EN BANC

[ GR NOs. 58674-77, Jul 11, 1986 ]

PEOPLE v. DOMINGO PANIS +

DECISION

226 Phil. 562

CRUZ, J.:
The basic issue in this case is the correct interpretation of Article 13(b) of P. D. 442, otherwise known as the
Labor Code, reading as follows:

"(b) 'Recruitment and placement' refers to any act of canvassing, enlisting, contracting, transporting, 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."
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo City
alleging that SerapioAbug, private respondent herein, "without first securing a license from the Ministry of
Labor as a holder of authority to operate a fee-charging employment agency, did then and there wilfully,
unlawfully and criminally operate a private fee-charging employment agency by charging fees and expenses
(from) and promising employment in Saudi Arabia" to four separate individuals named therein, in violation of
Article 16 in relation to Article 39 of the Labor Code.[1]

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 one person in each of the four informations. Under the proviso in Article
13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in any manner
promised or offered any employment for a fee."[2]

Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court dated June 24
and September 17, 1981. The prosecution is now before us on certiorari.[3]

The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in relation to
Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first two cited 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.

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 more persons as an indispensable requirement. On the other
hand, the petitioner argues that the requirement of two or more persons is imposed only where the recruitment
and placement consists of an offer or promise of employment to such persons and always in consideration of a
fee. The other acts mentioned in the body of the article may involve even only one person and are not
necessarily for profit.

Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or promise of
employment if the purpose was to apply the requirement of two or more persons to all the acts mentioned in
the basic rule. For its part, the petitioner does not explain why dealings with two or more persons are needed
where the recruitment and placement consists of an offer or promise of employment but not when it is done
through "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers."

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an

1
exception thereto but merely to create a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made in the course of the "canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring (of) workers."

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of
workers. Any of the acts mentioned in the basic rule in Article 13(b) will 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 v. 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 their own 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.

SO ORDERED.

2
 [G.R. No. 113547. February 9, 1995.]

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. ANITA BAUTISTA y LATOJA, Accused-Appellant.

DECISION

PUNO, J.:

Four (4) separate Informations 1 were filed before the Regional Trial Court of Manila (Branch XLI) against
accused ANITA BAUTISTA y LATOJA, charging her with the crimes of Illegal Recruitment In Large Scale 2
and Estafa. 3 

Upon arraignment on January 29, 1992, Accused pleaded NOT GUILTY. 4 The four (4) cases were tried
jointly.

After trial, the court a quo found accused guilty as charged. 5 In the illegal recruitment case, she was meted
the penalty of life imprisonment and ordered to pay P100,000.00 as fine. In the estafa cases, she was
sentenced from two (2) years, eight (8) months and twenty one (21) days of prisioncorreccional as minimum, to
six (6) years, five (5) months and eleven (11) days of prision mayor as maximum for each count of estafa, and
pay each complainant the amount of P 40,000.00 as civil indemnity.

Accused, thru counsel, filed her Notice of Appeal, dated March 6, 1992, indicating her desire to elevate her
case to this Court. 6 The records of the case were, however, transmitted by the trial court to the Court of
Appeals. In its Decision 7 dated November 26, 1993, the appellate court affirmed appellant's conviction.
However, it modified the penalty for the three (3) estafa cases. The dispositive portion of the decision of the
appellate court states:nadchanroblesvirtualawlibrary

"WHEREFORE, in Criminal Case No. 92-102377, the Court finds accused Anita Bautista GUILTY BEYOND
REASONABLE DOUBT of the crime of illegal recruitment, described and penalized under Article 13 (b), Article
38 (a) and (b) and Article 39 (a) of the Labor Code, and imposes upon her the penalty of life imprisonment and
fine of P100,000.00. . . .

"Insofar as Criminal Case No. 92-102378, Criminal Case No. 92-102379 and Criminal Case No. 92-102380,
the Court renders judgment, finding accused Anita Bautista GUILTY BEYOND REASONABLE DOUBT of the
crime of estafa, described and penalized under Article 315 par. 2 (a) of the Revised Penal Code, and
sentencing her in each criminal case to the indeterminate penalty of (sic) from FOUR (4) YEARS and TWO (2)
MONTHS of prisioncorreccional, as minimum, to NINE (9) YEARS of prision mayor, as maximum, and to pay
each complainants Remigio Fortes, Anastacio Amor and DominadorCostales, the amount of P40,000.00,
without subsidiary imprisonment in case of insolvency, with costs. Accordingly, the penalty imposed upon
accused by the lower court is MODIFIED.

"IT IS SO ORDERED."

Pursuant to Section 13 of Rule 124, the appellate court elevated to us the records of the case for review.
Notice was given to appellant for her to file additional Brief if she so desires. None was filed in her behalf.

The facts are as found by the appellate court:nadchanroblesvirtualawlibrary

"Sometime in August 1991, Accused Anita Bautista approached Romeo Paguio at the latter's restaurant at 565
Padre Faura St., Manila, and offered job openings abroad. At that time, Paguio had relatives who were

3
interested to work abroad. Accused, who also operated a restaurant nearby at Padre Faura, informed Paguio
that she knew somebody who could facilitate immediate employment in Taiwan for Paguio's relatives. Accused
Anita Bautista introduced Rosa Abrero to Paguio. Abrero informed him that the applicants could leave for
Taiwan within a period of one-month from the payment of placement fees. They informed Paguio that the
placement fee was P40,000.00 for each person. Paguio contacted his relatives, complainants Remigio Fortes
and DominadorCostales who were his brothers-in-law, and Anastacio Amor, a cousin, who lost no time raising
the needed money and gave the same to Paguio. The three were to work as factory workers and were to be
paid $850.00 monthly salary each. Paguio gave Rosa Abrero P20,000.00, which would be used in following up
the papers of the complainants; later he gave accused P40,000.00 and P60,000.00 in separate amounts,
totalling P100,000.00, as the remaining balance. Abrero and accused Bautista promised Paguio and
complainants that the latter could leave for Taiwan before September 25, 1991. As September 25, 1991
approached, Accused Bautista informed Paguio and complainants that there was a delay in the latter's
departure because their tickets and visas had not yet been released. Accused re-scheduled the complainants'
departure to October 10, 1991. Came October 10, 1991, and complainants were still not able to leave. Paguio
then required accused Bautista to sign the "Acknowledgment Receipt," dated October 11, 1991, in which
accused admitted having received the sum of P100,000.00 from Paguio, representing payment of plane
tickets, visas and other travel documents (Exhibit A). Paguio asked accused to return complainants' money;
accused, however, promised that complainants could leave for Taiwan before Christmas. From POEA, Paguio
secured a certification, dated January 9, 1992 attesting that Annie Bautista and Rosa Abrero are not licensed
or authorized to recruit workers for overseas employment (Exhibit B). Complainants Fortes, Amor and
Costales, as well as Paguio, gave their written statements at the Office of the Assistant Chief Directorial Staff
for Intelligence of the WPDC, complaining about their being victims of illegal recruitment by Rosa Abrero and
Annie Bautista (Exhibits C, D, E and F)."

The issue boils down to whether or not reasonable doubt exists to warrant the acquittal of appellant Anita
Bautista.

We find none.

The Labor Code defines recruitment and placement as referring to "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." 8 

It is settled that the essential elements of the crime of illegal recruitment in large scale are: (1) the accused
engages in the recruitment and placement of workers, as defined under Article 13 (b) or in any prohibited
activities under Article 34 of the Labor Code; (2) accused has not complied with the guidelines issued by the
Secretary of Labor and Employment, particularly with respect to securing of a license or an authority to recruit
and deploy workers, either locally or overseas; and (3) accused commits the same against three (3) or more
persons, individually or a group. 9 

For her exculpation, appellant denied she recruited complainants for employment abroad. She claimed Romeo
Paguio was the one who approached her and asked for someone who could help his relatives work abroad.
She thus introduced Rosa Abrero, a regular customer at her restaurant, to Paguio. In turn, Paguio introduced
Abrero to complainants in their subsequent meeting. Further, appellant testified she was present during the
recruitment of complainants since their meeting with Abrero was held at her restaurant. Appellant likewise
stressed she did not receive the amount of P100,000.00, as stated in the Acknowledgment Receipt, dated
October 11, 1991, but merely acknowledged that said sum was received by Rosa Abrero from Romeo Paguio.

Appellant's defense does not persuade us.

Appellant's active participation in the recruitment process of complainants belies her claim of innocence.
Complainants' recruitment was initiated by appellant during her initial meeting with Romeo Paguio. She gave
the impression to Romeo Paguio and the complainants that her cohort, Rosa Abrero, could send workers for
employment abroad. She introduced Rosa Abrero to Romeo Paguio. Both women assured the departure of

4
complainants to Taiwan within one month from payment of the placement fee of P40,000.00 per person. They
even claimed that complainants could work as factory workers for a monthly salary of $850.00 per person.
Moreover, it was appellant who informed Romeo Paguio that complainants' scheduled trip to Taiwan would be
on October 10, 1991, instead of the original departure date of September 25, 1991, due to some problems on
their visas and travel documents.

Her close association with Rosa Abrero is further strengthened by the Acknowledgment Receipt, dated
October 11, 1991, which was prepared by Romeo Paguio for the protection of complainants. The receipt
reads:nadchanroblesvirtualawlibrary

"ACKNOWLEDGMENT RECEIPT 

P100,000.00 October 11, 1991

RECEIVED FROM: ROMEO PAGUIO, the amount of ONE HUNDRED THOUSAND (P100,000.00) PESOS,
Philippine Currency, representing the payment (of) plane ticket, visa and other travel documents.

CONFORME: By:nadchanroblesvirtualawlibrary

(Sgd.) ROMEO PAGUIO (Sgd.) MRS. ANNIE BAUTISTA

c/o Rosa Abrero

SIGNED IN THE PRESENCE OF:nadchanroblesvirtualawlibrary

(Sgd.) Anastacio Amor Remigio Fortes

DominadorCostales

Said receipt shows that appellant collected the P100,000.00 for and in behalf of Rosa Abrero, and bolsters
Romeo Paguio's allegation that he gave P20,000.00 to Rosa Abrero, while the rest was received by appellant.
Notably, in its Decision, dated February 14, 1992, the trial court observed:nadchanroblesvirtualawlibrary

"The denial(s) made by the accused of any participation in the recruitment of the complainants do not
persuade. The evidence at hand shows that she acknowledged in writing the receipt of P100,000.00 from
witness Romeo Paguio who was all along representing the complainants in securing employment for them in
Taiwan. Her denial of having actually received the money in the sum of P100,000.00, the receipt of which she
voluntarily signed is not convincing. By her own admission, she is a restaurant operator. In other words, she is
a business woman. As such, she ought to know the consequences in signing any receipt. That she signed Exh.
"A" only goes to show that fact, as claimed by Romeo Paguio, that she actually received the same."

It is uncontroverted that appellant and Rosa Abrero are not authorized or licensed to engage in recruitment
activities. 10 Despite the absence of such license or authority, appellant participated in the recruitment of
complainants. Since there are at least three (3) victims in this case, appellant is correctly held criminally liable
for illegal recruitment in large scale. 11 

We shall now discuss appellant's culpability under the Revised Penal Code, specifically Article 315 thereof,
inasmuch as her conviction for offenses under the Labor Code does not avert punishment for offenses
punishable by other laws. 12 

The elements of estafa are as follows: (1) that the accused defrauded another (a) by abuse of confidence, or
(b) by means of deceit; and (2) that damage or prejudice capable of pecuniary estimation is caused by the
offended party or third party.

