.
Ravago, now the petitioner, has raised the following issues:
I.
[WHETHER OR NOT] THE COURT OF APPLEALS GRAVELY ERRED AND
VIOLATED THE LABOR CODE WHEN IT ISSUED A RESTRAINING ORDER
AND THEREAFTER A WRIT OF PRELIMINARY INJUNCTION IN CA-G.R. SP
NO. 66234.
II.
[WHETHER OR NOT] THE COURT OF APPEALS GRAVELY ERRED, [AND]
BLATANTLY DISREGARDED THE CONSTITUTIONAL MANDATE ON
PROTECTION TO FILIPINO OVERSEAS WORKERS, AND COUNTENANCED
UNWARRANTED DISCRIMINATION WHEN IT RULED THAT PETITIONER
CANNOT BECOME A REGULAR EMPLOYEE.28
On the first issue, the petitioner asserts that the CA violated Article 254 of
the Labor Code when it issued a temporary restraining order, and
thereafter a writ of preliminary injunction, to derail the enforcement of the
final and executory judgment of the Labor Arbiter as affirmed by the
NLRC. On the other hand, the respondents contend that the issue has
become academic since the CA had already decided the case on its merits.
The contention of the petitioner does not persuade.
The petitioner's reliance on Article 254 29 of the Labor Code is misplaced.
The law proscribes the issuance of injunctive relief only in those cases
involving or growing out of a labor dispute. The case before the NLRC
neither involves nor grows out of a labor dispute. It did not involve the
fixing of terms or conditions of employment or representation of persons
with respect thereto. In fact, the petitioner's complaint revolves around
the issue of his alleged dismissal from service and his claim for backwages,
damages and attorney's fees. Moreover, Article 254 of the Labor Code
specifically provides that the NLRC may grant injunctive relief under Article
218 thereof.
Besides, the anti-injunction policy of the Labor Code, basically, is freedom
at the workplace. It is more appropriate in the promotion of the primacy of
free collective bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor and industrial
disputes.30
Generally, an injunction is a preservative remedy for the protection of a
person's substantive rights or interests. It is not a cause of action in itself
but a mere provisional remedy, an appendage to the main suit. Pressing
necessity requires that it should be resorted to only to avoid injurious
consequences which cannot be remedied under any measure of
consideration. The application of an injunctive writ rests upon the presence
of an exigency or of an exceptional reason before the main case can be
regularly heard. The indispensable conditions for granting such temporary
injunctive relief are: (a) that the complaint alleges facts which appear to
be satisfactory to establish a proper basis for injunction, and (b) that on
the entire showing from the contending parties, the injunction is
reasonably necessary to protect the legal rights of the plaintiff pending the
litigation.31
It bears stressing that in the present case, the respondents' petition
contains facts sufficient to warrant the issuance of an injunction under
Article 218, paragraph (e) of the Labor Code of the Philippines. 32 Further,
respondents had already posted a surety bond more than adequate to
cover the judgment award.
On the second issue, the petitioner earnestly urges this Court to re-
examine its Resolution dated July 29, 2002 in Millares v. National Labor
Relations Commission33 and reinstate the doctrine laid down in its original
decision rendered on March 14, 2000, wherein it was initially determined
that a seafarer is a regular employee. The petitioner asserts that the
decision of the CA and, indirectly, that of the Resolution of this Court dated
July 29, 2002, are violative of the constitutional mandate of full protection
to labor,34 whether local or overseas, because it deprives overseas Filipino
workers, such as seafarers, an opportunity to become regular employees
without valid and serious reasons. The petitioner maintains that the
decision is discriminatory and violates the constitutional provision on equal
protection of the laws, in addition to being partial to and overly protective
of foreign employers.
The respondents, on the other hand, asseverate that there is no law or
administrative rule or regulation imposing an obligation to rehire a
seafarer upon the completion of his contract. Their refusal to secure the
services of the petitioner after the expiration of his contract can never be
tantamount to a termination. The respondents aver that the petitioner is
not entitled to backwages, not only because it is without factual
justification but also because it is not warranted under the law.
Furthermore, the respondents assert that the rulings in the Coyoca v.
NLRC,35 and the latest Millares case remain good and valid precedents that
need to be reaffirmed. The respondents cited the ruling of the Court
in Coyoca case where the Court ruled that a Filipino seaman's contract
does not provide for separation or termination pay because it is governed
by the Rules and Regulations Governing Overseas Employment.
The contention of the respondents is correct.
In a catena of cases, this Court has consistently ruled that seafarers are
contractual, not regular, employees.
In Brent School, Inc. v. Zamora,36 the Court ruled that seamen and
overseas contract workers are not covered by the term "regular
employment" as defined in Article 280 of the Labor Code. The Court said in
that case:
The question immediately provoked ... is whether or not a voluntary
agreement on a fixed term or period would be valid where the employee
"has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer." The definition
seems non sequitur. From the premise - that the duties of an employee
entail "activities which are usually necessary or desirable in the usual
business or trade of the employer" - the conclusion does not necessarily
follow that the employer and employee should be forbidden to stipulate
any period of time for the performance of those activities. There is nothing
essentially contradictory between a definite period of an employment
contract and the nature of the employee's duties set down in that contract
as being "usually necessary or desirable in the usual business or trade of
the employer." The concept of the employee's duties as being "usually
necessary or desirable in the usual business or trade of the employer" is
not synonymous with or identical to employment with a fixed
term. Logically, the decisive determinant in term employment should not
be the activities that the employee is called upon to perform, but the day
certain agreed upon by the parties for the commencement and termination
of their employment relationship, a day certain being understood to be
"that which must necessarily come, although it may not be known
when." Seasonal employment, and employment for a particular project are
merely instances of employment in which a period, were not expressly set
down, is necessarily implied.37
...
Some familiar examples may be cited of employment contracts which may
be neither for seasonal work nor for specific projects, but to which a fixed
term is an essential and natural appurtenance: overseas employment
contracts, for one, to which, whatever the nature of the engagement, the
concept of regular employment with all that it implies does not appear
ever to have been applied, Article 280 of the Labor Code notwithstanding;
also appointments to the positions of dean, assistant dean, college
secretary, principal, and other administrative offices in educational
institutions, which are by practice or tradition rotated among the faculty
members, and where fixed terms are a necessity without which no
reasonable rotation would be possible. ...38
...
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter. Unless,
thus, limited in its purview, the law would be made to apply to purposes
other than those explicitly stated by its framers; it thus becomes pointless
and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.39
The Court made the same ruling in Coyoca v. National Labor Relations
Commission40 and declared that a seafarer, not being a regular employee,
is not entitled to separation or termination pay.
Furthermore, petitioner's contract did not provide for separation
benefits. In this connection, it is important to note that neither does the
POEA standard employment contract for Filipino seamen provide for such
benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations
Governing Overseas Employment and the said Rules do not provide for
separation or termination pay. ...
...
Therefore, although petitioner may not be a regular employee of private
respondent, the latter would still have been liable for payment of the
benefits had the principal failed to pay the same. '41
In the July 29, 2002 Resolution of this Court in Millares v. National Labor
Relations Commission,42 it reiterated its ruling that seafarers are
contractual employees and, as such, are not covered by Article 280 of the
Labor Code of the Philippines:
From the foregoing cases, it is clear that seafarers are considered
contractual employees. They cannot be considered as regular employees
under Article 280 of the Labor Code. Their employment is governed by the
contracts they sign every time they are rehired and their employment is
terminated when the contract expires. Their employment is contractually
fixed for a certain period of time. They fall under the exception of Article
280 whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined
at the time of engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment is for the
duration of the season. We need not depart from the rulings of the Court
in the two aforementioned cases which indeed constitute stare decisis with
respect to the employment status of seafarers.
...
... The Standard Employment Contract governing the Employment of All
Filipino Seamen on Board Ocean-Going Vessels of the POEA, particularly in
Part I, Sec. C, specifically provides that the contract of seamen shall be for
a fixed period. And in no case should the contract of seamen be longer
than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to
exceed 12 months and shall be stated in the Crew Contract. Any extension
of the Contract period shall be subject to the mutual consent of the
parties.
Petitioners make much of the fact that they have been continually re-hired
or their contracts renewed before the contracts expired (which has
admittedly been going on for twenty [20] years). By such circumstance
they claim to have acquired regular status with all the rights and benefits
appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous
re-hiring was dictated by practical considerations that experienced crew
members are more preferred. Petitioners were only given priority or
preference because of their experience and qualifications but this does not
detract the fact that herein petitioners are contractual employees. They
can not be considered regular employees. We quote with favor the
explanation of the NLRC in this wise:
xxx The reference to "permanent" and "probationary" masters and
employees in these papers is a misnomer and does not alter the fact that
the contracts for enlistment between complainants-appellants and
respondent-appellee Esso International were for a definite periods of time,
ranging from 8 to 12 months. Although the use of the terms "permanent"
and "probationary" is unfortunate, what is really meant is "eligible for-re-
hire." This is the only logical conclusion possible because the parties
cannot and should not violate POEA's requirement that a contract of
enlistment shall be for a limited period only; not exceeding twelve (12)
months.
From all the foregoing, we hereby state that petitioners are not considered
regular or permanent employees under Article 280 of the Labor
Code. Petitioners' employment have automatically ceased upon the
expiration of their contracts of enlistment (COE). Since there was no
dismissal to speak of, it follows that petitioners are not entitled to
reinstatement or payment of separation pay or backwages, as provided by
law. '43
The Court ruled that the employment of seafarers for a fixed period is not
discriminatory against seafarers and in favor of foreign employers. As
explained by this Court in its July 29, 2002 Resolution in Millares:
Moreover, it is an accepted maritime industry practice that employment of
seafarers are for a fixed period only. Constrained by the nature of their
employment which is quite peculiar and unique in itself, it is for the mutual
interest of both the seafarer and the employer why the employment status
must be contractual only or for a certain period of time. Seafarers spend
most of their time at sea and understandably, they can not stay for a long
and an indefinite period of time at sea. Limited access to shore society
during the employment will have an adverse impact on the seafarer. The
national, cultural and lingual diversity among the crew during the COE is a
reality that necessitates the limitation of its period. 44
In Pentagon International Shipping, Inc. v. William B. Adelantar,45 the
Court cited its rulings in Millares and Coyoca and reiterated that a seafarer
is not a regular employee entitled to backwages and separation pay:

Therefore, Adelantar, a seafarer, is not a regular employee as defined in

Article 280 of the Labor Code. Hence, he is not entitled to full backwages
and separation pay in lieu of reinstatement as provided in Article 279 of
the Labor Code. As we held in Millares, Adelantar is a contractual
employee whose rights and obligations are governed primarily by [the]
Rules and Regulations of the POEA and, more importantly, by R.A. 8042,
or the Migrant Workers and Overseas Filipinos Act of 1995. SPECIAL FIRST DIVISION

The latest ruling of the Court in Marcial Gu-Miro v. Rolando C. Adorable G.R. No. 110524 July 29, 2002
and Bergesen D.Y. Manila46 reaffirmed yet again its rulings that a seafarer
is employed only on a contractual basis: DOUGLAS MILLARES and ROGELIO LAGDA, petitioners,
vs.
Clearly, petitioner cannot be considered as a regular employee
NATIONAL LABOR RELATIONS COMMISSION, TRANS-GLOBAL
notwithstanding that the work he performs is necessary and desirable in
the business of respondent company. As expounded in the above- MARITIME AGENCY, INC. and ESSO INTERNATIONAL SHIPPING
mentioned Millares Resolution, an exception is made in the situation of CO., LTD. respondents.
seafarers. The exigencies of their work necessitates that they be employed
on a contractual basis. RESOLUTION

Thus, even with the continued re-hiring by respondent company of KAPUNAN, J.:
petitioner to serve as Radio Officer onboard Bergesen's different vessels,
this should be interpreted not as a basis for regularization but rather
a series of contract renewals sanctioned under the doctrine set down by On March 14, 2000, the Court promulgated its decision in the above-
the second Millares case. If at all, petitioner was preferred because of entitled case, ruling in favor of the petitioners. The dispositive portion
practical considerations - namely, his experience and qualifications. reads, as follows:
However, this does not alter the status of his employment from being
contractual. WHEREFORE, premises considered, the assailed Decision,
dated June 1, 1993, of the National Labor Relations Commission
The petitioner failed to convince the Court why it should restate its
is hereby REVERSED and SET ASIDE and a new judgment is
decision in Millares and reverse its July 29, 2002 Resolution in the same
case.
hereby rendered ordering the private respondents to:

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The
assailed Decision dated August 28, 2002 of the Court of Appeals is hereby
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
(1) Reinstate petitioners Millares and Lagda to their former
positions without loss of seniority rights, and to pay full
backwages computed from the time of illegal dismissal to the time
of actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners
Millares and Lagda separation pay equivalent to one month's
salary for every year of service; and,
 (3) Jointly and severally pay petitioners One Hundred Percent
(100%) of their total credited contributions as provided under the
Consecutive Enlistment Incentive Plan.
SO ORDERED.1
A motion for reconsideration was consequently filed2 by the private
respondents to which petitioners filed an Opposition thereto. 3
In a Minute Resolution dated June 28, 2000, the Court resolved to deny
the motion for reconsideration with finality.4
Subsequently, the Filipino Association for Mariners Employment, Inc.
(FAME) filed a Motion for Leave to Intervene and to Admit a Motion for
Reconsideration in Intervention.
Private respondents, meanwhile, also filed a Motion for Leave to File a
Second Motion for Reconsideration of our decision.
In both motions, the private respondents and FAME respectively pray in
the main that the Court reconsider its ruling that "Filipino seafarers are
considered regular employees within the context of Article 280 of the
Labor Code." They claim that the decision may establish a precedent that
will adversely affect the maritime industry.
The Court resolved to set the case for oral arguments to enable the
parties to present their sides.
To recall, the facts of the case are, as follows:
Petitioner Douglas Millares was employed by private respondent
ESSO International Shipping Company LTD. (Esso International,
for brevity) through its local manning agency, private respondent
Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on
November 16, 1968 as a machinist. In 1975, he was promoted as
Chief Engineer which position he occupied until he opted to retire
in 1989. He was then receiving a monthly salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a leave of
absence for the period July 9 to August 7, 1989. In a letter dated
June 14, 1989, Michael J. Estaniel, President of private
respondent Trans-Global, approved the request for leave of
absence. On June 21, 1989, petitioner Millares wrote G.S. Hanly,
Operations Manager of Exxon International Co., (now Esso
International) through Michael J. Estaniel, informing him of his
intention to avail of the optional retirement plan under the
Consecutive Enlistment Incentive Plan (CEIP) considering that he
had already rendered more than twenty (20) years of continuous
service. On July 13, 1989 respondent Esso International, through
W.J. Vrints, Employee Relations Manager, denied petitioner
Millares' request for optional retirement on the following grounds,
to wit: (1) he was employed on a contractual basis; (2) his
contract of enlistment (COE) did not provide for retirement before
the age of sixty (60) years; and (3) he did not comply with the
requirement for claiming benefits under the CEIP, i.e., to submit a
written advice to the company of his intention to terminate his
employment within thirty (30) days from his last disembarkation
date.
On August 9, 1989, petitioner Millares requested for an extension
of his leave of absence from August 9 to 24, 1989. On August 19,
1989, Roy C. Palomar, Crewing Manager, Ship Group A, Trans-
global, wrote petitioner Millares advising him that respondent
Esso International "has corrected the deficiency in its manpower
requirement specifically in the Chief Engineer rank by promoting
a First Assistant Engineer to this position as a result of (his)
previous leave of absence which expired last August 8, 1989. The
adjustment in said rank was required in order to meet manpower
schedules as a result of (his) inability."
On September 26, 1989, respondent Esso International, through
H. Regenboog, Personnel Administrator, advised petitioner
Millares that in view of his absence without leave, which is
equivalent to abandonment of his position, he had been dropped
from the roster of crew members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by private
respondent Esso International as wiper/oiler in June 1969. He
was promoted as Chief Engineer in 1980, a position he continued
to occupy until his last COE expired on April 10, 1989. He was
then receiving a monthly salary of US$1,939.00.
 On May 16, 1989, petitioner Lagda applied for a leave of absence
from June 19, 1989 up to the whole month of August 1989. On
June 14, 1989, respondent Trans-Global's President, Michael J.
Estaniel, approved petitioner Lagda's leave of absence from June
22, 1989 to July 20, 1989 and advised him to report for re-
assignment on July 21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley,
Operations Manager of respondent Esso International, through
respondent Trans-Global's President Michael J. Estaniel,
informing him of his intention to avail of the optional early
retirement plan in view of his twenty (20) years continuous
service in the complaint.
On July 13, 1989, respondent Trans-global denied petitioner
Lagda's request for availment of the optional early retirement
scheme on the same grounds upon which petitioner Millares
request was denied.
On August 3, 1989, he requested for an extension of his leave of
absence up to August 26, 1989 and the same was approved.
However, on September 27, 1989, respondent Esso International,
through H. Regenboog, Personnel Administrator, advised
petitioner Lagda that in view of his "unavailability for contractual
sea service," he had been dropped from the roster of crew
members effective September 1, 1989.
On October 5, 1989, petitioners Millares and Lagda filed a
complaint-affidavit, docketed as POEA (M) 89-10-9671, for illegal
dismissal and non-payment of employee benefits against private
respondents Esso International and Trans-Global, before the
POEA.5
On July 17, 1991, the POEA rendered a decision dismissing the
complaint for lack of merit.
On appeal to the NLRC, the decision of the POEA was affirmed on June
1, 1993 with the following disquisition:
The first issue must be decided in the negative. Complainants-
appellants, as seamen and overseas contract workers are not
covered by the term "regular employment" as defined under
Article 280 of the 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 seamen on board ocean-going vessels
for a fixed period but in no case to exceed twelve (12) months
(Part 1, Sec. C). This POEA policy appears to be in consonance
with the international maritime practice. Moreover, the Supreme
Court in Brent School, Inc. vs. Zamora, 181 SCRA 702, had held
that a fixed term is essential and natural appurtenance of
overseas employment contracts to which the concept of regular
employment with all that it implies is not applicable, Article 280 of
the Labor Code notwithstanding. There is, therefore, no reason to
disturb the POEA Administrator's finding that complainants-
appellants were hired on a contractual basis and for a definite
period. Their employment is thus governed by the contracts they
sign each time they are re-hired and is terminated at the
expiration of the contract period.6
Undaunted, the petitioners elevated their case to this Court7 and
successfully obtained the favorable action, which is now vehemently
being assailed.
At the hearing on November 15, 2000, the Court defined the issues for
resolution in this case, namely:
I. ARE PETITIONERS REGULAR OR CONTRACTUAL
EMPLOYEES WHOSE EMPLOYMENTS ARE TERMINATED
EVERYTIME THEIR CONTRACTS OF EMPLOYMENT EXPIRE?
II. ASSUMING THAT PETITIONERS ARE REGULAR
EMPLOYEES, WERE THEY DISMISSED WITHOUT JUST
CAUSE SO AS TO BE ENTITLED TO REINSTATEMENT AND
BACKWAGES, INCLUDING PAYMENT OF 100% OF THEIR
TOTAL CREDITED CONTRIBUTIONS TO THE CONSECUTIVE
ENLISTMENT INCENTIVE PLAN (CEIP)?
III. DOES THE PROVISION OF THE POEA STANDARD
CONTRACT FOR SEAFARERS ON BOARD FOREIGN
VESSELS (SEC. C., DURATION OF CONTRACT) PRECLUDE
THE ATTAINMENT BY SEAMEN OF THE STATUS OF
REGULAR EMPLOYEES?
 IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524
CONTRAVENE INTERNATIONAL MARITIME LAW, ALLEGEDLY
PART OF THE LAW OF THE LAND UNDER SECTION 2,
ARTICLE II OF THE CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT CONSTITUTE
A DEPARTURE FROM ITS RULING IN COYOCA VS.
NLRC (G.R. NO. 113658, March 31, 1995)?8
In answer to the private respondents' Second Motion for Reconsideration
and to FAME's Motion for Reconsideration in Intervention, petitioners
maintain that they are regular employees as found by the Court in the
March 14, 2000 Decision. Considering that petitioners performed
activities which are usually necessary or desirable in the usual business
or trade of private respondents, they should be considered as regular
employees pursuant to Article 280, Par. 1 of the Labor Code.9 Other
justifications for this ruling include the fact that petitioners have rendered
over twenty (20) years of service, as admitted by the private
respondents;10 that they were recipients of Merit Pay which is an express
acknowledgment by the private respondents that petitioners are regular
and not just contractual employees;11 that petitioners were registered
under the Social Security System (SSS).
The petitioners further state that the case of Coyoca v. NLRC12 which the
private respondents invoke is not applicable to the case at bar as the
factual milieu in that case is not the same. Furthermore, private
respondents' fear that our judicial pronouncement will spell the death of
the manning industry is far from real. Instead, with the valuable
contribution of the manning industry to our economy, these seafarers are
supposed to be considered as "Heroes of the Republic" whose rights
must be protected.13 Finally, the first motion for reconsideration has
already been denied with finality by this Court and it is about time that the
Court should write finis to this case.
The private respondents, on the other hand, contend that: (a) the ruling
holding petitioners as regular employees was not in accord with the
decision in Coyoca v. NLRC, 243 SCRA 190; (b) Art. 280 is not applicable
as what applies is the POEA Rules and Regulations Governing Overseas
Employment; (c) seafarers are not regular employees based on
international maritime practice; (d) grave consequences would result on
the future of seafarers and manning agencies if the ruling is not
reconsidered; (e) there was no dismissal committed; (f) a dismissed
seafarer is not entitled to back wages and reinstatement, that being not
allowed under the POEA rules and the Migrant Workers Act; and, (g)
petitioners are not entitled to claim the total amount credited to their
account under the CEIP.14
Meanwhile, Intervenor Filipino Association of Mariners Employment
(FAME) avers that our decision, if not reconsidered, will have negative
consequences in the employment of Filipino Seafarers overseas which,
in turn, might lead to the demise of the manning industry in the
Philippines. As intervenor FAME puts it:
xxx
7.1 Foreign principals will start looking for alternative sources for
seafarers to man their ships. AS reported by the BIMCO/ISF
study, "there is an expectancy that there will be an increasing
demand for (and supply of) Chinese seafarers, with some
commentators suggesting that this may be a long-term alternative
to the Philippines." Moreover, "the political changes within the
former Eastern Bloc have made new sources of supply available
to the international market." Intervenor's recent survey among its
members shows that 50 Philippine manning companies had
already lost some 6,300 slots to other Asian, East Europe and
Chinese competition for the last two years;
7.2 The Philippine stands to lose an annual foreign income
estimated at U.S. DOLLARS TWO HUNDRED SEVENTY FOUR
MILLION FIVE HUNDRED FORTY NINE THOUSAND (US$
274,549,000.00) from the manning industry and another US
DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION
SEVEN HUNDRED SIX THOUSAND (US$ 4,650,760,000.00)
from the land-based sector if seafarers and equally situated land-
based contract workers will be declared regular employees;
7.3 Some 195,917 (as of 1998) deployed overseas Filipino
seafarers will be rendered jobless should we lose the market;
7.4 Some 360 manning agencies (as of 30 June 2000) whose
principals may no longer be doing business with them will close
their shops;
7.5 The contribution to the Overseas Worker's Welfare
Administration by the sector, which is USD 25.00 per contract and
translates to US DOLLARS FOUR MILLION (US$
4,000,000.00)annually, will be drastically reduced. This is not to
 mention the processing fees paid to POEA, Philippine Regulatory
Commission (PRC), Department of Foreign Affairs (DFA) and
Maritime Industry Authority (MARINA) for the documentation of
these seafarers;
7.6 Worst, some 195,917 (as of 1998) families will suffer socially
and economically, as their breadwinners will be rendered jobless;
and
7.7 It will considerably slow down the government's program of
employment generation, considering that, as expected foreign
employers will now avoid hiring Filipino overseas contract
workers as they will become regular employees with all its
concomitant effects.15
Significantly, the Office of the Solicitor General, in a departure from its
original position in this case, has now taken the opposite view. It has
expressed its apprehension in sustaining our decision and has called for
a re-examination of our ruling.16
Considering all the arguments presented by the private respondents, the
Intervenor FAME and the OSG, we agree that there is a need to
reconsider our position with respect to the status of seafarers which we
considered as regular employees under Article 280 of the Labor Code.
We, therefore, partially grant the second motion for reconsideration.
In Brent School Inc. v. Zamora,17 the Supreme Court stated that Article
280 of the Labor Code does not apply to overseas employment.
In the light of the foregoing description of the development of the
provisions of the Labor Code bearing on term or fixed-period
employment that the question posed in the opening paragraph of
this opinion should now be addressed. Is it then the legislative
intention to outlaw stipulations in employment contracts laying
down a definite period therefor? Are such stipulations in essence
contrary to public policy and should not on this account be
accorded legitimacy?
On the other hand, there is the gradual and progressive
elimination of references to term or fixed-period employment in
the Labor Code, and the specific statement of the rule that:
Regular and Casual Employment – The provisions of
written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the
employee has been engaged to perform activities which
are usually necessary or desirable in the usual business
or trade of the employer except where the employment
has been fixed for a specific project or undertaking the
completion or termination of which has been determined
at the time of the engagement of the employee or where
the work or service to be employee is seasonal in nature
and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph; provided that, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such actually exists.
There is, on the other hand, the Civil Code, which has always
recognized, and continues to recognize, the validity and propriety
of contracts and obligations with a fixed or definite period, and
imposes no restraints on the freedom of the parties to fix the
duration of a contract, whatever its object, be it specific, goods or
services, except the general admonition against stipulations
contrary to law, morals, good customs, public order or public
policy. Under the Civil code, therefore, and as a general
proposition, fixed-term employment contracts are not limited, as
they are under the present Labor Code, to those by natural
seasonal or for specific projects with predetermined dates of
completion; they also include those to which the parties by free
choice have assigned a specific date of termination.
Some familiar examples may be cited of employment
contract which may be neither for seasonal work nor for
specific projects, but to which a fixed term is an essential
and natural appurtenance: overseas employment contracts,
for one, to which, whatever the nature of the engagement,
the concept of regular employment with all that it implies
does not appear ever to have been applied. Article 280 of the
Labor Code notwithstanding also appointments to the positions of
dean, assistant dean, college secretary, principal, and other
administrative offices in educational institutions, which are by
practice or tradition rotated among the faculty members, and
where fixed terms are a necessity without which no reasonable
rotation would be possible. Similarly, despite the provisions of
Article 280, Policy Instructions. No. 8 of the Minister of Labor
implicitly recognize that certain company officials may be elected
for what would amount to fix periods, at the expiration of which
they would have to stand down, in providing that these officials,
xxx may lose their jobs as president, executive vice-president or
vice-president, etc. because the stockholders or the board of
directors for one reason or another did not reelect them.
There can of course be no quarrel with the proposition that where
from the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the
employee, they should be struck down or disregard as contrary to
public policy, morals, etc. But where no such intent to circumvent
the law is shown, or stated otherwise, where the reason for the
law does not exists, e.g., where it is indeed the employee himself
who insists upon a period or where the nature of the engagement
is such that, without being seasonal or for a specific project, a
definite date of termination is a sine qua non, would an
agreement fixing a period be essentially evil or illicit, therefore
anathema? Would such an agreement come within the scope of
Article 280 which admittedly was enacted "to prevent the
circumvention of the right of the employee to be secured in xxx
his employment
As it is evident from even only the three examples already given
that Article 280 of the Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would be an anomaly,
but would also appear to restrict, without reasonable distinctions,
the right of an employee to freely stipulate within his employer the
duration of his engagement, it logically follows that such a literal
interpretation should be eschewed or avoided. The law must be
given a reasonable interpretation, to preclude absurdity in its
application. Outlawing the whole concept of term employment
and subverting to boot the principle of freedom of contract to
remedy the evil of employer's using it as a means to prevent their
employees from obtaining security of tenure is like cutting off the
nose to spite the face or, more relevantly, curing a headache by
lopping of the head.
It is a salutary principle in statutory construction that there
exists a valid presumption that undesirable consequences
were never intended by a legislative measure, and that a
construction of which the statute is fairly susceptible is
favored, which will avoid all objectionable, mischievous,
indefensible, wrongful, evil, and injurious consequences."
Nothing is better settled than that courts are not to give
words a meaning which would lead to absurd or
unreasonable consequences. That is a principle that goes
back to In re Allen decided on October 27, 1902, where it
was held that a literal interpretation is to be rejected if it
would be unjust or lead to absurd results. That is a strong
argument against its adoption. The words of Justice
Laurel are particularly apt. Thus: "the appellants would
lead to an absurdity is another argument for rejecting it."
xxx We have, here, then a case where the true intent of
the law is clear that calls for the application of the cardinal
rule of statutory construction that such intent of spirit must
prevail over the letter thereof, for whatever is within the
spirit of a statute is within the statute, since adherence to
the letter would result in absurdity, injustice and
contradictions and would defeat the plain and vital
purpose of the statute.
Accordingly, and since the entire purpose behind the
development of legislation culminating in the present Article
280 of the Labor code clearly appears to have been, as
already observed, to prevent circumvention of the
employee's right to be secure in his tenure, the clause in
said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of
regular employment as defined therein should be construed
to refer to the substantive evil that the Code itself has
singled out; agreements entered into precisely to circumvent
security of tenure. It should have no application to instances
where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any force,
duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer
and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by
 the former over the latter. Unless thus limited in its purview, the
law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and
arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
Again, in Pablo Coyoca v. NLRC,18 the Court also held that a seafarer is
not a regular employee and is not entitled to separation pay. His
employment is governed by the POEA Standard Employment Contract
for Filipino Seamen.
x x x. In this connection, it is important to note that neither does
the POEA standard employment contract for Filipino seamen
provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules
and Regulations Governing Overseas Employment and the
said Rules do not provide for separation or termination
pay. What is embodied in petitioner's contract is the payment of
compensation arising from permanent partial disability during the
period of employment. We find that private respondent complied
with the terms of contract when it paid petitioner P42,315.00
which, in our opinion, is a reasonable amount, as compensation
for his illness.
Lastly, petitioner claims that he eventually became a regular
employee of private respondent and thus falls within the purview
of Articles 284 and 95 of the Labor Code. In support of this
contention, petitioner cites the case of Worth Shipping Service,
Inc., et al. v. NLRC, et al., wherein we held that the crew
members of the shipping company had attained regular status
and thus, were entitled to separation pay. However, the facts of
said case differ from the present. In Worth, we held that the
principal and agent had "operational control and management"
over the MV Orient Carrier and thus, were the actual employers
of their crew members.
From the foregoing cases, it is clear that seafarers are considered
contractual employees. They can not be considered as regular
employees under Article 280 of the Labor Code. Their employment is
governed by the contracts they sign everytime they are rehired and their
employment is terminated when the contract expires. Their employment
is contractually fixed for a certain period of time. They fall under the
exception of Article 280 whose employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work
or services to be performed is seasonal in nature and the employment is
for the duration of the season.19 We need not depart from the rulings of
the Court in the two aforementioned cases which indeed constitute stare
decisis with respect to the employment status of seafarers.
Petitioners insist that they should be considered regular employees,
since they have rendered services which are usually necessary and
desirable to the business of their employer, and that they have rendered
more than twenty(20) years of service. While this may be true,
the Brent case has, however, held that there are certain forms of
employment which also require the performance of usual and desirable
functions and which exceed one year but do not necessarily attain
regular employment status under Article 280.20 Overseas workers
including seafarers fall under this type of employment which are
governed by the mutual agreements of the parties.
In this jurisdiction and as clearly stated in the Coyoca case, Filipino
seamen are governed by the Rules and Regulations of the POEA. The
Standard Employment Contract governing the employment of All Filipino
seamen on Board Ocean-Going Vessels of the POEA, particularly in Part
I, Sec. C specifically provides that the contract of seamen shall be for a
fixed period. And in no case should the contract of seamen be longer
than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no
case to exceed 12 months and shall be stated in the Crew
Contract. Any extension of the Contract period shall be subject to
the mutual consent of the parties.
Moreover, it is an accepted maritime industry practice that employment of
seafarers are for a fixed period only. Constrained by the nature of their
employment which is quite peculiar and unique in itself, it is for the
mutual interest of both the seafarer and the employer why the
employment status must be contractual only or for a certain period of
time. Seafarers spend most of their time at sea and understandably, they
can not stay for a long and an indefinite period of time at sea. 21 Limited
access to shore society during the employment will have an adverse
impact on the seafarer. The national, cultural and lingual diversity among
the crew during the COE is a reality that necessitates the limitation of its
period.22
Petitioners make much of the fact that they have been continually re-
hired or their contracts renewed before the contracts expired (which has
admittedly been going on for twenty (20) years). By such circumstance
they claim to have acquired regular status with all the rights and benefits
appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of
continuous re-hiring was dictated by practical considerations that
experienced crew members are more preferred. Petitioners were only
given priority or preference because of their experience and qualifications
but this does not detract the fact that herein petitioners are contractual
employees. They can not be considered regular employees. We quote
with favor the explanation of the NLRC in this wise:
xxx The reference to "permanent" and "probationary" masters
and employees in these papers is a misnomer and does not alter
the fact that the contracts for enlistment between complainants-
appellants and respondent-appellee Esso International were for a
definite periods of time, ranging from 8 to 12 months. Although
the use of the terms "permanent" and "probationary" is
unfortunate, what is really meant is "eligible for-re-hire". This is
the only logical conclusion possible because the parties cannot
and should not violate POEA's requirement that a contract of
enlistment shall be for a limited period only; not exceeding twelve
(12)months.23
From all the foregoing, we hereby state that petitioners are not
considered regular or permanent employees under Article 280 of the
Labor Code. Petitioners' employment have automatically ceased upon
the expiration of their contracts of enlistment (COE). Since there was no
dismissal to speak of, it follows that petitioners are not entitled to
reinstatement or payment of separation pay or backwages, as provided
by law.
With respect to the benefits under the Consecutive Enlistment Incentive
Plan (CEIP), we hold that the petitioners are still entitled to receive 100%
of the total amount credited to him under the CEIP. Considering that we
have declared that petitioners are contractual employees, their
compensation and benefits are covered by the contracts they signed and
the CEIP is part and parcel of the contract.
The CEIP was formulated to entice seamen to stay long in the company.
As the name implies, the program serves as an incentive for the
employees to renew their contracts with the same company for as long
as their services were needed. For those who remained loyal to them,
they were duly rewarded with this additional remuneration under the
CEIP, if eligible. While this is an act of benevolence on the part of the
employer, it can not, however, be denied that this is part of the benefits
accorded to the employees for services rendered. Such right to the
benefits is vested upon them upon their eligibility to the program.
The CEIP provides that an employee becomes covered under the Plan
when he completes thirty-six (36) months or an equivalent of three (3)
years of credited service with respect to employment after June 30,
1973.24 Upon eligibility, an amount shall be credited to his account as it
provides, among others:
III. Distribution of Benefits
A. Retirement, Death and Disability
When the employment of an employee terminates because of his
retirement, death or permanent and total disability, a percentage
of the total amount credited to his account will be distributed to
him (or his eligible survivor(s) in accordance with the following:
Reason for Termination Percenta
a) Attainment of mandatory retirement age of 60. 100%
b) Permanent and total disability, while under 100%
contract, that is not due to accident or
misconduct.
c) Permanent and total disability, while under 100%
contract, that is due to accident, and not due to
misconduct.
 xxx
B. Voluntary Termination
When an employee voluntary terminates his employment with at
least 36 months of credited service without any misconduct on his
part, 18 percent of the total amount credited to his account, plus
an additional ½ of one percent for each month (up to a maximum
of 164 months of credited service in excess of 36, will be
distributed to him provided (1) the employee has completed his
last Contract of Enlistment and (2) employee advises the
company in writing, within 30 days, from his last disembarkation
date, of his intention to terminate his employment. (To advise the
Company in writing means that the original letter must be sent to
the Company's agent in the Philippines, a copy sent to the
Company in New York).
xxx
C. Other Terminations
When the employment of an employee is terminated by the
Company for a reason other than one in A and B above, without
any misconduct on his part, a percentage of the total amount
credited to his account will be distributed to him in accordance
with the following.
Credited Service Percentage
36 months 50%
48 " 75%
60 " 100%
When the employment of an employee is terminated due to his
poor-performance, misconduct, unavailability, etc., or if employee
is not offered re-engagement for similar reasons, no distribution
of any portion of employee's account will ever be made to him (or
his eligible survivor[s]).
It must be recalled that on June 21, 1989, Millares wrote a letter to his
employer informing his intention to avail of the optional retirement plan
under the CEIP considering that he has rendered more than twenty (20)
years of continuous service. Lagda, likewise, manifested the same
intention in a letter dated June 26, 1989. Private respondent, however,
denied their requests for benefits under the CEIP since: (1) the contract
of enlistment (COE) did not provide for retirement before 60 years of age;
and that (2) petitioners failed to submit a written notice of their intention to
terminate their employment within thirty (30) days from the last
disembarkation date pursuant to the provision on Voluntary Termination
of the CEIP. Petitioners were eventually dropped from the roster of crew
members and on grounds of "abandonment" and "unavailability for
contractual sea service", respectively, they were disqualified from
receiving any benefits under the CEIP.25
In our March 14, 2000 Decision, we, however, found that petitioners
Millares and Lagda were not guilty of "abandonment" or "unavailability for
contractual sea service," as we have stated:
The absence of petitioners was justified by the fact that they
secured the approval of private respondents to take a leave of
absence after the termination of their last contracts of enlistment.
Subsequently, petitioners sought for extensions of their respective
leaves of absence. Granting arguendo that their subsequent
requests for extensions were not approved, it cannot be said that
petitioners were unavailable or had abandoned their work when
they failed to report back for assignment as they were still
questioning the denial of private respondents of their desire to
avail of the optional early retirement policy, which they believed in
good faith to exist.26
Neither can we consider petitioners guilty of poor performance or
misconduct since they were recipients of Merit Pay Awards for their
exemplary performances in the company.
Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989
(for Lagda) which private respondent considered as belated written
notices of termination, we find such assertion specious. Notwithstanding,
we could conveniently consider the petitioners eligible under Section III-B
of the CEIP (Voluntary Termination), but this would, however, award them
only a measly amount of benefits which to our mind, the petitioners do
not rightfully deserve under the facts and circumstances of the case. As
the CEIP provides:

III. Distribution of Benefits

xxx

E. Distribution of Accounts

When an employee terminates under conditions that would

qualify for a distribution of more than one specified in A, B or C
above, the largest single amount, only, will be distributed.

Since petitioners' termination of employment under the CEIP do not fall

under Section III-A (Retirement, Death and Disability) or Section III-B
(Voluntary Termination), nor could they be they be considered under the
second paragraph of Section III-C, as earlier discussed; it follows that
their termination falls under the first paragraph of Section III-C for which
they are entitled to 100% of the total amount credited to their accounts.
The private respondents can not now renege on their commitment under
the CEIP to reward deserving and loyal employees as the petitioners in
this case.

In taking cognizance of private respondent's Second Motion for

Reconsideration, the Court hereby suspends the rules to make them
comformable to law and justice and to subserve an overriding public
interest.

IN VIEW OF THE FOREGOING, the Court Resolved to Partially

GRANT Private Respondent's Second Motion for Reconsideration and
Intervenor FAMES' Motion for Reconsideration in Intervention. The
Decision of the National Labor Relations Commission dated June 1, 1993
is hereby REINSTATED with MODIFICATION. The Private Respondents,
Trans-Global Maritime Agency, Inc. and Esso International Shipping Co.,
Ltd. are hereby jointly and severally ORDERED to pay petitioners One
Hundred Percent (100%) of their total credited contributions as provided
under the Consecutive Enlistment Incentive Plan(CEIP).

SO ORDERED.
 Republic of the Philippines the NLRC, so they filed a Petition for Certiorari with the Court of Appeals
9

SUPREME COURT (CA).10

Manila
The CA granted the petition, reversed the Labor Arbiter and NLRC
SECOND DIVISION Decisions, and awarded to De Gracia, Lata and Aprosta their unremitted
home allotment, three months salary each representing the unexpired
G.R. No. 175558 February 8, 2012 portion of their employment contracts and attorney’s fees. No award was
11

given to Doza for lack of factual basis. The CA denied Skippers’ Motion
12

SKIPPERS UNITED PACIFIC, INC. and SKIPPERS MARITIME for Partial Reconsideration. Hence, this Petition.
13

SERVICES, INC., LTD., Petitioners,

vs. The Facts
NATHANIEL DOZA, NAPOLEON DE GRACIA, ISIDRO L. LATA, and
CHARLIE APROSTA, Respondents. Skippers United Pacific, Inc. deployed, in behalf of Skippers, De Gracia,
Lata, and Aprosta to work on board the vessel MV Wisdom Star, under
DECISION the following terms and conditions:

CARPIO, J.: Name : Napoleon O. De Gracia

The Case Position : 3rd Engineer

Contract Duration : 10 months
This is a Petition for Review under Rule 45 assailing the 5 July 2006
Decision and 7 November 2006 Resolution of the Court of Appeals in
1 2 Basic Monthly Salary : US$800.00
CA-G.R. SP No. 88148. 3
Contract Date : 17 July 1998 14

This arose from consolidated labor case filed by seafarers Napoleon De

4
Name : Isidro L. Lata
Gracia (De Gracia), Isidro L. Lata (Lata), Charlie Aprosta (Aprosta), and
Nathaniel Doza (Doza) against local manning agency Skippers United Position : 4th Engineer
Pacific, Inc. and its foreign principal, Skippers Maritime Services, Inc., Contract Duration : 12 months
Ltd. (Skippers) for unremitted home allotment for the month of December
1998, salaries for the unexpired portion of their employment contracts, Basic Monthly Salary : US$600.00
moral damages, exemplary damages, and attorney’s fees. Skippers, on
Contract Date : 17 April 1998 15

the other hand, answered with a claim for reimbursement of De Gracia,

Aprosta and Lata’s repatriation expenses, as well as award of moral Name : Charlie A. Aprosta
damages and attorney’s fees.
Position : Third Officer
De Gracia, Lata, Aprosta and Doza’s (De Gracia, et al.) claims were Contract Duration : 12 months
dismissed by the Labor Arbiter for lack of merit. The Labor Arbiter also
5

dismissed Skippers’ claims. De Gracia, et al. appealed the Labor

6 7 Basic Monthly Salary : US$600.00
Arbiter’s decision with the National Labor Relations Commission (NLRC),
Contract Date : 17 April 1998 16

but the First Division of the NLRC dismissed the appeal for lack of
merit. Doza, et al.’s Motion for Reconsideration was likewise denied by
8
Paragraph 2 of all the employment contracts stated that: "The terms and Filipino seamen. This is again evidenced by a fax of Cosmoship MV
30

conditions of the Revised Employment Contract Governing the Wisdom to Skippers, which bears conflicting dates of 24 January 1998
Employment of All Seafarers approved per Department Order No. 33 and and 24 January 1999. 31

Memorandum Circular No. 55, both series of 1996 shall be strictly and
faithfully observed." No employment contract was submitted for
17
Skippers, in its Position Paper, admitted non-payment of home allotment
Nathaniel Doza. for the month of December 1998, but prayed for the offsetting of such
amount with the repatriation expenses in the following manner: 32

De Gracia, et al. claimed that Skippers failed to remit their respective

allotments for almost five months, compelling them to air their grievances
Seafarer Repatriation Expense Home Allotmen
with the Romanian Seafarers Free Union. On 16 December 1998, ITF
18

Inspector Adrian Mihalcioiu of the Romanian Seafarers Union sent De Gracia US$1,340.00 US$900.00
Captain Savvas of Cosmos Shipping a fax letter, relaying the complaints
of his crew, namely: home allotment delay, unpaid salaries (only Aprosta US$1,340.00 US$600.00
advances), late provisions, lack of laundry services (only one washing Lata US$1,340.00 US$600.00
machine), and lack of maintenance of the vessel (perforated and
unrepaired deck). To date, however, Skippers only failed to remit the
19

home allotment for the month of December 1998. On 28 January 1999,

20 Since De Gracia, et al. pre-terminated their contracts, Skippers claims
De Gracia, et al. were unceremoniously discharged from MV Wisdom they are liable for their repatriation expenses in accordance with Section
33

Stars and immediately repatriated. Upon arrival in the Philippines, De

21
Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter
on 4 April 1999 and prayed for payment of their home allotment for the
month of December 1998, salaries for the unexpired portion of their
contracts, moral damages, exemplary damages, and attorney’s fees. 22
Skippers, on the other hand, claims that at around 2:00 a.m. on 3
December 1998, De Gracia, smelling strongly of alcohol, went to the
cabin of Gabriel Oleszek, Master of MV Wisdom Stars, and was rude,
shouting noisily to the master. De Gracia left the master’s cabin after a
23
19(G) of Philippine Overseas Employment Administration (POEA)
Memorandum Circular No. 55, series of 1996 which states:
G. A seaman who requests for early termination of his contract shall be
liable for his repatriation cost as well as the transportation cost of his
replacement. The employer may, in case of compassionate grounds,
assume the transportation cost of the seafarer’s replacement.
Skippers also prayed for payment of moral damages and attorney’s
fees.34

few minutes and was heard shouting very loudly somewhere down the
corridors. This incident was evidenced by the Captain’s Report sent via
24
The Decision of the Labor Arbiter
telex to Skippers on said date. 25

The Labor Arbiter rendered his Decision on 18 February 2002, with its
Skippers also claims that at 12:00 noon on 22 January 1999, four Filipino dispositive portion declaring:
seafarers, namely Aprosta, De Gracia, Lata and Doza, arrived in the
master’s cabin and demanded immediate repatriation because they were WHEREFORE, judgment is hereby rendered dismissing herein action for
not satisfied with the ship. De Gracia, et al. threatened that they may
26
lack of merit. Respondents’ claim for reimbursement of the expenses they
become crazy any moment and demanded for all outstanding payments incurred in the repatriation of complainant Nathaniel Doza is likewise
due to them. This is evidenced by a telex of Cosmoship MV Wisdom to
27
dismissed.
Skippers, which however bears conflicting dates of 22 January 1998 and
22 January 1999. 28
SO ORDERED. 35

Skippers also claims that, due to the disembarkation of De Gracia, et al., The Labor Arbiter dismissed De Gracia, et al.’s complaint for illegal
17 other seafarers disembarked under abnormal circumstsances. For 29
dismissal because the seafarers voluntarily pre-terminated their
this reason, it was suggested that Polish seafarers be utilized instead of
employment contracts by demanding for immediate repatriation due to WHEREFORE, the instant petition for certiorari is GRANTED. The
dissatisfaction with the ship. The Labor Arbiter held that such voluntary
36
Resolution dated October 28, 2002 and the Order dated August 31, 2004
pre-termination of employment contract is akin to resignation, a form of
37
rendered by the public respondent NLRC are ANNULLED and SET
termination by employee of his employment contract under Article 285 of ASIDE. Let another judgment be entered holding private respondents
the Labor Code. The Labor Arbiter gave weight and credibility to the telex jointly and severally liable to petitioners for the payment of:
of the master of the vessel to Skippers, claiming that De Gracia, et al.
demanded for immediate repatriation. Due to the absence of illegal
38
1. Unremitted home allotment pay for the month of December,
dismissal, De Gracia, et. al.’s claim for salaries representing the 1998 or the equivalent thereof in Philippine pesos:
unexpired portion of their employment contracts was dismissed. 39

a. De Gracia = US$900.00
The Labor Arbiter also dismissed De Gracia et al.’s claim for home
allotment for December 1998. The Labor Arbiter explained that payment
40
b. Lata = US$600.00
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
c. Aprosta = US$600.00
such monetary benefit." Since De Gracia, et al. were not able to prove
41

their entitlement to home allotment, such claim was dismissed. 42

2. Salary for the unexpired portion of the employment contract or

for 3 months for every year of the unexpired term, whichever is
Lastly, Skippers’ claim for reimbursement of repatriation expenses was
less, or the equivalent thereof in Philippine pesos:
likewise denied, since Article 19(G) of POEA Memorandum Circular No.
55, Series of 1996 allows the employer, in case the seafarer voluntarily
pre-terminates his contract, to assume the repatriation cost of the a. De Gracia = US$2,400.00
seafarer on compassionate grounds. 43

b. Lata = US$1,800.00
The Decision of the NLRC
c. Aprosta = US$1,800.00
The NLRC, on 28 October 2002, dismissed De Gracia, et al.’s appeal for
lack of merit and affirmed the Labor Arbiter’s decision. The NLRC
44 3. Attorney’s fees and litigation expenses equivalent to 10% of the
considered De Gracia, et al.’s claim for home allotment for December total claims.
1998 unsubstantiated, since home allotment is a benefit which De
Gracia, et al. must prove their entitlement to. The NLRC also denied the
45 SO ORDERED. 47

claim for illegal dismissal because De Gracia, et al. were not able to
refute the telex received by Skippers from the vessel’s master that De
Gracia, et al. voluntarily pre-terminated their contracts and demanded
immediate repatriation due to their dissatisfaction with the ship’s
operations.46
The CA declared the Labor Arbiter and NLRC to have committed grave
abuse of discretion when they relied upon the telex message of the
captain of the vessel stating that De Gracia, et al. voluntarily pre-
terminated their contracts and demanded immediate repatriation. The 48

The Decision of the Court of Appeals
The CA, on 5 July 2006, granted De Gracia, et al.’s petition and reversed
the decisions of the Labor Arbiter and NLRC, its dispositive portion
telex message was "a self-serving document that does not satisfy the
requirement of substantial evidence, or that amount of relevant evidence
which a reasonable mind might accept as adequate to justify the
conclusion that petitioners indeed voluntarily demanded their immediate
repatriation." For this reason, the repatriation of De Gracia, et al. prior to
49