In the case at bench, it is crystal clear that complainants were deceived by appellant and Rosa Abrero into
believing that there were, indeed, jobs waiting for them in Taiwan. The assurances given by these two (2)

5
women made complainants part with whatever resources they have, in exchange for what they thought was a
promising job abroad. Thus, they sold their carabaos, mortgaged or sold their parcels of land and even
contracted loans to raise the much needed money, the P40,000.00 placement fee, required of them by
accused and Rosa Abrero.

The penalty for estafa depends on the amount defrauded. Article 315 of the Revised Penal Code provides: "the
penalty of prisioncorreccional in its maximum period to prision mayor in its minimum period (or imprisonment
ranging from 4 years, 2 months and 1 day to 8 years), if the amount of the fraud is over P12,000.00 but does
not exceed P22,000.00 pesos, and if such amount exceeds the latter sum, the penalty provided in this
paragraph shall be imposed in its maximum period (6 years, 8 months and 21 days to 8 years), adding one
year for each additional P10,000.00 pesos; but the total penalty which may be imposed shall not exceed
twenty years. In such case, and in connection with the accessory penalties which may be imposed and for the
purpose of other provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal, as
the case may be."

The amount defrauded in such estafa case (Criminal Case Nos. 92-102378, 92-102379, 92-102380) is P
40,000.00. As prescribed in Article 315, supra, the penalty should be imposed in the maximum period (6 years,
8 months and 21 days to 8 years) plus one (1) year, there being only one (1) P10,000.00 in excess of
P22,000.00. Applying the Indeterminate Sentence Law, the maximum penalty should be taken from the
aforesaid period, while the minimum term of the indeterminate penalty shall be within the range of the penalty
next lower in degree, that is — prisioncorreccional in its minimum and medium periods which has a duration of
6 months, 1 day to 4 year and 2 months.

Considering the foregoing, the appellant court correctly imposed the indeterminate penalty of four (4) years
and two (2) months of prisioncorreccional, as minimum, to nine (9) years of prision mayor, as maximum.

WHEREFORE, premises considered, the decision of the Court of Appeals, finding appellant ANITA BAUTISTA
guilty beyond reasonable doubt of the crimes of Illegal Recruitment in Large Scale (Criminal Case Nos. 92-
102377) and Estafa (Criminal Case Nos. 92-102378, 92-102379, 92-102380) is AFFIRMED. No Costs.

SO ORDERED.

6
G.R. No. 133563 March 4, 1999

BRIDGET BONENG Y BAGAWILI, petitioner, 

vs.
PEOPLE OF THE PHILIPPINES, respondent.

PURISIMA, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, seeking to
set aside the Decision 1 of the Court of Appeals 2 dated March 31, 1998 in CA G.R. CR No. 17133, affirming in
its entirety the judgment of conviction handed down by the Regional Trial Court, Branch 6, Baguio City, finding
the petitioner herein guilty beyond reasonable of Illegal Recruitment and sentencing her to a prison term of four
(4) years, as minimum, to eight (8) years, as maximum, and to pay the costs.

Petitioner Bridget Boneng y Bagawili was indicated for a violation of Article 38 (a), in relation to Articles 13 (b),
16, 34 and 39 (b) of Presidential Decree No. 442, as amended by Presidential Decree No. 1920, in Criminal
Case No. 12104 before the Regional Trial Court, Branch 6, Baguio City, under an Information, alleging:

That on or about the 24th day of September 1993, in the City of Baguio, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused, being then private person,
did then and there wilfully, unlawfully and feloniously engage in the following illegal recruitment
activities to wit: by promising, for profit to complainant MA. TERESA GARCIA employment
abroad under false pretenses and fraudulent acts, without any license or authority from the
Philippine Overseas Employment Administration, Department of Labor and Employment,
Manila, in violation of the aforecited provision of law.

On December 9, 1993, with the assistance of counsel, she was arraigned thereunder and pleaded "NOT
GUILTY" to the crime charged. Trial ensued, and after presenting the witnesses, SPO3 Jesus Nevado, SPO3
Romeo Dulay and Maria Teresa Garcia, and documentary evidence consisting of Exhibits "A" to "G", the
prosecution made a formal offer of evidence and rested its case.

On April 7, 1994, after the prosecution had rested, the accused (now petitioner) presented a demurrer to
evidence and manifested that she was waiving the right to adduce evidence for the defense, and was
submitting the case for decision on the basis of the evidence on record.

On May 5, 1994, the trial court came out with its Decision, finding petitioner guilty of the offense charged and
sentencing her thus:

Wherefore, the Court Finds (sic), accused Bridget Boneng guilty beyond reasonable doubt for
the offense of Violation of Article 38(a) in relation to Article 13(b), 16, 34 and 39(c) of PD 442 as
amended by PD 1920 (Illegal Recruitment) and sentences her, applying the indeterminate
sentence law, to an imprisonment ranging from FOUR (4) YEARS as Minimum to EIGHT (8)
YEARS as Maximum and to pay the costs.

Not satisfied with the verdict below, petitioner appealed to the Court of Appeals, contending that the testimony
of the complainant, Ma. Teresa Garcia, is perjured, hearsay, uncorroborated and tainted with material
inconsistencies and she (petitioner) should have been acquitted because the documentary evidence taken
from her office was seized in violation of her constitutional right against illegal search and seizure.

On March 31, 1998, the Court of Appeals decided as follows:

7
 In sum appellant was correctly found to be liable for violation of Art. 38(a) in relation to Articles
13(b), 16, 34 and 39 (c) of P.D. 442, as amended.

WHEREFORE, finding the conviction of appellant in conformity with the law and evidence, the
same is hereby AFFIRMED in toto.

SO ORDERED.

Without resorting first to a motion for reconsideration, the petitioner came to this Court via the present petition,
placing reliance practically on the same grounds she invoked and relied upon, before the Court of Appeals.

Did the Court of Appeals err in affirming the judgment convicting petitioner for illegal recruitment? This is the
crucial issue at bar.

Petitioner theorizes that the Court of Appeals erred in not considering the non-existence and non-admissibility
of the documents upon which the trial court based her conviction. According to her, the prosecution should
have established that other than Ma. Teresa Garcia, there were other applicants for overseas employment in
the office of petitioner where she was allegedly conducting her recruitment business and activities. In the
absence of sworn statements from the other applicants, petitioner maintains that the motive of the prosecution
witnesses, whose testimonies she branded as inconsistent with their affidavits, in carrying out the entrapment,
was to "fleece money" from her.

Petitioner, in effect, is asking this Court to review the factual findings by the trial court and the Court of
Appeals, to examine subject documents, and evaluate and assign the probative value of the evidence, the
same evidence looked into below, and determine once again the credibility of the witnesses.

To begin with, this Court is not a trier of facts. It is not its function to examine and determine the weight of the
evidence supporting the assailed, decision. In Philippine Airlines, Inc. vs. Court of Appeals, 3 the Court held
that factual findings of the Court of Appeals which are supported by substantial evidence are binding, final and
conclusive upon the Supreme Court. So also, well-established is the rule that "factual findings of the Court of
Appeals are conclusive on the parties and carry even more weight when the said court affirms the factual
findings of the trial court." 4 Moreover, well entrenched is the prevailing jurisprudence that only errors of law
and not of facts are reviewable by this Court in a petition for review on certiorari under Rule 45 of the Revised
Rules of Court, which applies with greater force to the Petition under consideration because the factual findings
by the Court of Appeals are in full agreement with what the trial court found.

It bears stressing that by opting not to present any controverting evidence during the trial, petitioner waived her
right to come forward with evidence for the defense and "foreclosed her right to interpose any objection to the
prosecution's evidence upon appeal . . . . 5

Similarly untenable is petitioner's stance that she is not an illegal recruiter, arguing that the documents
introduced to substantiate her recruitment activities were neither identified nor marked by the prosecution.

In People vs. Benemerito, 264 SCRA 677, 691, the Court enumerated the elements of illegal recruitment to be
as follows:

(1) the person charged with the crime must have undertaken recruitment activities (or any of the
activities enumerated in Article 34 of the Labor Code, as amended); and

(2) the said person does not have a license or authority to do so.

In affirming the findings arrived at by the court a quo, the Court of Appeals ratiocinated:

8
 The prosecution's evidence shows that appellant is a non-licensee or non-holder of authority as
required by law. Proof of this is a certification (Exh. "C") dated 18 August 1993 issued by the
POEA-REU, Baguio City, which reads:

CERTIFICATION

This is to certify that the name BRIDGETTE BUNEG (sic) per existing and
available records from this Office is not licensed nor authorized to recruit workers
for overseas employment in the City of Baguio or any part of the region.

When the trial prosecutor was about to present the signatory of the above document, the defense readily
admitted its authenticity, (TSN, 03 March 1994, p. 17). Appellant expressly waived her right to rebut this
allegation and in effect judicially admitted she was not a licensee or holder of authority. Consequently, such
evidence can be validly taken against her.

In this context, a non-licensee or non-holder of authority has been defined in People vs. Diaz, (supra) 6 as:

. . . 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 . . . .

Anent the second element, Article 13 (b) of the Labor Code, as amended, states:

Art. 13 (b) of the Labor Code defines "recruitment and placement as any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals,
contact services, promising or advertising abroad, whether for profit or not; provided that any
person or entity which, in any manner, offers or promises for fee employment to two or more
persons shall be deemed engaged in recruitment and placement.

The evidence shows that appellant promised Garcia employment abroad for fee. Garcia testified:

Q: After the secretary has introduced Mrs. Boneng to you to be her boss, what
did you do?

A: I asked from Bridget Boneng the rules and what country can I apply, sir.

Q: Did Mrs. Boneng answer you?

A: Yes, sir, she told me in Hongkong.

x xx           x xx          x xx

Q: . . . what things did you talk about with Mrs. Boneng?

A: I asked Mrs. Bridget Boneng how much will I spend in applying for Hongkong
and she told me that it was around P30,000.00 and she told me also to submit
my birth certificate and for the passport, she will (sic) take charge of it but I will
(sic) add a little amount for the processing of my papers.

x xx           x xx          x xx

Q: What did Mrs. Boneng tell you when you told her that you have (sic)
P2,000.00 and if possible, she would work first for your passport and your
medical examination?

9
 A: Bridget Boneng told me to at least solicit the amount of P10,000.00 as down
payment because there is an on going interview in Manila the following Sunday.

Q: What happen after that?

A: She accepted the amount of P2,000.00 and I told her that I will (sic) add more.

x xx           x xx          x xx

Q: Was there a receipt given by Bridget Boneng to you when you delivered the
P2,000.00?

A: He (sic) does not issue a receipt, she told me that.

Q: To whom did you personally deliver the P2,000.00?

A: To Mrs. Boneng.

(TSN., 24 February 1994, pp. 18-21).

From the aforecited testimony, it is decisively clear that aside from the promise to deploy complainant Ma.
Teresa Garcia in Hongkong, the petitioner accepted a part of the P30,000.00 fee she was collecting for her
recruitment work.

Neither do we discern any tenability in petitioner's contention that the prosecution should have secured sworn
statements from the applicants to prove her (petitioner's) recruitment activities. In People vs. Pabalan, 262
SCRA 574, it was succinctly ruled that "the testimony of a single prosecution witness, where credible and
positive, is sufficient to prove beyond reasonable doubt the guilt of the accused. There is no law which requires
that the testimony of a single witness has to be corroborated, except where expressly mandated in determining
the value and credibility of evidence. Witnesses are to weighed, not numbered." In People vs. Panis, 142
SCRA 665, the Court also held that "any of the acts mentioned in the basic rule in Article 13 (b) will constitute
recruitment and placement even if only one prospective worker is involved. 7

Petitioner complains that the Court of Appeals ignored "an avalanche of material inconsistencies" 8 tainting the
testimony of complainant Ma. Teresa Garcia. Records disclose, however, that the said court did pass upon
such aspect of the case but adjudged the same trivial and minor inconsistencies. Ratiocinated the Court of
Appeals:

. . . In this connection appellant has referred to inconsistencies as to the narration of events that
transpired on 24 September 1994. But these are trivial and minor points. In People vs. Trilles,
254 SCRA 633, the Supreme Court held:

Trivial inconsequential inconsistencies in the testimony of witnesses do not merit

consideration and cannot destroy the credibility of said witnesses in the face of
the positive and categorical identification of the accused as the perpetrator(s) of
the crime. 9

Petitioner also questions the legality and validity of her arrest sans a warrant. On this score, the Court of
Appeals erred not in affirming the ruling by the trial court of origin that the present case falls under Section 5
(b), Rule 113 of the Revised of Court, to wit:

Sec. 5. Arrest Without Warrant; when lawful — A peace officer or a private person may, without
a warrant, arrest a person:

xxx xxxxxx

10
 (b) when an offense has in fact just been committed, and he has personal knowledge of facts
indicating that the person to be arrested has committed it;

The Court of Appeals rationalized:

And in the case at bar, it can be said that when Garcia filled up the application forms for work
aboard and paid P2,000.00 to Boneng as partial payment or advance payment of the placement
fees required and was promised she could work in Hongkong by Boneng, the latter was actually
engaged in illegal recruitment as she had no license to recruit admittedly.

Hence, at that precise time Boneng was, already committing an offense of illegal recruitment in
the presence of Garcia. Garcia could have very well arrested her on the spot but she did not as
she explained civilian agents are cautioned not to effect arrest by the CIS authorities.

And when Garcia left and went downstairs to tell her CIS team that she already gave the
P2,000.00 marked money to Boneng after posing as an applicant for work abroad and
describing Boneng as a short fat lady wearing pants and white T-shirt and forthwith Nevado and
Dulay 10 went up to the second floor to apprehend Boneng and recover the marked money of
P2,000.00 and the documents pertaining to the recruitment activity of Boneng has just
committed an offense and the effects thereof are still visible in her office, the marked money and
documents of recruitment being there, when Nevado and Dulay of the CIS, both peace officers,
went up to effect her arrest.

xxx xxxxxx

The arrest therefore was legal as an exception under warrantless arrest under Section 5 (b) of
Rule 113 of the Rules of Court . . .

All things studiedly considered and the probative weight of the evidence on record taken into account, the
irresistible conclusion is that petitioner Bridget Boneng is guilty beyond reasonable doubt of the crime charged.

WHEREFORE, for lack of merit, the Petition is hereby DENIED, and the Decision of the Court of Appeals in CA
G.R. No. 17133 AFFIRMED in toto. No pronouncement as to costs.

SO ORDERED.

11
G.R. No. 146964 August 10, 2006

ROSA C. RODOLFO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

CARPIO MORALES, J.:

Petitioner was charged before the Regional Trial Court (RTC) of Makati for illegal recruitment alleged to have
been committed as follows:

That in or about and during the period from August to September 1984, in Makati, Metro Manila, Philippines,
and within the jurisdiction of this Honorable Court, the said accused representing herself to have the capacity
to contract, enlist and transport Filipino workers for employment abroad, did then and there willfully and
unlawfully, for a fee, recruit and promise employment/job placement abroad to VILLAMOR ALCANTARA,
NARCISO CORPUZ,1 NECITAS R. FERRE, GERARDO H. TAPAWAN and JOVITO L. CAMA, without first
securing the required license or authority from the Ministry of Labor and Employment. 2

After trial on the merits, Branch 61 of the Makati RTC rendered its Judgment on the case, 3 the decretal portion
of which reads:

WHEREFORE, PREMISES ABOVE CONSIDERED, the Court finds the accused ROSA C. RODOLFO as
GUILTY of the offense of ILLEGAL RECRUITMENT and hereby sentences her [to] a penalty of imprisonment
of EIGHT YEARS and to pay the costs. 4 (Underscoring supplied)

In so imposing the penalty, the trial court took note of the fact that while the information reflected the
commission of illegal recruitment in large scale, only the complaint of the two of the five complainants was
proven.

On appeal, the Court of Appeals correctly synthesized the evidence presented by the parties as follows:

[The evidence for the prosecution] shows that sometime in August and September 1984, accused-
appellant approached private complainants NecitasFerre and Narciso Corpus individually and invited them to
apply for overseas employment in Dubai. The accused-appellant being their neighbor, private complainants
agreed and went to the former’s office. This office which bore the business name "Bayside Manpower Export
Specialist" was in a building situated at Bautista St. Buendia, Makati, Metro Manila. In that office, private
complainants gave certain amounts to appellant for processing and other fees. Ferre gave P1,000.00 as
processing fee (Exhibit A) and another P4,000.00 (Exhibit B). Likewise, Corpus gave appellant P7,000.00
(Exhibit D). Appellant then told private complainants that they were scheduled to leave for Dubai on September
8, 1984. However, private complainants and all the other applicants were not able to depart on the said date as
their employer allegedly did not arrive. Thus, their departure was rescheduled to September 23, but the result
was the same. Suspecting that they were being hoodwinked, private complainants demanded of appellant to
return their money. Except for the refund of P1,000.00 to Ferre, appellant was not able to return private
complainants’ money. Tired of excuses, private complainants filed the present case for illegal recruitment
against the accused-appellant.

To prove that accused-appellant had no authority to recruit workers for overseas employment, the prosecution
presented Jose Valeriano, a Senior Overseas Employment Officer of the Philippine Overseas Employment
Agency (POEA), who testified that accused-appellant was neither licensed nor authorized by the then Ministry
of Labor and Employment to recruit workers for overseas employment.

12
For her defense, appellant denied ever approaching private complainants to recruit them for employment in
Dubai. On the contrary, it was the private complainants who asked her help in securing jobs abroad. As a good
neighbor and friend, she brought the private complainants to the Bayside Manpower Export Specialist agency
because she knew FloranteHinahon, 5 the owner of the said agency. While accused-appellant admitted that
she received money from the private complainants, she was quick to point out that she received the same only
in trust for delivery to the agency. She denied being part of the agency either as an owner or employee thereof.
To corroborate appellant’s testimony, Milagros Cuadra, who was also an applicant and a companion of private
complainants, testified that appellant did not recruit them. On the contrary, they were the ones who asked help
from appellant. To further bolster the defense, Eriberto C. Tabing, the accountant and cashier of the agency,
testified that appellant is not connected with the agency and that he saw appellant received money from the
applicants but she turned them over to the agency through either FlorantinoHinahon or Luzviminda
Marcos. 6(Emphasis and underscoring supplied)

In light thereof, the appellate court affirmed the judgment of the trial court but modified the penalty imposed
due to the trial court’s failure to apply the Indeterminate Sentence Law.

The appellate court thus disposed:

WHEREFORE, finding no merit in the appeal, this Court DISMISSES it and AFFIRMS the appealed Decision
EXCEPT the penalty x xx which is hereby changed to five (5) years as minimum to seven (7) years as
maximum with perpetual disqualification from engaging in the business of recruitment and placement of
workers. 7(Underscoring supplied)

Petitioner’s Motion for Reconsideration having been denied, 8 the present petition was filed, faulting the
appellate court

x xx IN GIVING CREDENCE TO THE TESTIMONIES OF THE COMPLAINING WITNESSES, [AND]

II

x xx IN FINDING THE PETITIONER-ACCUSED GUILTY WHEN THE PROSECUTION FAILED TO PROVE
HER GUILT BEYOND REASONABLE DOUBT. 9 (Underscoring supplied)

Petitioner bewails the failure of the trial court and the Court of Appeals to credit the testimonies of her
witnesses, her companion Milagros Cuadra, and Eriberto C. Tabing who is an accountant-cashier of the
agency.

Further, petitioner assails the trial court’s and the appellate court’s failure to consider that the provisional
receipts she issued indicated that the amounts she collected from the private complainants were turned over to
the agency through Minda Marcos and FloranteHinahon. At any rate, she draws attention to People v.
Señoron 10 wherein this Court held that the issuance or signing of receipts for placement fees does not make a
case for illegal recruitment. 11

The petition fails.

Articles 38 and 39 of the Labor Code, the legal provisions applicable when the offense charged was
committed, 12provided:

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. x xx

Article 39. Penalties. – x xxx

13
(c) Any person who is neither a licensee nor a holder of authority under this Title 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 years nor more than eight years or a fine of not less than P20,000 nor
more than P100,000 or both such imprisonment and fine, at the discretion of the court;

x xxx (Underscoring supplied)

The elements of the offense of illegal recruitment, which must concur, are: (1) that the offender has no valid
license or authority required by law to lawfully engage in recruitment and placement of workers; and (2) that
the offender undertakes any activity within the meaning of recruitment and placement under Article 13(b), or
any prohibited practices enumerated under Article 34 of the Labor Code. 13 If another element is present  that
the accused commits the act against three or more persons, individually or as a group, it becomes an illegal
recruitment in a large scale. 14

Article 13 (b) of the Labor Code defines "recruitment and placement" as "[a]ny 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." (Underscoring supplied)

That the first element is present in the case at bar, there is no doubt. Jose Valeriano, Senior Overseas
Employment Officer of the Philippine Overseas Employment Administration, testified that the records of the
POEA do not show that petitioner is authorized to recruit workers for overseas employment. 15 A Certification to
that effect was in fact issued by Hermogenes C. Mateo, Chief of the Licensing Division of POEA. 16

Petitioner’s disclaimer of having engaged in recruitment activities from the very start does not persuade in light
of the evidence for the prosecution. In People v. Alvarez, this Court held:

Appellant denies that she engaged in acts of recruitment and placement without first complying with the
guidelines issued by the Department of Labor and Employment. She contends that she did not possess any
license for recruitment, because she never engaged in such activity.

We are not persuaded. In weighing contradictory declarations and statements, greater weight must be given to
the positive testimonies of the prosecution witnesses than to the denial of the defendant. Article 38 (a) clearly
shows that illegal recruitment is an offense that is essentially committed by a non-licensee or non-holder of
authority. A non-licensee means any person, corporation or entity to which the labor secretary has not issued a
valid license or authority to engage in recruitment and placement; or whose license or authority has been
suspended, revoked or cancelled by the POEA or the labor secretary. A license authorizes a person or an
entity to operate a private employment agency, while authority is given to those engaged in recruitment and
placement activities.

x xxx

That appellant in this case had been neither licensed nor authorized to recruit workers for overseas
employment was certified by Veneranda C. Guerrero, officer-in-charge of the Licensing and Regulation Office;
and Ma. Salome S. Mendoza, manager of the Licensing Branch – both of the Philippine Overseas Employment
Administration. Yet, as complainants convincingly proved, she recruited them for jobs in Taiwan. 17 (Italics in
the original; underscoring supplied)

The second element is doubtless also present. The act of referral, which is included in recruitment, 18 is "the act
of passing along or forwarding of an applicant for employment after an initial interview of a selected applicant
for employment to a selected employer, placement officer or bureau." 19 Petitioner’s admission that she brought
private complainants to the agency whose owner she knows and her acceptance of fees including those for
processing betrays her guilt.