reading as follows: the expiration of their contracts showed they were illegally dismissed
from employment. 50
In addition, the failure to remit home allotment pay was effectively
admitted by Skippers, and prayed to be offset from the repatriation
expenses. Since there is no proof that De Gracia, et al. voluntarily pre-
51
terminated their contracts, the repatriation expenses are for the account
of Skippers, and cannot be offset with the home allotment pay for
December 1998. 52
No relief was granted to Doza due to lack of factual basis to support his
petition. Attorney’s fees equivalent to 10% of the total claims was
53
granted since it involved an action for recovery of wages or where the
employee was forced to litigate and incur expenses to protect his rights
and interest. 54
The Issues
Skippers, in its Petition for Review on Certiorari, assigned the following
errors in the CA Decision:
a) The Court of Appeals seriously erred in not giving due
credence to the master’s telex message showing that the
respondents voluntarily requested to be repatriated.
b) The Court of Appeals seriously erred in finding petitioners
liable to pay backwages and the alleged unremitted home
allotment pay despite the finding of the Labor Arbiter and the
NLRC that the claims are baseless.
c) The Court of Appeals seriously erred in awarding attorney’s
fees in favor of respondents despite its findings that the facts
attending in this case do not support the claim for moral and
exemplary damages. 55
The Ruling of this Court
We deny the petition and affirm the CA Decision, but modify the award.
For a worker’s dismissal to be considered valid, it must comply with both
procedural and substantive due process. The legality of the manner of
dismissal constitutes procedural due process, while the legality of the act
of dismissal constitutes substantive due process. 56
Procedural due process in dismissal cases consists of the twin
requirements of notice and hearing. The employer must furnish the
employee with two written notices before the termination of employment
can be effected: (1) the first notice apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the
second notice informs the employee of the employer’s decision to
dismiss him. Before the issuance of the second notice, the requirement of
a hearing must be complied with by giving the worker an opportunity to
be heard. It is not necessary that an actual hearing be conducted. 57
Substantive due process, on the other hand, requires that dismissal by
the employer be made under a just or authorized cause under Articles
282 to 284 of the Labor Code.
In this case, there was no written notice furnished to De Gracia, et al.
regarding the cause of their dismissal. Cosmoship furnished a written
notice (telex) to Skippers, the local manning agency, claiming that De
Gracia, et al. were repatriated because the latter voluntarily pre-
terminated their contracts. This telex was given credibility and weight by
the Labor Arbiter and NLRC in deciding that there was pre-termination of
the employment contract "akin to resignation" and no illegal dismissal.
However, as correctly ruled by the CA, the telex message is "a biased
and self-serving document that does not satisfy the requirement of
substantial evidence." If, indeed, De Gracia, et al. voluntarily pre-
terminated their contracts, then De Gracia, et al. should have submitted
their written resignations.
Article 285 of the Labor Code recognizes termination by the employee of
the employment contract by "serving written notice on the employer at
least one (1) month in advance." Given that provision, the law
contemplates the requirement of a written notice of resignation. In the
absence of a written resignation, it is safe to presume that the employer
terminated the seafarers. In addition, the telex message relied upon by
the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998
and 22 January 1999, giving doubt to the veracity and authenticity of the
document. In 22 January 1998, De Gracia, et al. were not even employed
yet by the foreign principal. For these reasons, the dismissal of De
Gracia, et al. was illegal.
On the issue of home allotment pay, Skippers effectively admitted non-
remittance of home allotment pay for the month of December 1998 in its
Position Paper. Skippers sought the repatriation expenses to be offset
with the home allotment pay. However, since De Gracia, et al.’s dismissal
was illegal, their repatriation expenses were for the account of Skippers
and could not be offset with the home allotment pay.
Contrary to the claim of the Labor Arbiter and NLRC that the home
allotment pay is in "the nature of extraordinary money where the burden
of proof is shifted to the worker who must prove he is entitled to such
monetary benefit," Section 8 of POEA Memorandum Circular No. 55,
series of 1996, states that the allotment actually constitutes at least
eighty percent (80%) of the seafarer’s salary:
The seafarer is required to make an allotment which is payable once a
month to his designated allottee in the Philippines through any authorized
Philippine bank. The master/employer/agency shall provide the seafarer
with facilities to do so at no expense to the seafarer. The allotment shall
be at least eighty percent (80%) of the seafarer’s monthly basic salary
including backwages, if any. (Emphasis supplied)
Paragraph 2 of the employment contracts of De Gracia, Lata and Aprosta
incorporated the provisions of above Memorandum Circular No. 55,
series of 1996, in the employment contracts. Since said memorandum
states that home allotment of seafarers actually constitutes at least eighty
percent (80%) of their salary, home allotment pay is not in the nature of
an extraordinary money or benefit, but should actually be considered as
salary which should be paid for services rendered. For this reason, such
non-remittance of home allotment pay should be considered as unpaid
salaries, and Skippers shall be liable to pay the home allotment pay of De
Gracia, et al. for the month of December 1998.
Damages
As admitted by Skippers in its Position Paper, the home allotment pay for
December 1998 due to De Gracia, Lata and Aprosta is:
Seafarer
Home Allotment Pay
De Gracia US$900.00 10022.
Aprosta US$600.00
Lata US$600.00 for three months for every year of the unexpired term, whichever is less"
The monthly salary of De Gracia, according to his employment contract,
is only US$800.00. However, since Skippers admitted in its Position
Paper a higher home allotment pay for De Gracia, we award the higher
amount of home allotment pay for De Gracia in the amount of
US$900.00. Since the home allotment pay can be considered as unpaid
salaries, the peso equivalent of the dollar amount should be computed
using the prevailing rate at the time of termination since it was due and
demandable to De Gracia, et al. on 28 January 1999.
Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for
money claims in cases of unjust termination of employment contracts:
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall be
entitled to the full reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.
The Migrant Workers Act provides that salaries for the unexpired portion
of the employent contract or three (3) months for every year of the
unexpired term, whichever is less, shall be awarded to the overseas
Filipino worker, in cases of illegal dismissal. However, in 24 March
2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co.
Inc., the Court, in an En Banc Decision, declared unconstitutional the
58
clause "or for three months for every year of the unexpired term,
whichever is less" and awarded the entire unexpired portion of the
employment contract to the overseas Filipino worker.
On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA
10022) amended Section 10 of the Migrant Workers Act, and once again
reiterated the provision of awarding the unexpired portion of the
employent contract or three (3) months for every year of the unexpired
term, whichever is less.
Nevertheless, since the termination occurred on January 1999 before the
passage of the amendatory RA 10022, we shall apply RA 8042, as
unamended, without touching on the constitutionality of Section 7 of RA
The declaration in March 2009 of the unconstitutionality of the clause "or
in RA 8042 shall be given retroactive effect to the termination that
occurred in January 1999 because an unconstitutional clause in the law
confers no rights, imposes no duties and affords no protection. The
unconstitutional provision is inoperative, as if it was not passed into law
at all. 59
As such, we compute the claims as follows:
 Contract Contract Repatriation The parents of the female seduced, abducted, raped, or abused, referred
Seafarer Unexpired Term to in No. 3 of this article, may also recover moral damages.
Term Date Date
De 10 months 17 Jul. 28 Jan. 1999 3 months & 20 The spouse, descendants, ascendants, and brothers and sisters may
Gracia 1998 days bring the action mentioned in No. 9 of this article, in the order named.
Lata 12 months 17 Apr. 28 Jan. 1999 2 months & 20
1998 days Article 2229 of the Civil Code, on the other hand, provides for recovery of
exemplary damages:
Aprosta 12 months 17 Apr. 28 Jan. 1999 2 months & 20
1998 days Art. 2229. Exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral,
Given the above computation, we modify the CA’s imposition of award, temperate, liquidated or compensatory damages.
and grant to De Gracia, et al. salaries representing the unexpired portion
of their contracts, instead of salaries for three (3) months. In this case, we agree with the CA in not awarding moral and exemplary
damages for lack of factual basis.
Article 2219 of the Civil Code of the Philippines provides for recovery of
moral damages in certain cases: Lastly, Article 2208 of the Civil Code provides for recovery of attorney’s
fees and expenses of litigation:
Art. 2219. Moral damages may be recovered in the following and
analogous cases: Art. 2208. In the absence of stipulation, attorney’s fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
(1) A criminal offense resulting in physical injuries;
(1) When exemplary damages are awarded;
(2) Quasi-delicts causing physical injuries;
(2) When the defendant’s act or omission has compelled the
(3) Seduction, abduction, rape, or other lascivious acts; plaintiff to litigate with third persons or to incur expenses to
protect his interest;
(4) Adultery or concubinage;
(3) In criminal cases of malicious prosecution against the plaintiff;
(5) Illegal or arbitrary detention or arrest;
(4) In case of a clearly unfounded civil action or proceeding
(6) Illegal search; against the plaintiff;

(7) Libel, slander or any other form of defamation; (5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff’s plainly valid, just and demandable
claim;
(8) Malicious prosecution;
(6) In actions for legal support;
(9) Acts mentioned in Article 309;
(7) In actions for the recovery of wages of household helpers,
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30,
laborers and skilled workers;
32, 34, and 35.
 (8) In actions for indemnity under workmen’s compensation and a. De Gracia = US$900.00
employer’s liability laws;
b. Lata = US$600.00
(9) In a separate civil action to recover civil liability arising from a
crime; c. Aprosta = US$600.00

(10) When at least double judicial costs are awarded; 2) Salary for the unexpired portion of the employment contract or
its current equivalent in Philippine Pesos:
(11) In any other case where the court deems it just and equitable
that attorney’s fees and expenses of litigation should be a. De Gracia = US$2,933.34
recovered.
b. Lata = US$1,600.00
In all cases, the attorney’s fees and expenses of litigation must be
reasonable. c. Aprosta = US$1,600.00

Article 111 of the Labor Code provides for a maximum award of attorney’s 3) Attorney’s fees and litigation expenses equivalent to 10% of
fees in cases of recovery of wages: the total claims.

Art. 111. Attorney’s fees. SO ORDERED.

a. In cases of unlawful withholding of wages, the culpable party

may be assessed attorney’s fees equivalent to ten percent of the
amount of wages recovered.

b. It shall be unlawful for any person to demand or accept, in any

judicial or administrative proceedings for the recovery of wages,
attorney’s fees which exceed ten percent of the amount of wages
recovered.

Since De Gracia, et al. had to secure the services of the lawyer to

recover their unpaid salaries and protect their interest, we agree with the
CA’s imposition of attorney’s fees in the amount of ten percent (10%) of
the total claims.
1âwphi1

WHEREFORE, we AFFIRM the Decision of the Court of Appeals dated 5

July 2006 with MODIFICATION. Petitioners Skippers United Pacific, Inc.
and Skippers Maritime Services Inc., Ltd. are jointly and severally liable
for payment of the following:

1) Unremitted home allotment pay for the month of December

1998 in its equivalent rate in Philippine Pesos at the time of
termination on 28 January 1999:
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 178551 October 11, 2010
ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY
OF PUBLIC HEALTH-KUWAIT Petitioners,
vs.
MA. JOSEFA ECHIN, Respondent.
DECISION
CARPIO MORALES, J.:
Josefina Echin (respondent) was hired by petitioner ATCI Overseas
Corporation in behalf of its principal-co-petitioner, the Ministry of Public
Health of Kuwait (the Ministry), for the position of medical technologist
under a two-year contract, denominated as a Memorandum of Agreement
(MOA), with a monthly salary of US$1,200.00.
Under the MOA,1 all newly-hired employees undergo a probationary
period of one (1) year and are covered by Kuwait’s Civil Service Board
Employment Contract No. 2.
Respondent was deployed on February 17, 2000 but was terminated
from employment on February 11, 2001, she not having allegedly passed
the probationary period.
As the Ministry denied respondent’s request for reconsideration, she
returned to the Philippines on March 17, 2001, shouldering her own air
fare.
On July 27, 2001, respondent filed with the National Labor Relations
Commission (NLRC) a complaint2 for illegal dismissal against petitioner
ATCI as the local recruitment agency, represented by petitioner, Amalia
Ikdal (Ikdal), and the Ministry, as the foreign principal.
By Decision3 of November 29, 2002, the Labor Arbiter, finding that
petitioners neither showed that there was just cause to warrant
respondent’s dismissal nor that she failed to qualify as a regular
employee, held that respondent was illegally dismissed and accordingly
ordered petitioners to pay her US$3,600.00, representing her salary for
the three months unexpired portion of her contract.
On appeal of petitioners ATCI and Ikdal, the NLRC affirmed the Labor
Arbiter’s decision by Resolution4 of January 26, 2004. Petitioners’ motion
for reconsideration having been denied by Resolution 5 of April 22, 2004,
they appealed to the Court of Appeals, contending that their principal, the
Ministry, being a foreign government agency, is immune from suit and, as
such, the immunity extended to them; and that respondent was validly
dismissed for her failure to meet the performance rating within the one-
year period as required under Kuwait’s Civil Service Laws. Petitioners
further contended that Ikdal should not be liable as an officer of petitioner
ATCI.
By Decision6 of March 30, 2007, the appellate court affirmed the NLRC
Resolution.
In brushing aside petitioners’ contention that they only acted as agent of
the Ministry and that they cannot be held jointly and solidarily liable with
it, the appellate court noted that under the law, a private employment
agency shall assume all responsibilities for the implementation of the
contract of employment of an overseas worker, hence, it can be sued
jointly and severally with the foreign principal for any violation of the
recruitment agreement or contract of employment.
As to Ikdal’s liability, the appellate court held that under Sec. 10 of
Republic Act No. 8042, the "Migrant and Overseas Filipinos’ Act of 1995,"
corporate officers, directors and partners of a recruitment agency may
themselves be jointly and solidarily liable with the recruitment agency for
money claims and damages awarded to overseas workers.
Petitioners’ motion for reconsideration having been denied by the
appellate court by Resolution7 of June 27, 2007, the present petition for
review on certiorari was filed.
Petitioners maintain that they should not be held liable because
respondent’s employment contract specifically stipulates that her
employment shall be governed by the Civil Service Law and Regulations
of Kuwait. They thus conclude that it was patent error for the labor
tribunals and the appellate court to apply the Labor Code provisions
governing probationary employment in deciding the present case.
Further, petitioners argue that even the Philippine Overseas Employment
Act (POEA) Rules relative to master employment contracts (Part III, Sec.
2 of the POEA Rules and Regulations) accord respect to the "customs,
practices, company policies and labor laws and legislation of the host
country."
Finally, petitioners posit that assuming arguendo that Philippine labor
laws are applicable, given that the foreign principal is a government
agency which is immune from suit, as in fact it did not sign any document
agreeing to be held jointly and solidarily liable, petitioner ATCI cannot
likewise be held liable, more so since the Ministry’s liability had not been
judicially determined as jurisdiction was not acquired over it.
The petition fails.
Petitioner ATCI, as a private recruitment agency, cannot evade
responsibility for the money claims of Overseas Filipino workers (OFWs)
which it deploys abroad by the mere expediency of claiming that its
foreign principal is a government agency clothed with immunity from suit,
or that such foreign principal’s liability must first be established before it,
as agent, can be held jointly and solidarily liable.
In providing for the joint and solidary liability of private recruitment
agencies with their foreign principals, Republic Act No. 8042 precisely
affords the OFWs with a recourse and assures them of immediate and
sufficient payment of what is due them. Skippers United Pacific v.
Maguad8 explains:
. . . [T]he obligations covenanted in the recruitment agreement
entered into by and between the local agent and its foreign principal
are not coterminous with the term of such agreement so that if either
or both of the parties decide to end the agreement, the responsibilities of
such parties towards the contracted employees under the agreement do
not at all end, but the same extends up to and until the expiration of the
employment contracts of the employees recruited and employed
pursuant to the said recruitment agreement. Otherwise, this will render
nugatory the very purpose for which the law governing the
employment of workers for foreign jobs abroad was enacted.
(emphasis supplied)
The imposition of joint and solidary liability is in line with the policy of the
state to protect and alleviate the plight of the working class.9 Verily, to
allow petitioners to simply invoke the immunity from suit of its foreign
principal or to wait for the judicial determination of the foreign principal’s
liability before petitioner can be held liable renders the law on joint and
solidary liability inutile.
As to petitioners’ contentions that Philippine labor laws on probationary
employment are not applicable since it was expressly provided in
respondent’s employment contract, which she voluntarily entered into,
that the terms of her engagement shall be governed by prevailing Kuwaiti
Civil Service Laws and Regulations as in fact POEA Rules accord
respect to such rules, customs and practices of the host country, the
same was not substantiated.
Indeed, a contract freely entered into is considered the law between the
parties who can establish stipulations, clauses, terms and conditions as
they may deem convenient, including the laws which they wish to govern
their respective obligations, as long as they are not contrary to law,
morals, good customs, public order or public policy.
It is hornbook principle, however, that the party invoking the application of
a foreign law has the burden of proving the law, under the doctrine of
processual presumption which, in this case, petitioners failed to
discharge. The Court’s ruling in EDI-Staffbuilders Int’l., v.
NLRC10 illuminates:
In the present case, the employment contract signed by Gran specifically
states that Saudi Labor Laws will govern matters not provided for in the
contract (e.g. specific causes for termination, termination procedures,
etc.). Being the law intended by the parties (lex loci intentiones) to apply
to the contract, Saudi Labor Laws should govern all matters relating to
the termination of the employment of Gran.
In international law, the party who wants to have a foreign law applied to
a dispute or case has the burden of proving the foreign law. 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. He is
presumed to know only domestic or forum law.
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on
the matter; thus, the International Law doctrine of presumed-identity
approach or processual presumption comes into play. Where a foreign
law is not pleaded or, even if pleaded, is not proved, the presumption is
that foreign law is the same as ours. Thus, we apply Philippine labor laws
in determining the issues presented before us. (emphasis and
underscoring supplied)
The Philippines does not take judicial notice of foreign laws, hence, they
must not only be alleged; they must be proven. To prove a foreign law,
the party invoking it must present a copy thereof and comply with
Sections 24 and 25 of Rule 132 of the Revised Rules of Court which
reads:
SEC. 24. Proof of official record. — The record of public documents
referred to in paragraph (a) of Section 19, when admissible for any
purpose, may be evidenced by an official publication thereof or by a copy
attested by the officer having the legal custody of the record, or by his
deputy, and accompanied, if the record is not kept in the Philippines, with
a certificate that such officer has the custody. If the office in which the
record is kept is in a foreign country, the certificate may be made by a
secretary of the embassy or legation, consul general, consul, vice consul,
or consular agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. (emphasis supplied)
SEC. 25. What attestation of copy must state. — Whenever a copy of a
document or record is attested for the purpose of the evidence, the
attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be. The attestation
must be under the official seal of the attesting officer, if there be any, or if
he be the clerk of a court having a seal, under the seal of such court.
To prove the Kuwaiti law, petitioners submitted the following: MOA
between respondent and the Ministry, as represented by ATCI, which
provides that the employee is subject to a probationary period of one (1)
year and that the host country’s Civil Service Laws and Regulations
apply; a translated copy11 (Arabic to English) of the termination letter to
respondent stating that she did not pass the probation terms, without
specifying the grounds therefor, and a translated copy of the certificate of
termination,12 both of which documents were certified by Mr. Mustapha
Alawi, Head of the Department of Foreign Affairs-Office of Consular
Affairs Inslamic Certification and Translation Unit; and respondent’s
letter13 of reconsideration to the Ministry, wherein she noted that in her
first eight (8) months of employment, she was given a rating of
"Excellent" albeit it changed due to changes in her shift of work schedule.
These documents, whether taken singly or as a whole, do not sufficiently
prove that respondent was validly terminated as a probationary employee
under Kuwaiti civil service laws. Instead of submitting a copy of the
pertinent Kuwaiti labor laws duly authenticated and translated by
Embassy officials thereat, as required under the Rules, what
petitioners submitted were mere certifications attesting only to the
correctness of the translations of the MOA and the termination letter
which does not prove at all that Kuwaiti civil service laws differ from
Philippine laws and that under such Kuwaiti laws, respondent was
validly terminated. Thus the subject certifications read:
xxxx
This is to certify that the herein attached translation/s from Arabic to
English/Tagalog and or vice versa was/were presented to this Office for
review and certification and the same was/were found to be in order. This
Office, however, assumes no responsibility as to the contents of the
document/s.
This certification is being issued upon request of the interested party for
whatever legal purpose it may serve. (emphasis supplied) 1avvphi1
Respecting Ikdal’s joint and solidary liability as a corporate officer, the
same is in order too following the express provision of R.A. 8042 on
money claims, viz:
SEC. 10. Money Claims.—Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the filing of the complaint,
the claims arising out of an employer-employee relationship or by virtue
of any law or contract involving Filipino workers for overseas deployment
including claims for actual moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and
several. This provision shall be incorporated in the contract for overseas
employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement agency, as
provided by law, shall be answerable for all money claims or damages
that may be awarded to the workers. If the recruitment/placement agency
is a juridical being, the corporate officers and directors and partners as
the case may be, shall themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and damages.
(emphasis and underscoring supplied)

WHEREFORE, the petition is DENIED.