That petitioner issued provisional receipts indicating that the amounts she received from the private
complainants were turned over to Luzviminda Marcos and FloranteHinahon does not free her from liability. For

14
the act of recruitment may be "for profit or not." It is sufficient that the accused "promises or offers for a fee
employment" to warrant conviction for illegal recruitment. 20 As the appellate court stated:

x xx Sec. 13(b) of P.D. 442 [The Labor Code] does not require that the recruiter receives and keeps the
placement money for himself or herself. For as long as a person who has no license to engage in recruitment
of workers for overseas employment offers for a fee an employment to two or more persons, then he or she is
guilty of illegal recruitment. 21

Parenthetically, why petitioner accepted the payment of fees from the private complainants when, in light of her
claim that she merely brought them to the agency, she could have advised them to directly pay the same to the
agency, she proferred no explanation.

On petitioner’s reliance on Señoron, 22 true, this Court held that issuance of receipts for placement fees does
not make a case for illegal recruitment. But it went on to state that it is "rather the undertaking of recruitment
activities without the necessary license or authority" that makes a case for illegal recruitment. 23

A word on the penalty. Indeed, the trial court failed to apply the Indeterminate Sentence Law which also
applies to offenses punished by special laws.

Thus, Section 1 of Act No. 4103 (An Act to Provide for an Indeterminate Sentence and Parole for All Persons
Convicted of Certain Crimes by the Courts of the Philippine Islands; To Create A Board of Indeterminate
Sentence and to Provide Funds Therefor; and for Other Purposes) provides:

SECTION 1. Hereafter, in imposing a prison sentence for an offense punished by the Revised Penal Code, or
its amendments, the court shall sentence the accused to an indeterminate sentence the maximum term of
which shall be that which, in view of the attending circumstances, could be properly imposed under the rules of
the said Code, and the minimum which shall be within the range of the penalty next lower to that prescribed by
the Code for the offense; and if the offense is punished by any other law, 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. (As amended by Act No. 4225)
(Underscoring supplied)

While the penalty of imprisonment imposed by the appellate court is within the prescribed penalty for the
offense, its addition of "perpetual disqualification from engaging in the business of recruitment and placement
of workers" is not part thereof. Such additional penalty must thus be stricken off.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals
are AFFIRMED with MODIFICATION in that the accessory penalty imposed by it consisting of "perpetual
disqualification from engaging in the business of recruitment and placement of workers" is DELETED.

Costs against petitioner.

SO ORDERED.

15
G.R. No. 127195           August 25, 1999

MARSAMAN MANNING AGENCY, INC. and DIAMANTIDES MARITIME, INC., petitioners, 

vs.
NATIONAL LABOR RELATIONS COMMISSION and WILFREDO T. CAJERAS, respondents.

BELLOSILLO, J.:

MARSAMAN MANNING AGENCY, INC. (MARSAMAN) and its foreign principal DIAMANTIDES MARITIME,
INC. (DIAMANTIDES) assail the Decision of public respondent National Labor Relations Commission dated 16
September 1996 as well as its Resolution dated 12 November 1996 affirming the Labor Arbiter's decision
finding them guilty of illegal dismissal and ordering them to pay respondent Wilfredo T. Cajeras salaries
corresponding to the unexpired portion of his employment contract, plus attorney's fees.

Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local manning agent of
petitioner DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned and operated by
DIAMANTIDES, for a contract period of ten (10) months with a monthly salary of US$600.00, evidenced by a
contract between the parties dated 15 June 1995. Cajeras started work on 8 August 1995 but less than two (2)
months later, or on 28 September 1995, he was repatriated to the Philippines allegedly by "mutual consent."

On 17 November 1995 private respondent Cajeras filed a complaint for illegal dismissal against petitioners with
the NLRC National Capital Region Arbitration Branch alleging that he was dismissed illegally, denying that his
repatriation was by mutual consent, and asking for his unpaid wages, overtime pay, damages, and attorney's
fees.1 Cajeras alleged that he was assigned not only as Chief Cook Steward but also as assistant cook and
messman in addition to performing various inventory and requisition jobs. Because of his additional
assignments he began to feel sick just a little over a month on the job constraining him to request for medical
attention. He was refused at first by Capt. KouvakasAlekos, master of the MV Prigipos, who just ordered him to
continue working. However a day after the ship's arrival at the port of Rotterdam, Holland, on 26 September
1995 Capt. Alekos relented and had him examined at the Medical Center for Seamen. However, the examining
physician, Dr. Wden Hoed, neither apprised private respondent about the diagnosis nor issued the requested
medical certificate allegedly because he himself would forward the results to private respondent's superiors.
Upon returning to the vessel, private respondent was unceremoniously ordered to prepare for immediate
repatriation the following day as he was said to be suffering from a disease of unknown origin.1âwphi1.nêt

On 28 September 1995 he was handed his Seaman's Service Record Book with the following entry: "Cause of
discharge — Mutual Consent."2 Private respondent promptly objected to the entry but was not able to do
anything more as he was immediately ushered to a waiting taxi which transported him to the Amsterdam
Airport for the return flight to Manila. After his arrival in Manila on 29 September 1995. Cajeras complained to
MARSAMAN but to no avail.3

MARSAMAN and DIAMANTIDES, on the other hand, denied the imputation of illegal dismissal. They alleged
that Cajeras approached Capt. Alekos on 26 September 1995 and informed the latter that he could not sleep at
night because he felt something crawling over his body. Furthermore, Cajeras reportedly declared that he
could no longer perform his duties and requested for repatriation. The following paragraph in the vessel's Deck
Log was allegedly entered by Capt. Alekos, to wit:

Cajeras approached me and he told me that he cannot sleep at night and that he feels something
crawling on his body and he declared that he can no longer perform his duties and he must be
repatriated.4

Private respondent was then sent to the Medical Center for Seamen at Rotterdam where he was examined by
Dr. Wden Hoed whose diagnosis appeared in a Medical Report as "paranoia" and "other mental
problems."5Consequently, upon Dr. Hoed's recommendation, Cajeras was repatriated to the Philippines on 28
September 1995.

16
On 29 January 1996 Labor Arbiter Ernesto S. Dinopol resolved the dispute in favor of private respondent
Cajeras ruling that the latter's discharge from the MV Prigipos allegedly by "mutual consent" was not proved by
convincing evidence. The entry made by Capt. Alekos in the Deck Log was dismissed as of little probative
value because it was a mere unilateral act unsupported by any document showing mutual consent of Capt.
Alekos, as master of the MV Prigipos, and Cajeras to the premature termination of the overseas employment
contract as required by Sec. H of the Standard Employment Contract Governing the Employment of all Filipino
Seamen on Board Ocean-Going Vessels. Dr. Hoed's diagnosis that private respondent was suffering from
"paranoia" and "other mental problems" was likewise dismissed as being of little evidentiary value because it
was not supported by evidence on how the paranoia was contracted, in what stage it was, and how it affected
respondent's functions as Chief Cook Steward which, on the contrary, was even rated "Very Good" in
respondent's Service Record Book. Thus, the Labor Arbiter disposed of the case as follows:

WHEREFORE, judgment is hereby rendered declaring the repatriation and dismissal of complaint
Wilfredo T. Cajeras as illegal and ordering respondents Marsaman Manning Agency, Inc. and
Diamantides Maritime, Inc. to jointly and severally pay complainant the sum of USD 5,100.00 or its
peso equivalent at the time of payment plus USD 510.00 as 10% attorney's fees it appearing that
complainant had to engage the service of counsel to protect his interest in the prosecution of this case.

The claims for nonpayment of wages and overtime pay are dismissed for having been withdrawn
(Minutes, December 18, 1995). The claims for damages are likewise dismissed for lack of merit, since
no evidence was presented to show that bad faith characterized the dismissal.6

Petitioners appealed to the NLRC.7 On 16 September 1996 the NLRC affirmed the appealed findings and
conclusions of the Labor Arbiter.8 The NLRC subscribed to the view that Cajeras' repatriation by alleged
mutual consent was not proved by petitioners, especially after noting that private respondent did not actually
sign his Seaman's Service Record Book to signify his assent to the repatriation as alleged by petitioners. The
entry made by Capt. Alekos in the Deck Log was not considered reliable proof that private respondent agreed
to his repatriation because no opportunity was given the latter to contest the entry which was against his
interest. Similarly, the Medical Report issued by Dr. Hoed of Holland was dismissed as being of dubious value
since it contained only a sweeping statement of the supposed ailment of Cajeras without any elaboration on
the factual basis thereof.

Petitioners' motion for reconsideration was denied by the NLRC in its Resolution dated 12 November
1996.9Hence, this petition contending that the NLRC committed grave abuse of discretion: (a) in not according
full faith and credit to the official entry by Capt. Alekos in the vessel's Deck Log conformably with the rulings
in Haverton Shipping Ltd. v. NLRC 10 and Wallem Maritime Services, Inc. v. NLRC;11 (b) in not appreciating the
Medical Report issued by Dr. Wden Hoed as conclusive evidence that respondent Cajeras was suffering from
paranoia and other mental problems; (c) in affirming the award of attorney's fees despite the fact that Cajeras'
claim for exemplary damages was denied for lack of merit; and, (d) in ordering a monetary award beyond the
maximum of three (3) months' salary for every year of service set by RA 8042.

We deny the petition. In the Contract of Employment12 entered into with private respondent, petitioners
convenanted strict and faithful compliance with the terms and conditions of the Standard Employment Contract
approved by the POEA/DOLE13 which provides:

1. The employment of the seaman shall cease upon expiration of the contract period indicated in the
Crew Contract unless the Master and the Seaman, by mutual consent, in writing agree to an early
termination . . . . (emphasis our).

Clearly, under the foregoing, the employment of a Filipino seaman may be terminated prior to the expiration of
the stipulated period provided that the master and the seaman (a) mutually consent thereto and (b) reduce
their consent in writing.

In the instant case, petitioners do not deny the fact that they have fallen short of the requirement. No document
exists whereby Capt. Alekos and private respondent reduced to writing their alleged "mutual consent" to the
termination of their employment contract. Instead, petitioners presented the vessel's Deck Log wherein an

17
entry unilaterally made by Capt. Alekos purported to show that private respondent himself asked for his
repatriation. However, the NLRC correctly dismissed its evidentiary value. For one thing, it is a unilateral act
which is vehemently denied by private respondent. Secondly, the entry in no way satisfies the requirement of a
bilateral documentation to prove early termination of an overseas employment contract by mutual consent
required by the Standard Employment Contract. Hence, since the latter sets the minimum terms and conditions
of employment for the protection of Filipino seamen subject only to the adoption of better terms and
conditions over and above the minimum standards,14 the NLRC could not be accused of grave abuse of
discretion in not accepting any thing less.

However petitioners contend that the entry should be considered prima facie evidence that respondent himself
requested his repatriation conformably with the rulings in Haverton Shipping Ltd. v. NLRC 15 and Abacast
Shipping and Management Agency, Inc. v. NLRC.16 Indeed, Haverton says that a vessel's log book is prima
facie evidence of the facts stated therein as they are official entries made by a person in the performance of a
duty required by law. However, this jurisprudential principle does not apply to win the case for petitioners.
In Wallem Maritime Services, Inc. v. NLRC 17 the Haverton ruling was not given unqualified application
because the log book presented therein was a mere typewritten collation of excerpts from what could be the
log book.18 The Court reasoned that since the log book was the only piece of evidence presented to prove just
cause for the termination of respondent therein, the log book had to be duly identified and authenticated lest an
injustice would result from a blind adoption of its contents which were but prima facie evidence of the incidents
stated therein.

In the instant case, the disputed entry in the Deck Log was neither authenticated nor supported by credible
evidence. Although petitioners claim that Cajeras signed his Seaman's Service Record Book to signify his
conformity to the repatriation, the NLRC found the allegation to be actually untrue since no signature of private
respondent appeared in the Record Book.

Neither could the "Medical Report" prepared by Dr. Hoed be considered corroborative and conclusive evidence
that private respondent was suffering from "paranoia" and "other mental problems," supposedly just causes for
his repatriation. Firstly, absolutely no evidence, not even an allegation, was offered to enlighten the NLRC or
this Court as to Dr. Hoed's qualifications to diagnose mental illnesses. It is a matter of judicial notice that there
are various specializations in medical science and that a general practitioner is not competent to diagnose any
and all kinds of illnesses and diseases. Hence, the findings of doctors who are not proven experts are not
binding on this Court.19 Secondly, the Medical Report prepared by Dr. Hoed contained only a general
statement that private respondent was suffering from "paranoia" and "other mental problems" without providing
the details on how the diagnosis was arrived at or in what stage the illness was. If Dr. Hoed indeed
competently examined private respondent then he would have been able to discuss at length the
circumstances and precedents of his diagnosis. Petitioners cannot rely on the presumption of regularity in the
performance of official duties to make the Medical Report acceptable because the presumption applies only to
public officers from the highest to the lowest in the service of the Government, departments, bureaus, offices,
and/or its political subdivisions,20 which Dr. Wden Hoed was not shown to be. Furthermore, neither did
petitioners prove that private respondent was incompetent or continuously incapacitated for the duties for
which he was employed by reason of his alleged mental state. On the contrary his ability as Chief Cook
Steward, up to the very moment of his repatriation, was rated "Very Good" in his Seaman's Service Record
Book as correctly observed by public respondent.

Considering all the foregoing we cannot ascribe grave abuse of discretion on the part of the NLRC in ruling that
petitioners failed to prove just cause for the termination of private respondent's overseas employment. Grave
abuse of discretion is committed only when the judgment is rendered in a capricious, whimsical, arbitrary or
despotic manner, which is not true in the present case.21

With respect to attorney's fees, suffice it to say that in actions for recovery of wages or where an employee
was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum award of ten
percent (10%) of the monetary award by way of attorney's fees is legally and morally justifiable under Art. 111
of the Labor Code,22 Sec. 8, Rule VIII, Book III of its Implementing Rules,23 and par. 7, Art. 220824 of the Civil
Code.25 The case of Albenson Enterprises Corporation v. Court of Appeals26 cited by petitioners in arguing
against the award of attorney's fees is clearly not applicable, being a civil action for damages which deals with

18
only one of the eleven (11) instances when attorney's fees could be recovered under Art. 2208 of the Civil
Code.

Lastly, on the amount of salaries due private respondent, the rule has always been that an illegally dismissed
worker whose employment is for a fixed period is entitled to payment of his salaries corresponding to the
unexpired portion of his employment.27 However on 15 July 1995, RA 8042 otherwise known as the "Migrant
Workers and Overseas Filipinos Act of 1995" took effect, Sec. 10 of which provides:

Sec. 10. In case of termination of overseas employment without just, valid or authorized cause as
defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee
with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of the
employment contract or for three (3) months for every year of the unexpired term whichever is
less (emphasis ours).

The Labor Arbiter, rationalizing that the aforesaid law did not apply since it became effective only one (1)
month after respondent's overseas employment contract was entered into on 15 June 1995, simply awarded
private respondent his salaries corresponding to the unexpired portion of his employment contract, i.e., for 8.6
months. The NLRC affirmed the award and the Office of the Solicitor General (OSG) fully agreed. But
petitioners now insist that Sec. 10, RA 8042 is applicable because although private respondent's contract of
employment was entered into before the law became effective his alleged cause of action, i.e., his repatriation
on 28 September 1995 without just, valid or authorized cause, occurred when the law was already in effect.
Petitioners' purpose in so arguing is to invoke the law in justifying a lesser monetary award to private
respondent, i.e., salaries for three (3) months only pursuant to the last portion of Sec. 10 as opposed to the
salaries for 8.6 months awarded by the Labor Arbiter and affirmed by the NLRC.

We agree with petitioners that Sec. 10, RA 8042, applies in the case of private respondent and to all overseas
contract workers dismissed on or after its effectivity on 15 July 1995 in the same way that Sec. 34,28 RA
6715,29 is made applicable to locally employed workers dismissed on or after 21 March 1989.30 However, we
cannot subscribe to the view that private respondent is entitled to three (3) months' salary only. 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 . . . for three months." To follow petitioners' thinking
that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to
completely disregard and overlook some words used in the statute while giving effect to some. This is contrary
to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every
part or word thereof be given effect31since the law-making body is presumed to know the meaning of the words
employed in the statue and to have used them advisedly.32 Ut res magisvaleat quam pereat.33

WHEREFORE, the questioned Decision and Resolution dated 16 September 1996 and 12 November 1996,
respectively, of public respondent National Labor Relations Commission are AFFIRMED. Petitioners
MARSAMAN MANNING AGENCY, INC., and DIAMANTIDES MARITIME, INC., are ordered, jointly and
severally, to pay private respondent WILFREDO T. CAJERAS his salaries for the unexpired portion of his
employment contract or USD$5,100.00, reimburse the latter's placement fee with twelve percent (12%)
interest per annum conformably with Sec. 10 of RA 8042, as well as attorney's fees of ten percent (10%) of the
total monetary award. Costs against petitioners.1âwphi1.nêt

SO ORDERED.

19
G.R. No. 167614               March 24, 2009

ANTONIO M. SERRANO, Petitioner, 
vs.
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 xx 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 xxx (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but
exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal to their
lump-sum salary either for the unexpired portion of their employment contract "or for three months for every
year of the unexpired term, whichever is less" (subject clause). Petitioner claims that the last clause violates
the OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of equal protection
and denies them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004
Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which applied the subject clause,
entreating this Court to declare the subject clause unconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a
Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following
terms and conditions:

Duration of contract 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

20
 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 US$ 413.90

27/31,
1998
(5
days)
incl.
Leave
pay
June 2,590.00
01/30,
1998
July 2,590.00
01/31,
1998
Augus 2,590.00
t
01/31,
1998
Sept. 2,590.00
01/30,
1998
Oct. 2,590.00
01/31,
1998
Nov. 2,590.00
01/30,
1998
Dec. 2,590.00
01/31,
1998
Jan. 2,590.00
01/31,
1999

21
Feb. 2,590.00
01/28,
1999
Mar. 1,640.00
1/19,
1999
(19
days)
incl.
leave
pay
  ------------------------------------------------------------------------------
--
  25,382.23
Amou  
nt
adjust
ed to
chief
mate's
salary
(Marc 1,060.5010
h
19/31,
1998
to
April
1/30,
1998)
+
  ------------------------------------------------------------------------------
----------------
TOTA US$ 26,442.7311
L
CLAIM

as well as moral and exemplary damages and attorney's fees.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and
awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the
complainant (petitioner) by the respondents in the above-entitled case was illegal and the respondents
are hereby ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency,
based on the rate of exchange prevailing at the time of payment, the amount of EIGHT THOUSAND
SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the complainant’s
salary for three (3) months of the unexpired portion of the aforesaid contract of
employment.1avvphi1

The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in
Philippine Currency, based on the rate of exchange prevailing at the time of payment, the amount of

22
 FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing the complainant’s claim for a salary
differential. In addition, the respondents are hereby ordered to pay the complainant, jointly and
severally, in Philippine Currency, at the exchange rate prevailing at the time of payment, the
complainant’s (petitioner's) claim for attorney’s fees equivalent to ten percent (10%) of the total amount
awarded to the aforesaid employee under this Decision.

The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of
merit.

All other claims are hereby DISMISSED.

SO ORDERED.13 (Emphasis supplied)

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

23
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:

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

24
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)

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

25
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment,
such that their rights to monetary benefits must necessarily be treated differently. The OSG enumerates the
essential elements that distinguish OFWs from local workers: first, while local workers perform their jobs within
Philippine territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to
acquire jurisdiction, or against whom it is almost impossible to enforce judgment; and second, as held in
Coyoca v. National Labor Relations Commission43 and Millares v. National Labor Relations
Commission,44 OFWs are contractual employees who can never acquire regular employment status, unlike
local workers who are or can become regular employees. Hence, the OSG posits that there are rights and
privileges exclusive to local workers, but not available to OFWs; that these peculiarities make for a reasonable
and valid basis for the differentiated treatment under the subject clause of the money claims of OFWs who are
illegally dismissed. Thus, the provision does not violate the equal protection clause nor Section 18, Article II of
the Constitution.45

Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to
mitigate the solidary liability of placement agencies for this "redounds to the benefit of the migrant workers
whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure]
the government that migrant workers are properly deployed and are employed under decent and humane
conditions."46

The Court's Ruling

The Court sustains petitioner on the first and second issues.

When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the
Congress, it does so only when these conditions obtain: (1) that there is an actual case or controversy
involving a conflict of rights susceptible of judicial determination;47 (2) that the constitutional question is raised
by a proper party48 and at the earliest opportunity;49 and (3) that the constitutional question is the very lismota
of the case,50otherwise 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.56Petitioner's interposition of the constitutional issue before the CA was
undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in its decision.

The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because
the monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-month
employment contract, and not just for a period of three months, strikes at the very core of the subject clause.

Thus, the stage is all set for the determination of the constitutionality of the subject clause.

26
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his
employment and the fixed salary package he will receive57 is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective
operation,58and cannot affect acts or contracts already perfected;59 however, as to laws already in existence,
their provisions are read into contracts and deemed a part thereof.60 Thus, the non-impairment clause under
Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from
existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the
employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No.
8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties
executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of
R.A. No. 8042.

But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on
the ground that it impinges on the impairment clause, for the law was enacted in the exercise of the police
power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of
OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they
may be employed.61 Police power legislations adopted by the State to promote the health, morals, peace,
education, good order, safety, and general welfare of the people are generally applicable not only to future
contracts but even to those already in existence, for all private contracts must yield to the superior and
legitimate measures taken by the State to promote public welfare.62

Does the subject clause violate Section 1,

Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property without due process of law nor shall any person be
denied the equal protection of the law.

Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without distinction as
to place of deployment, full protection of their rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic
security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all
monetary obligations should be borne by them in equal degree; none should be denied the protection of the
laws which is enjoyed by, or spared the burden imposed on, others in like circumstances.65

27
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 right70 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 classifications 73 based on race74 or
gender75 but not when the classification is drawn along income categories.76

It is different in the Philippine setting. In Central Bank (now BangkoSentralngPilipinas) Employee Association,
Inc. v. BangkoSentralng Pilipinas,77 the constitutionality of a provision in the charter of
the BangkoSentralngPilipinas (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.

x 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 xx

28
[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.

x 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.

x 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)

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-à-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-à-vis local workers with fixed-period employment;

29
OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts of
one year or more

As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations
Commission79 (Second Division, 1999) that the Court laid down the following rules on the application of the
periods prescribed under Section 10(5) of R.A. No. 804, to wit:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally
dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his
employment contract or three (3) months’ salary for every year of the unexpired term, whichever is
less, comes into play only when the employment contract concerned has a term of at least one (1) year
or more. This is evident from the words "for every year of the unexpired term" which follows the words
"salaries x xx for three months."To follow petitioners’ thinking that private respondent is entitled to three (3)
months salary only simply because it is the lesser amount is to completely disregard and overlook some words
used in the statute while giving effect to some. This is contrary to the well-established rule in legal
hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect
since the law-making body is presumed to know the meaning of the words employed in the statue and to have
used them advisedly. Ut res magisvaleat quam pereat.80 (Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was
awarded his salaries for the remaining 8 months and 6 days of his contract.

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on Section
10(5). One was Asian Center for Career and Employment System and Services v. National Labor Relations
Commission (Second Division, October 1998),81 which involved an OFW who was awarded a two-year
employment contract,but was dismissed after working for one year and two months. The LA declared his
dismissal illegal and awarded him SR13,600.00 as lump-sum salary covering eight months, the unexpired
portion of his contract. On appeal, the Court reduced the award to SR3,600.00 equivalent to his three months’
salary, this being the lesser value, to wit:

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just, valid or
authorized cause is entitled to his salary for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondent’s employment contract is eight (8) months.
Private respondent should therefore be paid his basic salary corresponding to three (3) months or a total of
SR3,600.82

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division,
December 1998),83 which involved an OFW (therein respondent ErlindaOsdana) who was originally granted a
12-month contract, which was deemed renewed for another 12 months. After serving for one year and seven-
and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for the
entire unexpired portion of four and one-half months of her contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

Case Title Contract Period of Unexpired Period Applied in

Period Service Period the Computation
of the Monetary
Award
Skippers v. 6 months 2 months 4 months 4 months
Maguad84
Bahia Shipping 9 months 8 months 4 months 4 months

30
 v. Reynaldo
Chua 85
Centennial 9 months 4 months 5 months 5 months
Transmarine v.
dela Cruz l86
Talidano v. 12 months 3 months 9 months 3 months
Falcon87
Univan v. CA 88 12 months 3 months 9 months 3 months
Oriental v. 12 months more than 2 10 months 3 months
CA 89 months
PCL v. NLRC90 12 months more than 2 more or less 9 3 months
months months
Olarte v. 12 months 21 days 11 months and 9 3 months
Nayona91 days
JSS v.Ferrer92 12 months 16 days 11 months and 3 months
24 days
Pentagon v. 12 months 9 months and 2 months and 23 2 months and 23
Adelantar93 7 days days days
Phil. Employ v. 12 months 10 months 2 months Unexpired portion
Paramio, et
al.94
Flourish 2 years 26 days 23 months and 4 6 months or 3
Maritime v. days months for each
Almanzor 95 year of contract
Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3
Manpower v. months and and 28 days months for each
Villanos 96 28 days year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first
category includes OFWs with fixed-period employment contracts of less than one year; in case of illegal
dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second
category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal
dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired portion of their
contracts.

The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent OFW
worked for only 2 months out of his 6-month contract, but was awarded his salaries for the remaining 4
months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for about 2 months out of
their 12-month contracts were awarded their salaries for only 3 months of the unexpired portion of their
contracts. Even the OFWs involved in Talidano and Univan who had worked for a longer period of 3 months
out of their 12-month contracts before being illegally dismissed were awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment
contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B with an employment
contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced work on the same
day and under the same employer, and were illegally dismissed after one month of work. Under the subject
clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his

31
contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the
unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his
contract, as the US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the Court takes into account jurisprudence that, prior to the
effectivity of R.A. No. 8042 on July 14, 1995,97 illegally dismissed OFWs, no matter how long the period of
their employment contracts, were entitled to their salaries for the entire unexpired portions of their contracts.
The matrix below speaks for itself:

Case Title Contract Period of Unexpired Period Applied in

Period Service Period the Computation of
the Monetary Award
ATCI v. CA, et 2 years 2 months 22 months 22 months
al.98
Phil. Integrated 2 years 7 days 23 months 23 months and 23
v. NLRC99 and 23 days days
JGB v. NLC100 2 years 9 months 15 months 15 months
Agoy v. 2 years 2 months 22 months 22 months
NLRC101
EDI v. NLRC, 2 years 5 months 19 months 19 months
et al.102
Barros v. 12 months 4 months 8 months 8 months
NLRC, et al.103
Philippine 12 months 6 months 5 months and 5 months and 18
Transmarine v. and 22 days 18 days days
Carilla104

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions
thereof, were treated alike in terms of the computation of their monetary benefits in case of illegal dismissal.
Their claims were subjected to a uniform rule of computation: their basic salaries multiplied by the entire
unexpired portion of their employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the
money claims of illegally dismissed OFWs based on their employment periods, in the process singling
out one category whose contracts have an unexpired portion of one year or more and subjecting them to the
peculiar disadvantage of having their monetary awards limited to their salaries for 3 months or for the
unexpired portion thereof, whichever is less, but all the while sparing the other category from such prejudice,
simply because the latter's unexpired contracts fall short of one year.

Among OFWs With Employment Contracts of More Than One Year

Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on
the accuracy of the Marsaman interpretation.

The Court notes that the subject clause "or for three (3) months for every year of the unexpired
term, whichever is less" contains the qualifying phrases "every year" and "unexpired term." By its ordinary
meaning, the word "term" means a limited or definite extent of time.105 Corollarily, that "every year" is but part of
an "unexpired term" is significant in many ways: first, the unexpired term must be at least one year, for if it
were any shorter, there would be no occasion for such unexpired term to be measured by every year; and
second, the original term must be more than one year, for otherwise, whatever would be the unexpired term

32
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-à-vis Local Workers
With Fixed-Period Employment

As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of
illegally dismissed OFWs was in place. This uniform system was applicable even to local workers with fixed-
term employment.107

The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of
Commerce (1888),108 to wit:

Article 299. If the contracts between the merchants and their shop clerks and employees should have been
made of a fixed period, none of the contracting parties, without the consent of the other, may withdraw from the
fulfillment of said contract until the termination of the period agreed upon.

Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of
the provisions contained in the following articles.

In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to determine the liability of a
shipping company for the illegal discharge of its managers prior to the expiration of their fixed-term
employment. The Court therein held the shipping company liable for the salaries of its managers for
the remainder of their fixed-term employment.

There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which
provides:

Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite
period or voyage, they cannot be discharged until the fulfillment of their contracts, except for reasons of
insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or
to its cargo by malice or manifest or proven negligence.

Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in

33
which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally
dismissed employees for the entire unexpired portion of their employment contracts.

While Article 605 has remained good law up to the present,111 Article 299 of the Code of Commerce was
replaced by Art. 1586 of the Civil Code of 1889, to wit:

Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain
work cannot leave or be dismissed without sufficient cause, before the fulfillment of the contract. (Emphasis
supplied.)

Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a conjunctive "and"
so as to apply the provision to local workers who are employed for a time certain although for no particular skill.
This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company.113 And in
both Lemoine and Palomar, the Court adopted the general principle that in actions for wrongful discharge
founded on Article 1586, local workers are entitled to recover damages to the extent of the amount stipulated
to be paid to them by the terms of their contract. On the computation of the amount of such damages, the
Court in Aldaz v. Gay114 held:

The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to
the contrary under Spanish jurisprudence, that when an employee is wrongfully discharged it is his duty to
seek other employment of the same kind in the same community, for the purpose of reducing the damages
resulting from such wrongful discharge. However, while this is the general rule, the burden of showing that he
failed to make an effort to secure other employment of a like nature, and that other employment of a like nature
was obtainable, is upon the defendant. When an employee is wrongfully discharged under a contract of
employment his prima facie damage is the amount which he would be entitled to had he continued in such
employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich.,
492; Farrell vs. School District No. 2, 98 Mich., 43.)115 (Emphasis supplied)

On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2
(Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of
Work), Chapter 3, Title VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of
the Civil Code do not expressly provide for the remedies available to a fixed-term worker who is illegally
discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich,117 the Court carried over
the principles on the payment of damages underlying Article 1586 of the Civil Code of 1889 and applied the
same to a case involving the illegal discharge of a local worker whose fixed-period employment contract was
entered into in 1952, when the new Civil Code was already in effect.118

More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-
term employment contracts were illegally terminated, such as in First Asian Trans & Shipping Agency, Inc. v.
Ople,119involving seafarers who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National
Labor Relations Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period
employment contract as a baby sitter, was awarded salaries corresponding to the unexpired portion of her
contract. The Court arrived at the same ruling in Anderson v. National Labor Relations Commission,121 which
involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally dismissed
after only nine months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired
portion of his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission, 122 a Filipino
working as a security officer in 1989 in Angola was awarded his salaries for the remaining period of his 12-
month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor
Relations Commission,123 an OFW whose 12-month contract was illegally cut short in the second month was
declared entitled to his salaries for the remaining 10 months of his contract.

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally
discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to
their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042,
specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year

34
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 xx. 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)

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. BonifacioGallego 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.

35
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.

36
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.1avvphi1

Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the
subject clause from the lone perspective that the clause directly violates state policy on labor under Section
3,131Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are presumed self-executing,132 there are some which this
Court has declared not judicially enforceable, Article XIII being one,133 particularly Section 3 thereof, the
nature of which, this Court, in Agabon v. National Labor Relations Commission,134 has described to be not self-
actuating:

Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-
executing in the sense that these are automatically acknowledged and observed without need for any enabling
legislation. However, to declare that the constitutional provisions are enough to guarantee the full exercise of
the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not
unrealistic. The espousal of such view presents the dangerous tendency of being overbroad and exaggerated.
The guarantees of "full protection to labor" and "security of tenure", when examined in isolation, are facially
unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor against any
form of removal regardless of circumstance. This interpretation implies an unimpeachable right to continued
employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers. Subsequent
legislation is still needed to define the parameters of these guaranteed rights to ensure the protection and
promotion, not only the rights of the labor sector, but of the employers' as well. Without specific and pertinent
legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at least the aims of
the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable
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
BangkoSentralngPilipinas) Employee Association, Inc. v. BangkoSentralngPilipinas, 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

37
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement
of OFWs to their three-month salary in case of illegal dismissal, is to give them a better chance of getting hired
by foreign employers. This is plain speculation. As earlier discussed, there is nothing in the text of the law or
the records of the deliberations leading to its enactment or the pleadings of respondent that would indicate that
there is an existing governmental purpose for the subject clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental purpose; and it is for that precise
reason that the clause violates not just petitioner's right to equal protection, but also her right to substantive
due process under Section 1,137 Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of
nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment
of R.A. No. 8042.