SO ORDERED.

EN BANC
G.R. No. 170139, August 05, 2014
SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. JOY C.
CABILES, Respondent.
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 review1 on certiorari assailing the Court of
Appeals’ decision2 dated June 27, 2005. This decision partially affirmed the
National Labor Relations Commission’s resolution dated March 31,
2004,3 declaring 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 cralawre d
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 cralawre d
Joy’s application was accepted.7 Joy was later asked to sign a one-year
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 cralawre d
Joy was deployed to work for Taiwan Wacoal, 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 Agency claims that on July 14, 1997, a certain Mr.
Huwang from Wacoal informed Joy, 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
cralawre d
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 cralawred
On October 15, 1997, Joy filed a complaint17 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
cralawred
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 ?70,000.00. 22 As evidence, it
showed Official Receipt No. 14860 dated June 10, 1997, bearing the amount of
?20,360.00.23 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 cralawre d
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
cralawred
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
mere allegations.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 Pacific34 and considered the matter immaterial in view of the
dismissal of respondent’s complaint.35 cralawre d
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
cralawred
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 proof to show that respondent was
inefficient in her work and that she failed to comply with company
requirements.41 Furthermore, procedural due process was not observed in
terminating respondent.42 cralawred
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.45cralawre d
The National Labor Relations Commission awarded respondent only three (3)
months worth of salary in the amount of NT$46,080, the reimbursement of the
NT$3,000 withheld from her, and attorney’s fees of NT$300. 46 cralawre d
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 in the last sentence. No costs.
SO ORDERED. 53
Dissatisfied, Sameer Overseas Placement Agency filed this petition. 54
cralawre d
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 of her 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 cralawred
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
cralawred
Sameer Overseas Placement Agency’s petition 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.
chanRoblesvirt ualLawlibrary
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 an employee 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.
This prerogative, however, should not be abused. It is “tempered with the
employee’s right to security of tenure.”63 Workers are entitled to substantive
and procedural due process before termination. They may not be removed
from employment without a valid or just cause as determined by law and
without going through the proper procedure.
Security of tenure for labor is guaranteed by our Constitution. 64 cralawred
Employees are not stripped of their security of tenure when they move to work
in a different jurisdiction. With respect to the rights of overseas Filipino
workers, we follow the principle of lex loci contractus.
Thus, in Triple Eight Integrated Services, Inc. v. NLRC, 65 this court noted: chanRoblesvirtualLawlibrary
Petitioner likewise attempts to sidestep the medical certificate requirement by
contending that since Osdana was working in Saudi Arabia, her employment
was subject to the laws of the host country. Apparently, petitioner hopes to
make 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.
Again, petitioner’s argument is without merit.
First, 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. Therefore, the Labor Code, its implementing
rules and regulations, and other laws affecting labor apply in this case.
Furthermore, settled is the rule that the courts of the forum will not enforce
any foreign claim obnoxious to the forum’s public policy. Here in the
Philippines, employment agreements are more than contractual in nature. The
Constitution itself, in Article XIII, Section 3, guarantees the special protection
of workers, to wit:
chanRoblesvirtualLawlibrary
The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
....
chanrobleslaw
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 pre-termination of employment contracts.66 (Emphasis supplied,
citation omitted)
Even with respect to fundamental procedural rights, this court emphasized
in PCL Shipping Philippines, Inc. v. NLRC,67 to wit: chanRoblesvirtualLawlibrary
Petitioners admit that they did not inform 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, petitioners contend that the twin
requirements of notice 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.
The Court does not agree. 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.
Moreover, the principle of lex loci contractus (the law of the place
where the contract is made) governs in this jurisdiction. In the present
case, 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). Hence, the Labor Code together with its implementing
rules and regulations and other laws affecting labor apply in this
case.68 (Emphasis supplied, citations omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a
just or authorized cause and after compliance with procedural due process
requirements.
Article 282 of the Labor Code enumerates the just causes of termination by the
employer. Thus:
chanRoblesvirtualLawlibrary
Art. 282. Termination by employer. An employer may terminate an
employment for any of the following causes:
cralawlawlibrary
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work; chanroblesvirtuallawlibrary
(b) Gross and habitual neglect by the employee of his duties;
chanroblesvirtuallawlibrary
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
chanroblesvirtuallawlibrary
(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; and
ChanRoblesVirtualawlibrary
(e) Other causes analogous to the foregoing.
Petitioner’s allegation that respondent was inefficient in her work and negligent
in her duties69 may, therefore, constitute a just cause for termination under
Article 282(b), but only if petitioner was able to prove it.
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.”70 Failure to show that there was
valid or just cause for termination would necessarily mean that the dismissal
was illegal.71
cralawred
To show that dismissal resulting from inefficiency in work is valid, it must be
shown that: 1) the employer has set standards of conduct and workmanship
against which the employee will be judged; 2) the standards of conduct and
workmanship must have been communicated to the employee; and 3) the
communication was made at a reasonable time prior to the employee’s
performance assessment.
This is similar to the law and jurisprudence on probationary employees, which
allow termination of the 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.”72 cralawred
However, we do not see why the application of that ruling should be limited to
probationary employment. That rule is basic to the idea of security of tenure
and due process, which are guaranteed to all employees, whether their
employment is probationary or regular.
The pre-determined standards that the employer sets are the bases for
determining the probationary employee’s fitness, propriety, efficiency, and
qualifications as a regular employee. 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 adjust his or her character or workmanship
accordingly. 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.
Assessing an employee’s work performance does not stop after regularization.
The employer, on a regular basis, determines if an employee is still qualified
and efficient, based on work standards. Based on that determination, and after
complying with the due process requirements of notice and hearing, the
employer may exercise its management prerogative of terminating the
employee found unqualified.
The regular employee must constantly attempt to prove to his or her employer
that he or she meets all the standards for employment. This time, however,
the standards to be met are set for the purpose of retaining employment or
promotion. The employee cannot be expected to meet any standard of
character or workmanship if such standards were not communicated to him or
her. Courts should remain vigilant on allegations of the employer’s failure to
communicate work standards that would govern one’s employment “if [these
are] to discharge in good faith [their] duty to adjudicate.”73
cralawre d
In this case, petitioner merely alleged that respondent failed to comply with
her foreign employer’s work requirements and was inefficient in her work. 74No
evidence was shown to support such allegations. Petitioner did not even bother
to specify what requirements were not met, what efficiency standards were
violated, or what particular acts of respondent constituted inefficiency.
There was also no showing that respondent was sufficiently informed of the
standards against which her work efficiency and performance were
judged. 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 bare allegations of petitioner are not sufficient to support a claim that
there is just cause for termination. There is no proof that respondent was
legally terminated.
Petitioner failed to comply with
the due process requirements
Respondent’s dismissal less than one year from hiring and her repatriation on
the same day show not only failure on the part of petitioner to comply with the
requirement of the existence of just cause for termination. They patently show
that the employers did not comply with the due process requirement.
A valid dismissal requires both a valid cause and adherence to the valid
procedure of dismissal.75 The employer is required to give the charged
employee at least two written notices before termination. 76 One of the written
notices must inform the employee of the particular acts that may cause his or
her dismissal.77 The other notice must “[inform] the employee of the
employer’s decision.”78 Aside from the notice requirement, the employee must
also be given “an opportunity to be heard.” 79cralawre d
Petitioner failed to comply with the twin notices and hearing requirements.
Respondent started working on June 26, 1997. She was told that she was
terminated on July 14, 1997 effective on the same day and barely a month
from her first workday. She was also repatriated on the same day that she was
informed of her termination. The abruptness of the termination negated any
finding that she was properly notified and given the opportunity to be heard.
Her constitutional right to due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her
salary for the unexpired portion of the employment contract that was violated
together with attorney’s fees and reimbursement of amounts withheld from her
salary.
Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers
and Overseas Filipinos Act of 1995, states that overseas workers who were
terminated without just, valid, 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, whichever is less.”
Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provisions [sic] shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.
Any compromise/amicable settlement or voluntary agreement on money claims
inclusive of damages under this section shall be paid within four (4) months
from the approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers 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, whichever is
less.
....
(Emphasis supplied) chanrobleslaw
Section 15 of Republic Act No. 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 exception is when “termination of employment is due solely to the fault of
the worker,”80 which as we have established, is not the case. It reads: chanRoblesvirt ualLawlibrary
SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. –
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. All costs attendant to repatriation shall be borne by or
charged to the agency concerned and/or its principal. Likewise, 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.
However, in cases where the termination of employment is due solely to the
fault of the worker, the principal/employer or agency shall not in any manner
be responsible for the repatriation of the former and/or his belongings.
....
The Labor Code81 also entitles the employee to 10% of the amount of withheld
wages as attorney’s fees when the withholding is unlawful.
The Court of Appeals affirmed the National Labor Relations Commission’s
decision to award respondent NT$46,080.00 or the three-month equivalent of
her salary, attorney’s fees of NT$300.00, and the reimbursement of the
withheld NT$3,000.00 salary, which answered for her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The
award of the three-month equivalent of respondent’s salary should,
however, be increased to the amount equivalent to the unexpired term
of the employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co.,
Inc.,82 this court ruled that the clause “or for three (3) months for every year
of the unexpired term, whichever is less” 83 is unconstitutional for violating the
equal protection clause and substantive due process.84 cralawred
A statute or provision which was declared unconstitutional 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.”85 cralawred
We are aware that the clause “or for three (3) months for every year of the
unexpired term, whichever is less” was reinstated in Republic Act No. 8042
upon promulgation of Republic Act No. 10022 in 2010. Section 7 of Republic
Act No. 10022 provides: chanRoblesvirt ualLawlibrary
Section 7. Section 10 of Republic Act No. 8042, as amended, is hereby
amended to read as follows: chanRoblesvirtualLawlibrary
SEC. 10. Money Claims. – Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damage. Consistent with this
mandate, the NLRC shall endeavor to update and keep abreast with the
developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to de
[sic] filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.
Any compromise/amicable settlement or voluntary agreement on money claims
inclusive of damages under this section shall be paid within thirty (30) days
from approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any unauthorized deductions
from the migrant worker’s salary, 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, 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.
In case of a final and executory judgement against a foreign
employer/principal, it shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers until and unless it fully
satisfies the judgement award.
Noncompliance with the mandatory periods for resolutions of case provided
under this section shall subject the responsible officials to any or all of the
following penalties:cralawlawlibrary
(a) The salary of any such official who fails to render his decision or resolution
within the prescribed period shall be, or caused to be, withheld until the said
official complies therewith; chanroblesvirtuallawlibrary
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any appointive
public office for five (5) years.
Provided, however, That the penalties herein provided shall be without
prejudice to any liability which any such official may have incured [sic] under
other existing laws or rules and regulations as a consequence of violating the
provisions of this paragraph. (Emphasis supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This means that
the reinstatement of the clause in Republic Act No. 8042 was not yet in effect
at the time of respondent’s termination from work in 1997. 86 Republic Act No.
8042 before it was amended by Republic Act No. 10022 governs this case.
When a law is passed, this court awaits an actual case that clearly raises
adversarial positions in their proper context before considering a prayer to
declare it as unconstitutional.
However, we are confronted with a unique situation. The law passed
incorporates the exact clause already declared as unconstitutional, without any
perceived substantial change in the circumstances.
This may cause confusion on the part of the National Labor Relations
Commission and the Court of Appeals. At minimum, the existence of Republic
Act No. 10022 may delay the execution of the judgment in this case, further
frustrating remedies to assuage the wrong done to petitioner. Hence, there is a
necessity to decide this constitutional issue.
Moreover, this court is possessed with the constitutional duty to “[p]romulgate
rules concerning the protection and enforcement of constitutional
rights.”87 When cases become moot and academic, 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. 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.
In the hierarchy of laws, the Constitution is supreme. No branch or office of the
government may exercise its powers in any manner inconsistent with the
Constitution, regardless of the existence of any law that supports such
exercise. The Constitution cannot be trumped by any other law. All laws must
be read in light of the Constitution. Any law that is inconsistent with it is a
nullity.
Thus, when a law or a provision of law is null because it is inconsistent with the
Constitution, the nullity cannot be cured by reincorporation or reenactment of
the same or a similar law or provision. A law or provision of law that was
already declared unconstitutional remains as such unless circumstances have
so changed as to warrant a reverse conclusion.
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.
Likewise, there are special reasons of judicial efficiency and economy that
attend to these cases.
The new law puts our overseas workers in the same vulnerable position as they
were prior to Serrano. 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. Obviously, we cannot countenance added
expenses for further litigation that will reduce their hard-earned 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. There is no
constitutional doctrine that causes injustice in the face of empty procedural
niceties. Constitutional interpretation is complex, but it is never unreasonable.
Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the
Office of the Solicitor General to comment on the constitutionality of the
reinstated clause in Republic Act No. 10022.
In its comment,89 petitioner argued that the clause was constitutional. 90 The
legislators intended a balance between the employers’ and the employees’
rights by not unduly burdening the local recruitment agency. 91 Petitioner is also
of the view that the clause was already declared as constitutional in Serrano.92
cralawred
The Office of the Solicitor General also argued that the clause was valid and
constitutional.93 However, since the parties never raised the issue of the
constitutionality of the clause as reinstated in Republic Act No. 10022, its
contention is that it is beyond judicial review.94
cralawre d
On the other hand, respondent argued that the clause was unconstitutional
because it infringed on workers’ right to contract.95 cralawred
We observe that the reinstated clause, this time as provided in Republic Act.
No. 10022, violates the constitutional rights to equal protection and due
process.96 Petitioner as well as the Solicitor General have failed to show any
compelling change in the circumstances that would warrant us to revisit the
precedent.
We reiterate our finding in Serrano v. Gallant Maritime that limiting
wages that should be recovered by an illegally dismissed overseas
worker to three months is both a violation of due process and the
equal protection clauses of the Constitution.
Equal protection of the law is a guarantee that persons under like
circumstances and falling within the same class are treated alike, in terms of
“privileges conferred and liabilities enforced.”97 It is a guarantee against
“undue favor and individual or class privilege, as well as hostile discrimination
or the oppression of inequality.”98 cralawre d
In creating laws, the legislature has the power “to make distinctions and
classifications.”99 In exercising such power, it has a wide discretion.100 cralawred
The equal protection clause does not infringe on this legislative power. 101 A law
is void on this basis, only if classifications are made arbitrarily.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.103 A law that does not violate the equal protection clause prescribes a
reasonable classification.104 cralawred
A reasonable classification “(1) must rest on substantial distinctions; (2) must
be germane to the purposes of the law; (3) must not be limited to existing
conditions only; and (4) must apply equally to all members of the same
class.”105
cralawred
The reinstated clause does not satisfy the requirement of reasonable
classification.
In Serrano, we identified the classifications made by the reinstated clause. It
distinguished between fixed-period overseas workers and fixed-period local
workers.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.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.108 cralawred
The Congress’ classification may be subjected to judicial review. In Serrano,
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.”109 cralawre d
Under the Constitution, labor is afforded special protection. 110 Thus, this court
in Serrano, “[i]mbued with the same sense of ‘obligation to afford protection to
labor,’ . . . employ[ed] the standard of strict judicial scrutiny, for it perceive[d]
in the subject clause a suspect classification prejudicial to OFWs.”111 cralawre d
We also noted in Serrano that before the passage of Republic Act No. 8042, the
money claims of illegally terminated overseas and local workers with fixed-
term employment were computed in the same manner.112 Their money claims
were computed based on the “unexpired portions of their contracts.” 113 The
adoption of the reinstated clause in Republic Act No. 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. 114 There was
no such limitation on the money claims of illegally terminated local workers
with fixed-term employment.115 cralawred
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. 116 Meanwhile, illegally
dismissed overseas 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.117
cralawre d
Observing the terminologies used in the clause, 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, while those who are illegally dismissed with
one year or more remaining in their contracts shall be covered by the
reinstated clause, and their monetary benefits limited to their salaries for three
months only.”118 cralawre d
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.
Overseas workers regardless of their classifications are entitled to security of
tenure, at least for the period agreed upon in their contracts. This means that
they cannot be dismissed before the end of their contract terms without due
process. If they were illegally dismissed, the workers’ right to security of
tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated
are neither greater than nor less than the rights violated when a fixed-period
overseas worker is illegally terminated. It is state policy to protect the rights of
workers without qualification as to the place of employment.119 In both cases,
the workers are deprived of their expected salary, which they could have
earned had they not been illegally dismissed. For both workers, this
deprivation translates to economic insecurity and disparity. 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, 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.
For this reason, we cannot subscribe to the argument that “[overseas workers]
are contractual employees who can never acquire regular employment status,
unlike local workers”121 because it already justifies differentiated treatment in
terms of the computation of money claims.122 cralawre d
Likewise, the jurisdictional and enforcement issues on overseas workers’
money claims do not justify a differentiated treatment in the computation of
their money claims.123 If anything, these issues justify an equal, if not greater
protection and assistance to overseas workers who generally are more prone to
exploitation given their physical distance from our government.
We also find that the classifications are not relevant to the purpose of the law,
which is to “establish a higher standard of protection and promotion of the
welfare of migrant workers, their families and overseas Filipinos in distress,
and for other purposes.”124 Further, we find specious the argument that
reducing the liability of placement agencies “redounds to the benefit of the
[overseas] workers.”125cralawred
Putting a cap on the money claims of certain overseas workers does not
increase the standard of protection afforded to them. On the other hand,
foreign employers are more incentivized by the reinstated clause to enter into
contracts of at least a year because it gives them more flexibility to violate our
overseas workers’ rights. Their liability for arbitrarily terminating overseas
workers is decreased at the expense of the workers whose rights they violated.
Meanwhile, 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. They are left with claims that are
less than what others in the same situation would receive. The reinstated
clause, therefore, creates a situation where the law meant to protect them
makes violation of rights easier and simply benign to the violator.
As Justice Brion said in his concurring opinion in Serrano:
chanRoblesvirtualLawlibrary
Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in
fact provides a hidden twist affecting the principal/employer’s liability. While
intended as an incentive accruing to recruitment/manning agencies, the law,
as worded, simply limits the OFWs’ recovery in wrongful dismissal situations.
Thus, it redounds to the benefit of whoever may be liable, including the
principal/employer – the direct employer primarily liable for the wrongful
dismissal. In this sense, Section 10 – read as a grant of incentives to
recruitment/manning agencies – oversteps what it aims to do by effectively
limiting what is otherwise the full liability of the foreign
principals/employers. Section 10, in short, really operates to benefit the wrong
party and allows that party, without justifiable reason, to mitigate its liability
for wrongful dismissals. Because of this hidden twist, the limitation of liability
under Section 10 cannot be an “appropriate” incentive, to borrow the term that
R.A. No. 8042 itself uses to describe the incentive it envisions under its
purpose clause.
What worsens the situation is the chosen mode of granting the incentive:
instead of a grant that, to encourage greater efforts at recruitment, is directly
related to extra efforts undertaken, the law simply limits their liability for the
wrongful dismissals of already deployed OFWs. This is effectively a legally-
imposed partial condonation of their liability to OFWs, justified solely by the
law’s intent to encourage greater deployment efforts. Thus, the incentive, from
a more practical and realistic view, is really part of a scheme to sell Filipino
overseas labor at a bargain for purposes solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the OFWs
— the benefits accruing to the recruitment/manning agencies and their
principals are taken from the pockets of the OFWs to whom the full salaries for
the unexpired portion of the contract rightfully belong. Thus, the
principals/employers and the recruitment/manning agencies even profit from
their violation of the security of tenure that an employment contract embodies.
Conversely, lesser protection is afforded the OFW, not only because of the
lessened recovery afforded him or her by operation of law, but also because
this same lessened recovery renders a wrongful dismissal easier and less
onerous to undertake; the lesser cost of dismissing a Filipino will always be a
consideration a foreign employer will take into account in termination of
employment decisions. . . .126
Further, “[t]here can never be a justification for any form of government action
that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private
businesses such as placement agencies, while the disadvantaged sector is
composed of OFWs whose protection no less than the Constitution commands.
The idea that private business interest can be elevated to the level of a
compelling state interest is odious.”127
cralawre d
Along the same line, we held that the reinstated clause violates due process
rights. It is arbitrary as it deprives overseas workers of their monetary claims
without any discernable valid purpose.128 cralawred
Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her
contract, in accordance with Section 10 of Republic Act No. 8042. The award of
the three-month equivalence of respondent’s salary must be modified
accordingly. Since she started working on June 26, 1997 and was terminated
on July 14, 1997, respondent is entitled to her salary from July 15, 1997 to
June 25, 1998. “To rule otherwise would be iniquitous to petitioner and other
OFWs, and would, in effect, send a wrong signal that principals/employers and
recruitment/manning agencies may violate an OFW’s security of tenure which
an employment contract embodies and actually profit from such violation based
on an unconstitutional provision of law.”129
cralawre d
III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June
21, 2013, which revised the interest rate for loan or forbearance from 12% to
6% in the absence of stipulation, applies in this case. The pertinent portions of
Circular No. 799, Series of 2013, read: chanRoblesvirt ualLawlibrary
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved
the following revisions governing the rate of interest in the absence of
stipulation in loan contracts, thereby amending Section 2 of Circular No. 905,
Series of 1982: cralawlawlibrary
Section 1. The rate of interest for the loan or forbearance of any money,
goods or credits and the rate allowed in judgments, in the absence of an
express contract as to such rate of interest, shall be six percent (6%) per
annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the
Manual of Regulations for Non-Bank Financial Institutions are hereby amended
accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the
guidelines in computing legal interest in Nacar v. Gallery Frames:130 cralawre d
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
chanRoblesvirtualLawlibrary
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that
which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be
6% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until
the demand can be established with reasonable
certainty. Accordingly, where the demand is
established with reasonable certainty, the interest
shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code), but
when such certainty cannot be so reasonably
established at the time the demand is made, 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 actual base for the
computation of legal interest shall, in any case, be on
the amount finally adjudged.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from
such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a
forbearance of credit.
And, in addition to the above, judgments that have become final and executory
prior to July 1, 2013, shall not be disturbed and shall continue to be
implemented applying the rate of interest fixed therein. 131
Circular No. 799 is applicable only in loans and forbearance of money, goods,
or credits, and in judgments when there is no stipulation on the applicable
interest rate. Further, it is only applicable if the judgment did not become final
and executory before July 1, 2013.132
cralawred
We add that Circular No. 799 is not applicable when there is a law that states
otherwise. While the Bangko Sentral ng Pilipinas has the power to set or limit
interest rates,133 these interest rates do not apply when the law provides that a
different interest rate shall be applied. “[A] Central Bank Circular cannot repeal
a law. Only a law can repeal another law.”134 cralawre d
For example, Section 10 of Republic Act 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. Since Bangko Sentral ng
Pilipinas circulars cannot repeal Republic Act No. 8042, the issuance of Circular
No. 799 does not have the effect of changing the interest on awards for
reimbursement of placement fees from 12% to 6%. This is despite Section 1 of
Circular No. 799, which provides that the 6% interest rate applies even to
judgments.
Moreover, laws are deemed incorporated in contracts. “The contracting parties
need not repeat them. They do not even have to be referred to. Every
contract, thus, contains not only what has been explicitly stipulated, but the
statutory provisions that have any bearing on the matter.” 135 There is,
therefore, an implied stipulation in contracts between the placement agency
and the overseas worker that in case the overseas worker is adjudged as
entitled to reimbursement of his or her placement fees, the amount shall be
subject to a 12% interest per annum. This implied stipulation has the effect of
removing awards for reimbursement of placement fees from Circular No. 799’s
coverage.
The same cannot be said for awards of salary for the unexpired portion of the
employment contract under Republic Act No. 8042. These awards are covered
by Circular No. 799 because the law does not provide for a specific interest
rate that should apply.
In sum, if judgment did not become final and executory before July 1, 2013
and there was no stipulation in the contract providing for a different interest
rate, other money claims under Section 10 of Republic Act No. 8042 shall be
subject to the 6% interest per annum in accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum on
her money claims from the finality of this judgment.
IV
Finally, we clarify the liabilities of Wacoal as principal and petitioner as the
employment agency that facilitated respondent’s overseas employment.
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. 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.
This provision is in line with the state’s policy of affording protection to labor
and alleviating workers’ plight.136 cralawred
In overseas employment, the filing of money claims against the foreign
employer is attended by practical and legal complications. The distance of the
foreign employer alone makes it difficult for an overseas worker to reach it and
make it liable for violations of the Labor Code. There are also possible conflict
of laws, jurisdictional issues, and procedural rules that may be raised to
frustrate an overseas worker’s attempt to advance his or her claims.
It may be argued, for instance, 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.137 cralawred
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.
The fundamental effect of joint and several liability is that “each of the debtors
is liable for the entire obligation.”138 A final determination may, therefore, be
achieved even if only one of the joint and several debtors are impleaded in an
action. Hence, in the case of overseas employment, either the local agency or
the foreign employer may be sued for all claims arising from the foreign
employer’s labor law violations. This way, the overseas workers are assured
that someone — the foreign employer’s local agent — may be made to answer
for violations that the foreign employer may have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas
workers have recourse in law despite the circumstances of their employment.
By providing that the liability of the foreign employer may be “enforced to the
full extent”139 against the local agent, the overseas worker is assured of
immediate and sufficient payment of what is due them. 140 cralawre d
Corollary to the assurance of immediate recourse in law, 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. However, it must be emphasized that the
local agency that is held to answer for the overseas worker’s money claims is
not left without remedy. 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.
A further implication of making local agencies jointly and severally liable with
the foreign employer is that an additional layer of protection is afforded to
overseas workers. Local agencies, which are businesses by nature, are
inoculated with interest in being always on the lookout against foreign
employers that tend to violate labor law. Lest they risk their reputation or
finances, local agencies must already have mechanisms for guarding against
unscrupulous foreign employers even at the level prior to overseas
employment applications.
With the present state of the pleadings, it is not possible to determine whether
there was indeed a transfer of obligations from petitioner to Pacific. This should
not be an obstacle for the respondent overseas worker to proceed with the
enforcement of this judgment. Petitioner is possessed with the resources to
determine the proper legal remedies to enforce its rights against Pacific, if any.
V
Many times, this court has spoken on what Filipinos may encounter as they
travel into the farthest and most difficult reaches of our planet to provide for
their families. In Prieto v. NLRC:141 cralawred
The Court is not unaware of the many abuses suffered by our overseas workers
in the foreign land where they have ventured, usually with heavy hearts, in
pursuit of a more fulfilling future. Breach of contract, maltreatment, rape,
insufficient nourishment, sub-human lodgings, insults and other forms of
debasement, are only a few of the inhumane acts to which they are subjected
by their foreign employers, who probably feel they can do as they please in
their own country. While these workers may indeed have relatively little
defense against exploitation while they are abroad, that disadvantage must not
continue to burden them when they return to their own territory to voice their
muted complaint. There is no reason why, in their very own land, the
protection of our own laws cannot be extended to them in full measure for the
redress of their grievances.142
chanrobleslaw
But it seems that we have not said enough.
We face a diaspora of Filipinos. Their travails and their heroism can be told a
million times over; each of their stories as real as any other. Overseas Filipino
workers brave alien cultures and the heartbreak of families left behind daily.
They would count the minutes, hours, days, months, and years yearning to see
their sons and daughters. We all know of the joy and sadness when they come
home to see them all grown up and, being so, they remember what their work
has cost them. Twitter accounts, Facetime, and many other gadgets and online
applications will never substitute for their lost physical presence.