On the Third Issue

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

Petitioner is mistaken.

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

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

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

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

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

WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year of the
unexpired term, whichever is less" in the 5th paragraph of Section 10 of Republic Act No. 8042
is DECLAREDUNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the
Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired
portion of his employment contract consisting of nine months and 23 days computed at the rate of
US$1,400.00 per month.

No costs.

SO ORDERED.

38
39
G.R. No. 175558               February 8, 2012

SKIPPERS UNITED PACIFIC, INC. and SKIPPERS MARITIME SERVICES, INC., LTD., Petitioners, 
vs.
NATHANIEL DOZA, NAPOLEON DE GRACIA, ISIDRO L. LATA, and CHARLIE APROSTA, Respondents.

DECISION

CARPIO, J.:

The Case

This is a Petition for Review under Rule 45 assailing the 5 July 2006 Decision1 and 7 November 2006
Resolution2of the Court of Appeals in CA-G.R. SP No. 88148.3

This arose from consolidated labor case4 filed by seafarers Napoleon De Gracia (De Gracia), Isidro L. Lata
(Lata), Charlie Aprosta (Aprosta), and Nathaniel Doza (Doza) against local manning agency Skippers United
Pacific, Inc. and its foreign principal, Skippers Maritime Services, Inc., Ltd. (Skippers) for unremitted home
allotment for the month of December 1998, salaries for the unexpired portion of their employment contracts,
moral damages, exemplary damages, and attorney’s fees. Skippers, on the other hand, answered with a claim
for reimbursement of De Gracia, Aprosta and Lata’s repatriation expenses, as well as award of moral damages
and attorney’s fees.

De Gracia, Lata, Aprosta and Doza’s (De Gracia, et al.) claims were dismissed by the Labor Arbiter for lack of
merit.5 The Labor Arbiter also dismissed Skippers’ claims.6 De Gracia, et al. appealed7 the Labor Arbiter’s
decision with the National Labor Relations Commission (NLRC), but the First Division of the NLRC dismissed
the appeal for lack of merit.8 Doza, et al.’s Motion for Reconsideration was likewise denied by the NLRC,9 so
they filed a Petition for Certiorari with the Court of Appeals (CA).10

The CA granted the petition, reversed the Labor Arbiter and NLRC Decisions, and awarded to De Gracia, Lata
and Aprosta their unremitted home allotment, three months salary each representing the unexpired portion of
their employment contracts and attorney’s fees.11 No award was given to Doza for lack of factual basis.12 The
CA denied Skippers’ Motion for Partial Reconsideration.13 Hence, this Petition.

The Facts

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

Name : Napoleon O. De Gracia

Position : 3rd Engineer
Contract Duration : 10 months
Basic Monthly Salary : US$800.00
Contract Date : 17 July 199814
Name : Isidro L. Lata
Position : 4th Engineer
Contract Duration : 12 months

40
 Basic Monthly Salary : US$600.00
Contract Date : 17 April 199815
Name : Charlie A. Aprosta
Position : Third Officer
Contract Duration : 12 months
Basic Monthly Salary : US$600.00
Contract Date : 17 April 199816

Paragraph 2 of all the employment contracts stated that: "The terms and conditions of the Revised
Employment Contract Governing the Employment of All Seafarers approved per Department Order No. 33 and
Memorandum Circular No. 55, both series of 1996 shall be strictly and faithfully observed."17 No employment
contract was submitted for Nathaniel Doza.

De Gracia, et al. claimed that Skippers failed to remit their respective allotments for almost five months,
compelling them to air their grievances with the Romanian Seafarers Free Union.18 On 16 December 1998, ITF
Inspector Adrian Mihalcioiu of the Romanian Seafarers Union sent Captain Savvas of Cosmos Shipping a fax
letter, relaying the complaints of his crew, namely: home allotment delay, unpaid salaries (only advances), late
provisions, lack of laundry services (only one washing machine), and lack of maintenance of the vessel
(perforated and unrepaired deck).19 To date, however, Skippers only failed to remit the home allotment for the
month of December 1998.20 On 28 January 1999, De Gracia, et al. were unceremoniously discharged from MV
Wisdom Stars and immediately repatriated.21 Upon arrival in the Philippines, De Gracia, et al. filed a complaint
for illegal dismissal with the Labor Arbiter on 4 April 1999 and prayed for payment of their home allotment for
the month of December 1998, salaries for the unexpired portion of their contracts, moral damages, exemplary
damages, and attorney’s fees.22

Skippers, on the other hand, claims that at around 2:00 a.m. on 3 December 1998, De Gracia, smelling
strongly of alcohol, went to the cabin of Gabriel Oleszek, Master of MV Wisdom Stars, and was rude, shouting
noisily to the master.23 De Gracia left the master’s cabin after a few minutes and was heard shouting very
loudly somewhere down the corridors.24 This incident was evidenced by the Captain’s Report sent via telex to
Skippers on said date.25

Skippers also claims that at 12:00 noon on 22 January 1999, four Filipino seafarers, namely Aprosta, De
Gracia, Lata and Doza, arrived in the master’s cabin and demanded immediate repatriation because they were
not satisfied with the ship.26 De Gracia, et al. threatened that they may become crazy any moment and
demanded for all outstanding payments due to them.27 This is evidenced by a telex of Cosmoship MV Wisdom
to Skippers, which however bears conflicting dates of 22 January 1998 and 22 January 1999.28

Skippers also claims that, due to the disembarkation of De Gracia, et al., 17 other seafarers disembarked
under abnormal circumstsances.29 For this reason, it was suggested that Polish seafarers be utilized instead of
Filipino seamen.30 This is again evidenced by a fax of Cosmoship MV Wisdom to Skippers, which bears
conflicting dates of 24 January 1998 and 24 January 1999.31

Skippers, in its Position Paper, admitted non-payment of home allotment for the month of December 1998, but
prayed for the offsetting of such amount with the repatriation expenses in the following manner:32

Seafarer Repatriation Expense Home Allotment Balance

De Gracia US$1,340.00 US$900.00 US$440.00
Aprosta US$1,340.00 US$600.00 US$740.00
Lata US$1,340.00 US$600.00 US$740.00

41
Since De Gracia, et al. pre-terminated their contracts, Skippers claims they are liable for their repatriation
expenses33 in accordance with Section 19(G) of Philippine Overseas Employment Administration (POEA)
Memorandum Circular No. 55, series of 1996 which states:

G. A seaman who requests for early termination of his contract shall be liable for his repatriation cost as well as
the transportation cost of his replacement. The employer may, in case of compassionate grounds, assume the
transportation cost of the seafarer’s replacement.

Skippers also prayed for payment of moral damages and attorney’s fees.34

The Decision of the Labor Arbiter

The Labor Arbiter rendered his Decision on 18 February 2002, with its dispositive portion declaring:

WHEREFORE, judgment is hereby rendered dismissing herein action for lack of merit. Respondents’ claim for
reimbursement of the expenses they incurred in the repatriation of complainant Nathaniel Doza is likewise
dismissed.

SO ORDERED.35

The Labor Arbiter dismissed De Gracia, et al.’s complaint for illegal dismissal because the seafarers voluntarily
pre-terminated their employment contracts by demanding for immediate repatriation due to dissatisfaction with
the ship.36 The Labor Arbiter held that such voluntary pre-termination of employment contract is akin to
resignation,37 a form of termination by employee of his employment contract under Article 285 of the Labor
Code. The Labor Arbiter gave weight and credibility to the telex of the master of the vessel to Skippers,
claiming that De Gracia, et al. demanded for immediate repatriation.38 Due to the absence of illegal dismissal,
De Gracia, et. al.’s claim for salaries representing the unexpired portion of their employment contracts was
dismissed.39

The Labor Arbiter also dismissed De Gracia et al.’s claim for home allotment for December 1998.40 The Labor
Arbiter explained that payment for home allotment is "in the nature of extraordinary money where the burden of
proof is shifted to the worker who must prove he is entitled to such monetary benefit."41 Since De Gracia, et al.
were not able to prove their entitlement to home allotment, such claim was dismissed.42

Lastly, Skippers’ claim for reimbursement of repatriation expenses was likewise denied, since Article 19(G) of
POEA Memorandum Circular No. 55, Series of 1996 allows the employer, in case the seafarer voluntarily pre-
terminates his contract, to assume the repatriation cost of the seafarer on compassionate grounds.43

The Decision of the NLRC

The NLRC, on 28 October 2002, dismissed De Gracia, et al.’s appeal for lack of merit and affirmed the Labor
Arbiter’s decision.44 The NLRC considered De Gracia, et al.’s claim for home allotment for December 1998
unsubstantiated, since home allotment is a benefit which De Gracia, et al. must prove their entitlement to.45 The
NLRC also denied the claim for illegal dismissal because De Gracia, et al. were not able to refute the telex
received by Skippers from the vessel’s master that De Gracia, et al. voluntarily pre-terminated their contracts
and demanded immediate repatriation due to their dissatisfaction with the ship’s operations.46

The Decision of the Court of Appeals

The CA, on 5 July 2006, granted De Gracia, et al.’s petition and reversed the decisions of the Labor Arbiter
and NLRC, its dispositive portion reading as follows:

WHEREFORE, the instant petition for certiorari is GRANTED. The Resolution dated October 28, 2002 and the
Order dated August 31, 2004 rendered by the public respondent NLRC are ANNULLED and SET ASIDE. Let

42
another judgment be entered holding private respondents jointly and severally liable to petitioners for the
payment of:

1. Unremitted home allotment pay for the month of December, 1998 or the equivalent thereof in
Philippine pesos:

a. De Gracia = US$900.00

b. Lata = US$600.00

c. Aprosta = US$600.00

2. Salary for the unexpired portion of the employment contract or for 3 months for every year of the
unexpired term, whichever is less, or the equivalent thereof in Philippine pesos:

a. De Gracia = US$2,400.00

b. Lata = US$1,800.00

c. Aprosta = US$1,800.00

3. Attorney’s fees and litigation expenses equivalent to 10% of the total claims.

SO ORDERED.47

The CA declared the Labor Arbiter and NLRC to have committed grave abuse of discretion when they relied
upon the telex message of the captain of the vessel stating that De Gracia, et al. voluntarily pre-terminated
their contracts and demanded immediate repatriation.48 The telex message was "a self-serving document that
does not satisfy the requirement of substantial evidence, or that amount of relevant evidence which a
reasonable mind might accept as adequate to justify the conclusion that petitioners indeed voluntarily
demanded their immediate repatriation."49 For this reason, the repatriation of De Gracia, et al. prior to the
expiration of their contracts showed they were illegally dismissed from employment.50

In addition, the failure to remit home allotment pay was effectively admitted by Skippers, and prayed to be
offset from the repatriation expenses.51 Since there is no proof that De Gracia, et al. voluntarily pre-terminated
their contracts, the repatriation expenses are for the account of Skippers, and cannot be offset with the home
allotment pay for December 1998.52

No relief was granted to Doza due to lack of factual basis to support his petition.53 Attorney’s fees equivalent to
10% of the total claims was granted since it involved an action for recovery of wages or where the employee
was forced to litigate and incur expenses to protect his rights and interest.54

The Issues

Skippers, in its Petition for Review on Certiorari, assigned the following errors in the CA Decision:

a) The Court of Appeals seriously erred in not giving due credence to the master’s telex message
showing that the respondents voluntarily requested to be repatriated.

b) The Court of Appeals seriously erred in finding petitioners liable to pay backwages and the alleged
unremitted home allotment pay despite the finding of the Labor Arbiter and the NLRC that the claims
are baseless.