Unknown to them, they keep our economy afloat through the ebb and flow of
political and economic crises. They are our true diplomats, they who show the
world the resilience, patience, and creativity of our people. Indeed, we are a
people who contribute much to the provision of material creations of this world.

This government loses its soul if we fail to ensure decent treatment for all
Filipinos. We default by limiting the contractual wages that should be paid to
our workers when their contracts are breached by the foreign employers. While
we sit, this court will ensure that our laws will reward our overseas workers
with what they deserve: their dignity.

Inevitably, their dignity is ours as well.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals

is AFFIRMED with modification. Petitioner Sameer Overseas Placement Agency
is ORDERED to pay respondent Joy C. 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. Petitioner is
also ORDERED to reimburse respondent the withheld NT$3,000.00 salary and
pay respondent attorney’s fees of NT$300.00 at an interest of 6% per annum
from the finality of this judgment.

The clause, “or for three (3) months for every year of the unexpired term,
whichever is less” in Section 7 of Republic Act No. 10022 amending Section 10
of Republic Act No. 8042 is declared unconstitutional and, therefore, null and
void.

SO ORDERED.

EN BANC
[G.R. NO. 167614 : March 24, 2009]
ANTONIO M. SERRANO, Petitioner, v. Gallant MARITIME SERVICES, INC.
and MARLOW NAVIGATION CO., INC., Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and
communities out of poverty. Their earnings have built houses, provided health
care, equipped schools and planted the seeds of businesses. They have woven
together the world by transmitting ideas and knowledge from country to
country. They have provided the dynamic human link between cultures,
societies and economies. Yet, only recently have we begun to understand not
only how much international migration impacts development, but how smart
public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th
paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment
without just, valid or authorized cause as defined by law or contract, the
workers shall be entitled to the full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.
x x x x (Emphasis and underscoring supplied) cralawlibrary
does not magnify the contributions of overseas Filipino workers (OFWs) to
national development, but exacerbates the hardships borne by them by unduly
limiting their entitlement in case of illegal dismissal to their lump-sum salary
either for the unexpired portion of their employment contract "or for three
months for every year of the unexpired term, whichever is less" (subject
clause). Petitioner claims that the last clause violates the OFWs' constitutional
rights in that it impairs the terms of their contract, deprives them of equal
protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner
assails the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the
Court of Appeals (CA), which applied the subject clause, entreating this Court
to declare the subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation
Co., Ltd. (respondents) under a Philippine Overseas Employment
Administration (POEA)-approved Contract of Employment with the following
terms and conditions:
Duration of contract 12 months
Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month5
On March 19, 1998, the date of his departure, petitioner was constrained to
accept a downgraded employment contract for the position of Second Officer
with a monthly salary of US$1,000.00, upon the assurance and representation
of respondents that he would be made Chief Officer by the end of April 1998. 6
Respondents did not deliver on their promise to make petitioner Chief
Officer.7 Hence, petitioner refused to stay on as Second Officer and was
repatriated to the Philippines on May 26, 1998.8
Petitioner's employment contract was for a period of 12 months or from March
19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26,
1998, he had served only two (2) months and seven (7) days of his contract,
leaving an unexpired portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for
constructive dismissal and for payment of his money claims in the total amount
of US$26,442.73, broken down as follows:
May 27/31, 1998 (5 days) incl. Leave US$ 413.90 - - - - - - - - - -
pay - - - - - - - - - -
- - - - - - - - - -
June 01/30, 1998 2,590.00
- - - - - - - - - -
July 01/31, 1998 2,590.00 - - - - - - - - - -
- - - - - - - - - -
August 01/31, 1998 2,590.00
- - - - - - - - - -
Sept. 01/30, 1998 2,590.00 - - - -
Oct. 01/31, 1998 2,590.00 TOTAL CLAIM US$
26,442.7311
Nov. 01/30, 1998 2,590.00
Dec. 01/31, 1998 2,590.00 as well as moral and exemplary damages and attorney's fees.

Jan. 01/31, 1999 2,590.00 The LA rendered a Decision dated July 15, 1999, declaring the dismissal of
petitioner illegal and awarding him monetary benefits, to wit:
Feb. 01/28, 1999 2,590.00
WHEREFORE, premises considered, judgment is hereby rendered declaring that
Mar. 1/19, 1999 (19 days) incl. leave 1,640.00 the dismissal of the complainant (petitioner) by the respondents in the above-
pay entitled case was illegal and the respondents are hereby ordered to pay the
complainant [petitioner], jointly and severally, in Philippine Currency, based on
- - - - - - - - - - the rate of exchange prevailing at the time of payment, the amount of EIGHT
THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00),
- - - - - - - - - - representing the complainant's salary for three (3) months of the
- - - - - - - - - - unexpired portion of the aforesaid contract of employment. ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

- - - - - - - - - -
The respondents are likewise ordered to pay the complainant [petitioner],
- - - - - - - - - - jointly and severally, in Philippine Currency, based on the rate of exchange
- - - - - - - - - - prevailing at the time of payment, the amount of FORTY FIVE U.S. DOLLARS
(US$ 45.00),12 representing the complainant's claim for a salary differential. In
- - - - - - - - - - addition, the respondents are hereby ordered to pay the complainant, jointly
- - - - - - - - - - and severally, in Philippine Currency, at the exchange rate prevailing at the
time of payment, the complainant's (petitioner's) claim for attorney's fees
25,382.23 equivalent to ten percent (10%) of the total amount awarded to the aforesaid
employee under this Decision.
Amount adjusted to chief mate's
salary The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.
(March 19/31, 1998 to April 1/30, 1,060.5010
All other claims are hereby DISMISSED.
1998) +
---------- SO ORDERED.13 (Emphasis supplied) cralawlibrary

----------
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
computation on the salary period of three months only - - rather than the
entire unexpired portion of nine months and 23 days of petitioner's
employment contract - applying the subject clause. However, the LA applied
the salary rate of US$2,590.00, consisting of petitioner's "[b]asic salary,
US$1,400.00/month + US$700.00/month, fixed overtime pay, +
US$490.00/month, vacation leave pay = US$2,590.00/compensation per
month."14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to
question the finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in Triple Integrated Services, Inc. v. National
Labor Relations Commission17 that in case of illegal dismissal, OFWs are
entitled to their salaries for the unexpired portion of their contracts. 18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are
hereby ordered to pay complainant, jointly and severally, in Philippine
currency, at the prevailing rate of exchange at the time of payment the
following:
1. Three (3) months salary
$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorney's fees 424.50
TOTAL US$4,669.50
The other findings are affirmed.
SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to
petitioner by reducing the applicable salary rate from US$2,590.00 to
US$1,400.00 because R.A. No. 8042 "does not provide for the award of
overtime pay, which should be proven to have been actually performed, and
for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned
the constitutionality of the subject clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the
constitutional challenge against the subject clause.24 After initially dismissing
the petition on a technicality, the CA eventually gave due course to it, as
directed by this Court in its Resolution dated August 7, 2003 which granted the
Petition for Certiorari, docketed as G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the
reduction of the applicable salary rate; however, the CA skirted the
constitutional issue raised by petitioner.25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner
brings his cause to this Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way
not in accord with applicable decision of the Supreme Court involving similar
issue of granting unto the migrant worker back wages equal to the unexpired
portion of his contract of employment instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were
merely applying their interpretation of Section 10 of Republic Act No. 8042, it
is submitted that the Court of Appeals gravely erred in law when it failed to
discharge its judicial duty to decide questions of substance not theretofore
determined by the Honorable Supreme Court, particularly, the constitutional
issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back
wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic
Act No. 8042, the Court of Appeals gravely erred in law in excluding from
petitioner's award the overtime pay and vacation pay provided in his contract
since under the contract they form part of his salary. 28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he
is already old and sickly, and he intends to make use of the monetary award
for his medical treatment and medication.29 Required to comment, counsel for
petitioner filed a motion, urging the court to allow partial execution of the
undisputed monetary award and, at the same time, praying that the
constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court
now takes up the full merit of the petition mindful of the extreme importance
of the constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner
was illegal is not disputed. Likewise not disputed is the salary differential of
US$45.00 awarded to petitioner in all three fora. What remains disputed is only
the computation of the lump-sum salary to be awarded to petitioner by reason
of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum
salary of petitioner at the monthly rate of US$1,400.00 covering the period of
three months out of the unexpired portion of nine months and 23 days of his
employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that,
in addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled
to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries
for the entire nine months and 23 days left of his employment contract,
computed at the monthly rate of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly
impairs the freedom of OFWs to negotiate for and stipulate in their overseas
employment contracts a determinate employment period and a fixed salary
package.32 It also impinges on the equal protection clause, for it treats OFWs
differently from local Filipino workers (local workers) by putting a cap on the
amount of lump-sum salary to which OFWs are entitled in case of illegal
dismissal, while setting no limit to the same monetary award for local workers
when their dismissal is declared illegal; that the disparate treatment is not
reasonable as there is no substantial distinction between the two groups; 33 and
that it defeats Section 18,34 Article II of the Constitution which guarantees the
protection of the rights and welfare of all Filipino workers, whether deployed
locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals
are not in line with existing jurisprudence on the issue of money claims of
illegally dismissed OFWs. Though there are conflicting rulings on this, petitioner
urges the Court to sort them out for the guidance of affected OFWs. 36
Petitioner further underscores that the insertion of the subject clause into R.A.
No. 8042 serves no other purpose but to benefit local placement agencies. He
marks the statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment
of money claims in the event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer reneges on its obligation.
Hence, placement agencies that are in good faith and which fulfill their
obligations are unnecessarily penalized for the acts of the foreign employer. To
protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money claims was reduced under Section
10 of R.A. No. 8042. 37 (Emphasis supplied) cralawlibrary
Petitioner argues that in mitigating the solidary liability of placement agencies,
the subject clause sacrifices the well-being of OFWs. Not only that, the
provision makes foreign employers better off than local employers because in
cases involving the illegal dismissal of employees, foreign employers are liable
for salaries covering a maximum of only three months of the unexpired
employment contract while local employers are liable for the full lump-sum
salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the
amount of backwages they have to give their employees they have illegally
dismissed, following well-entrenched and unequivocal jurisprudence on the
matter. On the other hand, foreign employers will only be limited to giving the
illegally dismissed migrant workers the maximum of three (3) months unpaid
salaries notwithstanding the unexpired term of the contract that can be more
than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause,
for it deprives him of the salaries and other emoluments he is entitled to under
his fixed-period employment contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the
constitutional issue should not be entertained, for this was belatedly interposed
by petitioner in his appeal before the CA, and not at the earliest opportunity,
which was when he filed an appeal before the NLRC. 40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on
July 15, 1995, its provisions could not have impaired petitioner's 1998
employment contract. Rather, R.A. No. 8042 having preceded petitioner's
contract, the provisions thereof are deemed part of the minimum terms of
petitioner's employment, especially on the matter of money claims, as this was
not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of
the nature of their employment, such that their rights to monetary benefits
must necessarily be treated differently. The OSG enumerates the essential
elements that distinguish OFWs from local workers: first, while local workers
perform their jobs within Philippine territory, OFWs perform their jobs for
foreign employers, over whom it is difficult for our courts to acquire
jurisdiction, or against whom it is almost impossible to enforce judgment; and
second, as held in Coyoca v. National Labor Relations Commission 43 and
Millares v. National Labor Relations Commission,44 OFWs are contractual
employees who can never acquire regular employment status, unlike local
workers who are or can become regular employees. Hence, the OSG posits that
there are rights and privileges exclusive to local workers, but not available to
OFWs; that these peculiarities make for a reasonable and valid basis for the
differentiated treatment under the subject clause of the money claims of OFWs
who are illegally dismissed. Thus, the provision does not violate the equal
protection clause nor Section 18, Article II of the Constitution. 45
Lastly, the OSG defends the rationale behind the subject clause as a police
power measure adopted to mitigate the solidary liability of placement agencies
for this "redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies
helps [assure] the government that migrant workers are properly deployed and
are employed under decent and humane conditions."46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the
acts of its co-equals, such as the Congress, it does so only when these
conditions obtain: (1) that there is an actual case or controversy involving a
conflict of rights susceptible of judicial determination;47 (2) that the
constitutional question is raised by a proper party 48 and at the earliest
opportunity;49 and (3) that the constitutional question is the very lis mota of
the case,50 otherwise the Court will dismiss the case or decide the same on
some other ground.51
Without a doubt, there exists in this case an actual controversy directly
involving petitioner who is personally aggrieved that the labor tribunals and the
CA computed his monetary award based on the salary period of three months
only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity
entails the interposition of the issue in the pleadings before a competent
court, such that, if the issue is not raised in the pleadings before that
competent court, it cannot be considered at the trial and, if not considered in
the trial, it cannot be considered on appeal. 52 Records disclose that the issue
on the constitutionality of the subject clause was first raised, not in petitioner's
appeal with the NLRC, but in his Motion for Partial Reconsideration with said
labor tribunal,53 and reiterated in his Petition for Certiorari before the
CA.54 Nonetheless, the issue is deemed seasonably raised because it is not the
NLRC but the CA which has the competence to resolve the constitutional issue.
The NLRC is a labor tribunal that merely performs a quasi-judicial function - its
function in the present case is limited to determining questions of fact to which
the legislative policy of R.A. No. 8042 is to be applied and to resolving such
questions in accordance with the standards laid down by the law itself; 55 thus,
its foremost function is to administer and enforce R.A. No. 8042, and not to
inquire into the validity of its provisions. The CA, on the other hand, is vested
with the power of judicial review or the power to declare unconstitutional a law
or a provision thereof, such as the subject clause.56 Petitioner's interposition of
the constitutional issue before the CA was undoubtedly seasonable. The CA
was therefore remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of
the case likewise obtains because the monetary claim of petitioner to his lump-
sum salary for the entire unexpired portion of his 12-month employment
contract, and not just for a period of three months, strikes at the very core of
the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the
subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations
in his contract on the term of his employment and the fixed salary package he
will receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted
have only a prospective operation,58 and cannot affect acts or contracts already
perfected;59 however, as to laws already in existence, their provisions are read
into contracts and deemed a part thereof.60 Thus, the non-impairment clause
under Section 10, Article II is limited in application to laws about to be enacted
that would in any way derogate from existing acts or contracts by enlarging,
abridging or in any manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995
preceded the execution of the employment contract between petitioner and
respondents in 1998. Hence, it cannot be argued that R.A. No. 8042,
particularly the subject clause, impaired the employment contract of the
parties. Rather, when the parties executed their 1998 employment contract,
they were deemed to have incorporated into it all the provisions of R.A. No.
8042.
But even if the Court were to disregard the timeline, the subject clause may
not be declared unconstitutional on the ground that it impinges on the
impairment clause, for the law was enacted in the exercise of the police power
of the State to regulate a business, profession or calling, particularly the
recruitment and deployment of OFWs, with the noble end in view of ensuring
respect for the dignity and well-being of OFWs wherever they may be
employed.61 Police power legislations adopted by the State to promote the
health, morals, peace, education, good order, safety, and general welfare of
the people are generally applicable not only to future contracts but even to
those already in existence, for all private contracts must yield to the superior
and legitimate measures taken by the State to promote public welfare. 62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of
law nor shall any person be denied the equal protection of the law.
Section 18, Article II and Section 3, Article XIII accord all members of the
63 64
labor sector, without distinction as to place of deployment, full protection of
their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional
provisions translate to economic security and parity: all monetary benefits
should be equally enjoyed by workers of similar category, while all monetary
obligations should be borne by them in equal degree; none should be denied
the protection of the laws which is enjoyed by, or spared the burden imposed
on, others in like circumstances.65
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation;
however, to be valid, the classification must comply with these requirements:
1) it is based on substantial distinctions; 2) it is germane to the purposes of
the law; 3) it is not limited to existing conditions only; and 4) it applies equally
to all members of the class.66
There are three levels of scrutiny at which the Court reviews the
constitutionality of a classification embodied in a law: a) the deferential or
rational basis scrutiny in which the challenged classification needs only be
shown to be rationally related to serving a legitimate state interest; 67 b) the
middle-tier or intermediate scrutiny in which the government must show that
the challenged classification serves an important state interest and that the
classification is at least substantially related to serving that interest; 68 and c)
strict judicial scrutiny69 in which a legislative classification which impermissibly
interferes with the exercise of a fundamental right 70 or operates to the peculiar
disadvantage of a suspect class71 is presumed unconstitutional, and the burden
is upon the government to prove that the classification is necessary to achieve
a compelling state interest and that it is the least restrictive means to
protect such interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications73 based on race74 or gender75 but not when the classification is
drawn along income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng
Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, 77 the
constitutionality of a provision in the charter of the Bangko Sentral ng
Pilipinas (BSP), a government financial institution (GFI), was challenged for
maintaining its rank-and-file employees under the Salary Standardization Law
(SSL), even when the rank-and-file employees of other GFIs had been
exempted from the SSL by their respective charters. Finding that the disputed
provision contained a suspect classification based on salary grade, the Court
deliberately employed the standard of strict judicial scrutiny in its review of the
constitutionality of said provision. More significantly, it was in this case that the
Court revealed the broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and
its policies should be accorded recognition and respect by the courts of justice
except when they run afoul of the Constitution. The deference stops where the
classification violates a fundamental right, or prejudices persons accorded
special protection by the Constitution. When these violations arise, this
Court must discharge its primary role as the vanguard of constitutional
guaranties, and require a stricter and more exacting adherence to
constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by
the Constitution requires a stricter judicial scrutiny finds no support in
American or English jurisprudence. Nevertheless, these foreign decisions and
authorities are not per se controlling in this jurisdiction. At best, they are
persuasive and have been used to support many of our decisions. We should
not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments. We live in a
different ambience and must decide our own problems in the light of our own
interests and needs, and of our qualities and even idiosyncrasies as a people,
and always with our own concept of law and justice. Our laws must be
construed in accordance with the intention of our own lawmakers and such
intent may be deduced from the language of each law and the context of other
local legislation related thereto. More importantly, they must be construed to
serve our own public interest which is the be-all and the end-all of all our laws.
And it need not be stressed that our public interest is distinct and different
from others.
 xxx
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the
Constitution. The Preamble proclaims "equality" as an ideal precisely in protest
against crushing inequities in Philippine society. The command to promote
social justice in Article II, Section 10, in "all phases of national development,"
further explicitated in Article XIII, are clear commands to the State to take
affirmative action in the direction of greater equality. x x x [T]here is thus in
the Philippine Constitution no lack of doctrinal support for a more vigorous
state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and
economic rights to marginalized groups of society, including labor. Under the
policy of social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those with less
privilege in life should have more in law. And the obligation to afford protection
to labor is incumbent not only on the legislative and executive branches but
also on the judiciary to translate this pledge into a living reality. Social justice
calls for the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular
conception may at least be approximated.
xxx
Under most circumstances, the Court will exercise judicial restraint in deciding
questions of constitutionality, recognizing the broad discretion given to
Congress in exercising its legislative power. Judicial scrutiny would be based on
the "rational basis" test, and the legislative discretion would be given
deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental
right, or the perpetuation of prejudice against persons favored by the
Constitution with special protection, judicial scrutiny ought to be more
strict. A weak and watered down view would call for the abdication of this
Court's solemn duty to strike down any law repugnant to the Constitution and
the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its
instrumentalities. Oppressive acts will be struck down regardless of the
character or nature of the actor.
xxx
In the case at bar, the challenged proviso operates on the basis of the salary
grade or officer-employee status. It is akin to a distinction based on economic
class and status, with the higher grades as recipients of a benefit specifically
withheld from the lower grades. Officers of the BSP now receive higher
compensation packages that are competitive with the industry, while the
poorer, low-salaried employees are limited to the rates prescribed by the SSL.
The implications are quite disturbing: BSP rank-and-file employees are paid the
strictly regimented rates of the SSL while employees higher in rank -
possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to
stay. Considering that majority, if not all, the rank-and-file employees consist
of people whose status and rank in life are less and limited, especially in terms
of job marketability, it is they - and not the officers - who have the real
economic and financial need for the adjustment . This is in accord with the
policy of the Constitution "to free the people from poverty, provide adequate
social services, extend to them a decent standard of living, and improve the
quality of life for all." Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by this Court before it can
pass muster. (Emphasis supplied) cralawlibrary
Imbued with the same sense of "obligation to afford protection to labor," the
Court in the present case also employs the standard of strict judicial scrutiny,
for it perceives in the subject clause a suspect classification prejudicial to
OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies
to all OFWs. However, a closer examination reveals that the subject clause has
a discriminatory intent against, and an invidious impact on, OFWs at two
levels:
First, OFWs with employment contracts of less than one year vis - Ã -vis OFWs
with employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis - Ã -vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis - Ã
-vis OFWs with employment contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v.
National Labor Relations Commission79 (Second Division, 1999) that the Court
laid down the following rules on the application of the periods prescribed under
Section 10(5) of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which
amount to award an illegally dismissed overseas contract worker, i.e.,
whether his salaries for the unexpired portion of his employment
contract or three (3) months' salary for every year of the unexpired
term, whichever is less, comes into play only when the employment
contract concerned has a term of at least one (1) year or more. This is
evident from the words "for every year of the unexpired term" which
follows the words "salaries x x x for three months."
 To follow petitioners' thinking that private respondent is entitled to three (3)
months salary only simply because it is the lesser amount is to completely Computation
disregard and overlook some words used in the statute while giving effect to of the
some. This is contrary to the well-established rule in legal hermeneutics that in
interpreting a statute, care should be taken that every part or word thereof be Monetary
given effect since the law-making body is presumed to know the meaning of Award
the words employed in the statue and to have used them advisedly. Ut res
magis valeat quam pereat.80 (Emphasis supplied) cralawlibrary

Skippers v. 6 months 2 months 4 months 4 months

Maguad84
In Marsaman, the OFW involved was illegally dismissed two months into his
10-month contract, but was awarded his salaries for the remaining 8 months
and 6 days of his contract. Bahia 9 months 8 months 4 months 4 months
Shipping v.
Prior to Marsaman, however, there were two cases in which the Court made Reynaldo
conflicting rulings on Section 10(5). One was Asian Center for Career and
Employment System and Services v. National Labor Relations Chua 85
Commission (Second Division, October 1998),81 which involved an OFW who
was awarded a two-year employment contract, but was dismissed after Centennial 9 months 4 months 5 months 5 months
working for one year and two months. The LA declared his dismissal illegal and Transmarine
awarded him SR13,600.00 as lump-sum salary covering eight months, the
unexpired portion of his contract. On appeal, the Court reduced the award to v. dela Cruz
SR3,600.00 equivalent to his three months' salary, this being the lesser value, l86
to wit:
Talidano v. 12 3 months 9 months 3 months
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas
employment without just, valid or authorized cause is entitled to his salary for
Falcon87 months
the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less. Univan v. 12 3 months 9 months 3 months
CA 88 months
In the case at bar, the unexpired portion of private respondent's employment
contract is eight (8) months. Private respondent should therefore be paid his Oriental v. 12 more than 10 months 3 months
basic salary corresponding to three (3) months or a total of SR3,600.82
CA 89 months 2 months
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
PCL v. 12 more than more or less 3 months
Commission (Third Division, December 1998),83 which involved an OFW
(therein respondent Erlinda Osdana) who was originally granted a 12-month NLRC90 months 2 months 9 months
contract, which was deemed renewed for another 12 months. After serving for
one year and seven-and-a-half months, respondent Osdana was illegally Olarte v. 12 21 days 11 months 3 months
dismissed, and the Court awarded her salaries for the entire unexpired portion
of four and one-half months of her contract.
Nayona91 months and 9 days

The Marsaman interpretation of Section 10(5) has since been adopted in the
JSS v. 12 16 days 11 months 3 months
following cases: .Ferrer92 months and 24 days
Pentagon v. 12 9 months 2 months 2 months and
Case Title Contract Period of Unexpired PeriodAdelantar93 months and 7 and 23 days 23 days
Period Service Period Applied in days
the
 The disparity becomes more aggravating when the Court takes into account
Phil. Employ 12 10 months 2 months Unexpired jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14,
v. Paramio, months portion 1995,97 illegally dismissed OFWs, no matter how long the period of their
employment contracts, were entitled to their salaries for the entire unexpired
et al.94 portions of their contracts. The matrix below speaks for itself:

Flourish 2 years 26 days 23 months 6 months or 3

Maritime v. and 4 days Case Title
months for Contract Period Unexpired Period Applied
Almanzor 95 each year of Period of Period in the
contract Service Computation of
the Monetary
Athenna 1 year, 1 month 1 year, 9 6 months or 3 Award
Manpower 10 months and months for
v. Villanos 96 months 28 days each year ATCI
of v. CA, 2 years 2 22 months 22 months
98
and 28 contract et al. months
days
Phil. 2 years 7 days 23 months 23 months and
Integrated and 23 23 days
As the foregoing matrix readily shows, the subject clause classifies OFWs into
two categories. The first category includes OFWs with fixed-period employment v. NLRC99 days
contracts of less than one year; in case of illegal dismissal, they are entitled to
their salaries for the entire unexpired portion of their contract. The second JGB v. 2 years 9 months 15 months 15 months
category consists of OFWs with fixed-period employment contracts of one year NLC100
or more; in case of illegal dismissal, they are entitled to monetary award
equivalent to only 3 months of the unexpired portion of their contracts.
Agoy v. 2 years 2 months 22 months 22 months
The disparity in the treatment of these two groups cannot be discounted. NLRC101
In Skippers, the respondent OFW worked for only 2 months out of his 6-month
contract, but was awarded his salaries for the remaining 4 months. In contrast, EDI v. 2 years 5 months 19 months 19 months
the respondent OFWs in Oriental and PCL who had also worked for about 2 NLRC, et
months out of their 12-month contracts were awarded their salaries for only 3
months of the unexpired portion of their contracts. Even the OFWs involved al.102
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 Barros v. 12 4 months 8 months 8 months
salaries for only 3 months.
NLRC, et months
To illustrate the disparity even more vividly, the Court assumes a hypothetical
al.103
OFW-A with an employment contract of 10 months at a monthly salary rate of
US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 Philippine 12 6 months 5 months 5 months and 18
months with the same monthly salary rate of US$1,000.00. Both commenced Transmarine months and 22 and 18 days
work on the same day and under the same employer, and were illegally
dismissed after one month of work. Under the subject clause, OFW-A will be v. Carilla104 days days
entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months
of his contract, whereas OFW-B will be entitled to only US$3,000.00,
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods
equivalent to his salaries for 3 months of the unexpired portion of his contract,
or the unexpired portions thereof, were treated alike in terms of the
instead of US$14,000.00 for the unexpired portion of 14 months of his
computation of their monetary benefits in case of illegal dismissal. Their claims
contract, as the US$3,000.00 is the lesser amount.
were subjected to a uniform rule of computation: their basic salaries multiplied
by the entire unexpired portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a
differentiated rule of computation of the money claims of illegally dismissed
OFWs based on their employment periods, in the process singling out one
category whose contracts have an unexpired portion of one year or more and
subjecting them to the peculiar disadvantage of having their monetary awards
limited to their salaries for 3 months or for the unexpired portion thereof,
whichever is less, but all the while sparing the other category from such
prejudice, simply because the latter's unexpired contracts fall short of one
year.
Among OFWs With Employment Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause,
the Court now has misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year
of the unexpired term, whichever is less" contains the qualifying phrases
"every year" and "unexpired term." By its ordinary meaning, the word "term"
means a limited or definite extent of time.105 Corollarily, that "every year" is
but part of an "unexpired term" is significant in many ways: first, the
unexpired term must be at least one year, for if it were any shorter, there
would be no occasion for such unexpired term to be measured by every year;
and second, the original term must be more than one year, for otherwise,
whatever would be the unexpired term thereof will not reach even a year.
Consequently, the more decisive factor in the determination of when the
subject clause "for three (3) months for every year of the unexpired
term, whichever is less" shall apply is not the length of the original contract
period as held in Marsaman,106 but the length of the unexpired portion of the
contract period - - the subject clause applies in cases when the unexpired
portion of the contract period is at least one year, which arithmetically requires
that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination
among OFWs whose contract periods are for more than one year: those who
are illegally dismissed with less than one year left in their contracts shall be
entitled to their salaries for the entire unexpired portion thereof, while those
who are illegally dismissed with one year or more remaining in their contracts
shall be covered by the subject clause, and their monetary benefits limited to
their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the
subject clause, the Court assumes hypothetical OFW-C and OFW-D, who each
have a 24-month contract at a salary rate of US$1,000.00 per month. OFW-C
is illegally dismissed on the 12th month, and OFW-D, on the 13th month.
Considering that there is at least 12 months remaining in the contract period of
OFW-C, the subject clause applies to the computation of the latter's monetary
benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total
salaries for the 12 months unexpired portion of the contract, but to the lesser
amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-
month unexpired term of the contract. On the other hand, OFW-D is spared
from the effects of the subject clause, for there are only 11 months left in the
latter's contract period. Thus, OFW-D will be entitled to US$11,000.00, which is
equivalent to his/her total salaries for the entire 11-month unexpired portion.
OFWs vis - Ã -vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation
of the monetary awards of illegally dismissed OFWs was in place. This uniform
system was applicable even to local workers with fixed-term employment. 107
The earliest rule prescribing a uniform system of computation was actually
Article 299 of the Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and
employees should have been made of a fixed period, none of the contracting
parties, without the consent of the other, may withdraw from the fulfillment of
said contract until the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage
suffered, with the exception of the provisions contained in the following
articles.
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing
provision to determine the liability of a shipping company for the illegal
discharge of its managers prior to the expiration of their fixed-term
employment. The Court therein held the shipping company liable for the
salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of
the Code of Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the
agent should be for a definite period or voyage, they cannot be discharged
until the fulfillment of their contracts, except for reasons of insubordination in
serious matters, robbery, theft, habitual drunkenness, and damage caused to
the vessel or to its cargo by malice or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
which the Court held the shipping company liable for the salaries and
subsistence allowance of its illegally dismissed employees for
the entire unexpired portion of their employment contracts.
While Article 605 has remained good law up to the present, 111 Article 299 of the
Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a
certain time and for a certain work cannot leave or be dismissed without
sufficient cause, before the fulfillment of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in
Article 1586 as a conjunctive "and" so as to apply the provision to local
workers who are employed for a time certain although for no particular skill.
This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de
France Company.113 And in both Lemoine and Palomar, the Court adopted the
general principle that in actions for wrongful discharge founded on Article
1586, local workers are entitled to recover damages to the extent of the
amount stipulated to be paid to them by the terms of their contract. On the
computation of the amount of such damages, the Court in Aldaz v. Gay 114 held:
The doctrine is well-established in American jurisprudence, and nothing has
been brought to our attention to the contrary under Spanish jurisprudence,
that when an employee is wrongfully discharged it is his duty to seek other
employment of the same kind in the same community, for the purpose of
reducing the damages resulting from such wrongful discharge. However, while
this is the general rule, the burden of showing that he failed to make an effort
to secure other employment of a like nature, and that other employment of a
like nature was obtainable, is upon the defendant. When an employee is
wrongfully discharged under a contract of employment his prima facie damage
is the amount which he would be entitled to had he continued in such
employment until the termination of the period. (Howard v. Daly, 61 N. Y.,
362; Allen v. Whitlark, 99 Mich., 492; Farrell v. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)
cralawlibrary
On August 30, 1950, the New Civil Code took effect with new provisions on
fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title
I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work),
Chapter 3, Title VIII, Book IV.116 Much like Article 1586 of the Civil Code of
1889, the new provisions of the Civil Code do not expressly provide for the
remedies available to a fixed-term worker who is illegally discharged. However,
it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich, 117 the Court
carried over the principles on the payment of damages underlying Article 1586
of the Civil Code of 1889 and applied the same to a case involving the illegal
discharge of a local worker whose fixed-period employment contract was
entered into in 1952, when the new Civil Code was already in effect. 118
More significantly, the same principles were applied to cases involving overseas
Filipino workers whose fixed-term employment contracts were illegally
terminated, such as in First Asian Trans & Shipping Agency, Inc. v.
Ople,119 involving seafarers who were illegally discharged. In Teknika Skills and
Trade Services, Inc. v. National Labor Relations Commission,120 an OFW who
was illegally dismissed prior to the expiration of her fixed-period employment
contract as a baby sitter, was awarded salaries corresponding to the unexpired
portion of her contract. The Court arrived at the same ruling in Anderson v.
National Labor Relations Commission,121 which involved a foreman hired in
1988 in Saudi Arabia for a fixed term of two years, but who was illegally
dismissed after only nine months on the job - - the Court awarded him salaries
corresponding to 15 months, the unexpired portion of his contract. In Asia
World Recruitment, Inc. v. National Labor Relations Commission, 122 a Filipino
working as a security officer in 1989 in Angola was awarded his salaries for the
remaining period of his 12-month contract after he was wrongfully discharged.
Finally, in Vinta Maritime Co., Inc. v. National Labor Relations
Commission,123 an OFW whose 12-month contract was illegally cut short in the
second month was declared entitled to his salaries for the remaining 10
months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term
employment who were illegally discharged were treated alike in terms of the
computation of their money claims: they were uniformly entitled to their
salaries for the entire unexpired portions of their contracts. But with the
enactment of R.A. No. 8042, specifically the adoption of the subject clause,
illegally dismissed OFWs with an unexpired portion of one year or more in their
employment contract have since been differently treated in that their money
claims are subject to a 3-month cap, whereas no such limitation is imposed on
local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect
classification in that, in the computation of the monetary benefits of
fixed-term employees who are illegally discharged, it imposes a 3-
month cap on the claim of OFWs with an unexpired portion of one year
or more in their contracts, but none on the claims of other OFWs or
local workers with fixed-term employment. The subject clause singles
out one classification of OFWs and burdens it with a peculiar
disadvantage.
There being a suspect classification involving a vulnerable sector protected by
the Constitution, the Court now subjects the classification to a strict judicial
scrutiny, and determines whether it serves a compelling state interest through
the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights
and powers arrayed in the Constitution and calibrated by history.124 It is akin to
the paramount interest of the state125 for which some individual liberties must
give way, such as the public interest in safeguarding health or maintaining
medical standards,126 or in maintaining access to information on matters of
public concern.127
In the present case, the Court dug deep into the records but found no
compelling state interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to
protect the employment of Filipino seafarers overseas x x x. By limiting the
liability to three months [sic], Filipino seafarers have better chance of getting
hired by foreign employers." The limitation also protects the interest of local
placement agencies, which otherwise may be made to shoulder millions of
pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment
of money claims in the event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer reneges on its obligation.
Hence, placement agencies that are in good faith and which fulfill their
obligations are unnecessarily penalized for the acts of the foreign employer. To
protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money are reduced under Section 10 of
RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare
the government seeks to promote. The survival of legitimate placement
agencies helps [assure] the government that migrant workers are properly
deployed and are employed under decent and humane conditions. 129 (Emphasis
supplied)
cralawlibrary
However, nowhere in the Comment or Memorandum does the OSG cite the
source of its perception of the state interest sought to be served by the subject
clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio
Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law
originated;130 but the speech makes no reference to the underlying reason for
the adoption of the subject clause. That is only natural for none of the 29
provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on
money claims, to wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and decide, within ninety
(90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of the complaint, the claim arising
out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas employment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and
all claims under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money
claims exclusive of damages under this Section shall not be less than fifty
percent (50%) of such money claims: Provided, That any installment
payments, if applicable, to satisfy any such compromise or voluntary
settlement shall not be more than two (2) months. Any compromise/voluntary
agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided
under this Section shall subject the responsible officials to any or all of the
following penalties:
(1) The salary of any such official who fails to render his decision or resolution
within the prescribed period shall be, or caused to be, withheld until the said
official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive
public office for five (5) years.
Provided, however, That the penalties herein provided shall be without
prejudice to any liability which any such official may have incurred under other
existing laws or rules and regulations as a consequence of violating the
provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the
computation of money claims.
A rule on the computation of money claims containing the subject clause was
inserted and eventually adopted as the 5th paragraph of Section 10 of R.A. No.
8042. The Court examined the rationale of the subject clause in the transcripts
of the "Bicameral Conference Committee (Conference Committee) Meetings on
the Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and
House Bill No. 14314)." However, the Court finds no discernible state interest,
let alone a compelling one, that is sought to be protected or advanced by the
adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the
existence of a compelling state interest that would justify the perpetuation of
the discrimination against OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is
to protect the employment of OFWs by mitigating the solidary liability of
placement agencies, such callous and cavalier rationale will have to be
rejected. There can never be a justification for any form of government action
that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private
businesses such as placement agencies, while the disadvantaged sector is
composed of OFWs whose protection no less than the Constitution commands.
The idea that private business interest can be elevated to the level of a
compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary
liability of placement agencies vis-a-vis their foreign principals, there are
mechanisms already in place that can be employed to achieve that purpose
without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment
of Land-Based Overseas Workers, dated February 4, 2002, imposes
administrative disciplinary measures on erring foreign employers who default
on their contractual obligations to migrant workers and/or their Philippine
agents. These disciplinary measures range from temporary disqualification to
preventive suspension. The POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers, dated May 23, 2003, contains
similar administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive
means of aiding local placement agencies in enforcing the solidary liability of
their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is
violative of the right of petitioner and other OFWs to equal protection.
ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Further, there would be certain misgivings if one is to approach the declaration
of the unconstitutionality of the subject clause from the lone perspective that
the clause directly violates state policy on labor under Section 3, 131 Article XIII
of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-
executing,132 there are some which this Court has declared not judicially
enforceable, Article XIII being one,133 particularly Section 3 thereof, the
nature of which, this Court, in Agabon v. National Labor Relations
Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure
may be deemed as self-executing in the sense that these are automatically
acknowledged and observed without need for any enabling legislation.
However, to declare that the constitutional provisions are enough to guarantee
the full exercise of the rights embodied therein, and the realization of ideals
therein expressed, would be impractical, if not unrealistic. The espousal of such
view presents the dangerous tendency of being overbroad and exaggerated.
The guarantees of "full protection to labor" and "security of tenure", when
examined in isolation, are facially unqualified, and the broadest interpretation
possible suggests a blanket shield in favor of labor against any form of removal
regardless of circumstance. This interpretation implies an unimpeachable right
to continued employment-a utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is still needed to define
the parameters of these guaranteed rights to ensure the protection and
promotion, not only the rights of the labor sector, but of the employers' as
well. Without specific and pertinent legislation, judicial bodies will be at a loss,
formulating their own conclusion to approximate at least the aims of the
Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a
source of a positive enforceable right to stave off the dismissal of an
employee for just cause owing to the failure to serve proper notice or hearing.
As manifested by several framers of the 1987 Constitution, the provisions on
social justice require legislative enactments for their
enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct
enforceable rights, for the violation of which the questioned clause may be
declared unconstitutional. It may unwittingly risk opening the floodgates of
litigation to every worker or union over every conceivable violation of so broad
a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the
working class any actual enforceable right, but merely clothes it with the status
of a sector for whom the Constitution urges protection through executive or
legislative action and judicial recognition. Its utility is best limited to being
an impetus not just for the executive and legislative departments, but for the
judiciary as well, to protect the welfare of the working class.And it was in fact
consistent with that constitutional agenda that the Court in Central Bank (now
Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng
Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno,
formulated the judicial precept that when the challenge to a statute is
premised on the perpetuation of prejudice against persons favored by the
Constitution with special protection - - such as the working class or a section
thereof - - the Court may recognize the existence of a suspect classification
and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny
formulated in Central Bank Employee Association exaggerate the significance
of Section 3, Article XIII is a groundless apprehension. Central Bank applied
Article XIII in conjunction with the equal protection clause. Article XIII, by
itself, without the application of the equal protection clause, has no life or force
of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject
clause violates petitioner's right to substantive due process, for it deprives him
of property, consisting of monetary benefits, without any existing valid
governmental purpose.136
The argument of the Solicitor General, that the actual purpose of the subject
clause of limiting the entitlement of OFWs to their three-month salary in case
of illegal dismissal, is to give them a better chance of getting hired by foreign
employers. This is plain speculation. As earlier discussed, there is nothing in
the text of the law or the records of the deliberations leading to its enactment
or the pleadings of respondent that would indicate that there is an existing
governmental purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental
purpose; and it is for that precise reason that the clause violates not just
petitioner's right to equal protection, but also her right to substantive due of his employment contract consisting of nine months and 23 days computed
process under Section 1,137 Article III of the Constitution. at the rate of US$1,400.00 per month.

The subject clause being unconstitutional, petitioner is entitled to his salaries No costs.
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. SO ORDERED.
8042.

On the Third Issue

Petitioner contends that his overtime and leave pay should form part of the
salary basis in the computation of his monetary award, because these are fixed
benefits that have been stipulated into his contract.

Petitioner is mistaken.

The word salaries in Section 10(5) does not include overtime and leave pay.
For seafarers like petitioner, DOLE Department Order No. 33, series 1996,
provides a Standard Employment Contract of Seafarers, in which salary is
understood as the basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all work "performed" in
excess of the regular eight hours, and holiday pay is compensation for any
work "performed" on designated rest days and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion
of overtime and holiday pay in the computation of petitioner's monetary award,
unless there is evidence that he performed work during those periods. As the
Court held in Centennial Transmarine, Inc. v. Dela Cruz,138

However, the payment of overtime pay and leave pay should be disallowed in
light of our ruling in Cagampan v. National Labor Relations Commission, to wit:

The rendition of overtime work and the submission of sufficient proof that said
was actually performed are conditions to be satisfied before a seaman could be
entitled to overtime pay which should be computed on the basis of 30% of the
basic monthly salary. In short, the contract provision guarantees the right to
overtime pay but the entitlement to such benefit must first be established.

In the same vein, the claim for the day's leave pay for the unexpired portion of
the contract is unwarranted since the same is given during the actual service of
the seamen.

WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three
months for every year of the unexpired term, whichever is less" in the 5th
paragraph of Section 10 of Republic Act No. 8042
is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision
and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the
effect that petitioner is AWARDED his salaries for the entire unexpired portion