43
 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)

44
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
Aprosta US$600.00
Lata US$600.00

The monthly salary of De Gracia, according to his employment contract, is only US$800.00. However, since
Skippers admitted in its Position Paper a higher home allotment pay for De Gracia, we award the higher
amount of home allotment pay for De Gracia in the amount of US$900.00. Since the home allotment pay can
be considered as unpaid salaries, the peso equivalent of the dollar amount should be computed using the
prevailing rate at the time of termination since it was due and demandable to De Gracia, et al. on 28 January
1999.

Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust
termination of employment contracts:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.

The Migrant Workers Act provides that salaries for the unexpired portion of the employent contract or three (3)
months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino
worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and
Marlow Navigation Co. Inc.,58 the Court, in an En Banc Decision, declared unconstitutional the clause "or for
three months for every year of the unexpired term, whichever is less" and awarded the entire unexpired portion
of the employment contract to the overseas Filipino worker.

On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the
Migrant Workers Act, and once again reiterated the provision of awarding the unexpired portion of the
employent contract or three (3) months for every year of the unexpired term, whichever is less.

Nevertheless, since the termination occurred on January 1999 before the passage of the amendatory RA
10022, we shall apply RA 8042, as unamended, without touching on the constitutionality of Section 7 of RA
10022.

The declaration in March 2009 of the unconstitutionality of the clause "or for three months for every year of the
unexpired term, whichever is less" in RA 8042 shall be given retroactive effect to the termination that occurred
in January 1999 because an unconstitutional clause in the law confers no rights, imposes no duties and affords
no protection. The unconstitutional provision is inoperative, as if it was not passed into law at all.59

45
As such, we compute the claims as follows:

Contract Contract Repatriation Unexpired Monthly

Seafarer Total Claims
Term Date Date Term Salary
De 10 months 17 Jul. 28 Jan. 1999 3 months & 20 US$800 US$2933.34
Gracia 1998 days
Lata 12 months 17 Apr. 28 Jan. 1999 2 months & 20 US$600 US$1600
1998 days
Aprosta 12 months 17 Apr. 28 Jan. 1999 2 months & 20 US$600 US$1600
1998 days

Given the above computation, we modify the CA’s imposition of award, and grant to De Gracia, et al. salaries
representing the unexpired portion of their contracts, instead of salaries for three (3) months.

Article 2219 of the Civil Code of the Philippines provides for recovery of moral damages in certain cases:

Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in Article 309;

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also
recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of
this article, in the order named.

Article 2229 of the Civil Code, on the other hand, provides for recovery of exemplary damages:

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good,
in addition to the moral, temperate, liquidated or compensatory damages.

In this case, we agree with the CA in not awarding moral and exemplary damages for lack of factual basis.

Lastly, Article 2208 of the Civil Code provides for recovery of attorney’s fees and expenses of litigation:

46
Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly
valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen’s compensation and employer’s liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of
litigation should be recovered.

In all cases, the attorney’s fees and expenses of litigation must be reasonable.

Article 111 of the Labor Code provides for a maximum award of attorney’s fees in cases of recovery of wages:

Art. 111. Attorney’s fees.

a. In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees
equivalent to ten percent of the amount of wages recovered.

b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings
for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.

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

WHEREFORE, we AFFIRM the Decision of the Court of Appeals dated 5 July 2006 with MODIFICATION.
Petitioners Skippers United Pacific, Inc. and Skippers Maritime Services Inc., Ltd. are jointly and severally
liable for payment of the following:

1) Unremitted home allotment pay for the month of December 1998 in its equivalent rate in Philippine
Pesos at the time of termination on 28 January 1999:

a. De Gracia = US$900.00

b. Lata = US$600.00

47
 c. Aprosta = US$600.00

2) Salary for the unexpired portion of the employment contract or its current equivalent in Philippine
Pesos:

a. De Gracia = US$2,933.34

b. Lata = US$1,600.00

c. Aprosta = US$1,600.00

3) Attorney’s fees and litigation expenses equivalent to 10% of the total claims.

SO ORDERED.

48
 [G.R. NO. 197528 - September 5, 2012]

PERT/CPM MANPOWER EXPONENT CO., INC., Petitioner, v. ARMANDO A. VINUY A, LOUIE M.

ORDOVEZ, ARSENIO S. LUMANTA,. JR., ROBELITO S. ANIPAN, VIRGILIO R. ALCANTARA, MARINO M.
ERA, SANDY 0. ENJAMBRE and NOEL T. LADEA, Respondents.

DECISION

BRION, J.:

We resolve the present Petition for Review on Certiorari 1Ï‚rνll assailing the decision2Ï‚rνll dated May 9, 2011
and the resolution3dated June 23, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 114353.

The Antecedents

On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez, Arsenio S. Lumanta, Jr., Robelito S.
Anipan, Virgilio R. Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T. Ladea (respondents) filed a
complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co., Inc. (agency), and its
President Romeo P. Nacino.

The respondents alleged that the agency deployed them between March 29, 2007 and May 12, 2007 to work
as aluminum fabricator/installer for the agency s principal, Modern Metal Solution LLC/MMS Modern Metal
Solution LLC (Modern Metal) in Dubai, United Arab Emirates.

The respondents employment contracts,4Ï‚rνll which were approved by the Philippine Overseas Employment
Administration (POEA), provided for a two-year employment, nine hours a day, salary of 1,350 AED with
overtime pay, food allowance, free and suitable housing (four to a room), free transportation, free laundry, and
free medical and dental services. They each paid a P 15,000.00 processing fee.5Ï‚rνllÏ‚rνll

On April 2, 2007, Modern Metal gave the respondents, except Era, appointment letters6Ï‚rνll with terms
different from those in the employment contracts which they signed at the agency s office in the Philippines.
Under the letters of appointment, their employment was increased to three years at 1,000 to 1,200 AED and
food allowance of 200 AED.

The respondents claimed that they were shocked to find out what their working and living conditions were in
Dubai. They were required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half
hours. When they rendered overtime work, they were most of the time either underpaid or not paid at all. Their
housing accommodations were cramped and were shared with 27 other occupants. The lodging house was in
Sharjah, which was far from their jobsite in Dubai, leaving them only three to four hours of sleep a day because
of the long hours of travel to and from their place of work; there was no potable water and the air was polluted.

When the respondents received their first salaries (at the rates provided in their appointment letters and with
deductions for placement fees) and because of their difficult living and working conditions, they called up the
agency and complained about their predicament. The agency assured them that their concerns would be
promptly addressed, but nothing happened.

On May 5, 2007, Modern Metal required the respondents to sign new employment contracts,7Ï‚rνll except for
Era who was made to sign later. The contracts reflected the terms of their appointment letters. Burdened by all
the expenses and financial obligations they incurred for their deployment, they were left with no choice but to
sign the contracts. They raised the matter with the agency, which again took no action.

On August 5, 2007, despondent over their unbearable living and working conditions and by the agency s
inaction, the respondents expressed to Modern Metal their desire to resign. Out of fear, as they put it, that
Modern Metal would not give them their salaries and release papers, the respondents, except Era, cited

49
personal/family problems for their resignation.8Ï‚rνll Era mentioned the real reason "because I dont (sic) want
the company policy"9Ï‚rνll for his resignation.

It took the agency several weeks to repatriate the respondents to the Philippines. They all returned to Manila in
September 2007. Except for Ordovez and Enjambre, all the respondents shouldered their own airfare.

For its part, the agency countered that the respondents were not illegally dismissed; they voluntarily resigned
from their employment to seek a better paying job. It claimed that the respondents, while still working for
Modern Metal, applied with another company which offered them a higher pay. Unfortunately, their supposed
employment failed to materialize and they had to go home because they had already resigned from Modern
Metal.

The agency further alleged that the respondents even voluntarily signed affidavits of quitclaim and release after
they resigned. It thus argued that their claim for benefits, under Section 10 of Republic Act No. (R.A.) 8042,
damages and attorney s fees is unfounded.

The Compulsory Arbitration Rulings

On April 30, 2008, Labor Arbiter Ligerio V. Ancheta rendered a Decision10Ï‚rνll dismissing the complaint,
finding that the respondents voluntarily resigned from their jobs. He also found that four of them Alcantara, Era,
Anipan and Lumanta even executed a compromise agreement (with quitclaim and release) before the POEA.
He considered the POEA recourse a case of forum shopping.

The respondents appealed to the National Labor Relations Commission (NLRC). They argued that the labor
arbiter committed serious errors in (1) admitting in evidence the quitclaims and releases they executed in
Dubai, which were mere photocopies of the originals and which failed to explain the circumstances behind their
execution; (2) failing to consider that the compromise agreements they signed before the POEA covered only
the refund of their airfare and not all their money claims; and (3) ruling that they violated the rule on non-forum
shopping.

On May 12, 2009, the NLRC granted the appeal.11Ï‚rνll It ruled that the respondents had been illegally
dismissed. It anchored its ruling on the new employment contracts they were made to sign in Dubai. It stressed
that it is illegal for an employer to require its employees to execute new employment papers, especially those
which provide benefits that are inferior to the POEA-approved contracts.

The NLRC rejected the quitclaim and release executed by the respondents in Dubai. It believed that the
respondents executed the quitclaim documents under duress as they were afraid that they would not be
allowed to return to the Philippines if they did not sign the documents. Further, the labor tribunal disagreed with
the labor arbiter s opinion that the compromise agreement they executed before the POEA had effectively
foreclosed the illegal dismissal complaint before the NLRC and that the respondents had been guilty of forum
shopping. It pointed out that the POEA case involved pre-deployment issues; whereas, the complaint before
the NLRC is one for illegal dismissal and money claims arising from employment.

Consequently, the NLRC ordered the agency, Nacino and Modern Metal to pay, jointly and severally, the
respondents, as follows:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

WHEREFORE, the Decision dated 30 April 2008 is hereby REVERSED and SET ASIDE, a new Decision is
hereby issued ordering the respondents PERT/CPM MANPOWER EXPONENTS CO., INC., ROMEO
NACINO, and MODERN METAL SOLUTIONS, INC. to jointly and severally, pay the complainants the
following:

Employee Underpaid Placement Salary for Exemplary

Salary fee the Damages
unexpired

50
 portion of
the contract
(1350 x 6
months)
Vinuya,
150 x 6 = 900 AED USD 400 8100 AED P 20,000.00
ARMANDO
Alcantara
150 X 4 = 600 AED USD 400 8100 AED P 20,000.00
VIRGILIO
Era,
350 x 4 = 1400 AED USD 400 8100 AED P 20,000.00
MARINO
Ladea,
150 x 5 = 750 AED USD 400 8100 AED P 20,000.00
NOEL
Ordovez,
250 X 3 = 750 AED USD 400 8100 AED P 20,000.00
LOUIE
Anipan,
150 x 4 = 600 AED USD 400 8100 AED P 20,000.00
ROBELITO
Enjambre,
150 x 4 = 600 AED USD 400 8100 AED P 20,000.00
SANDY
Lumanta,
250 x 5 = 1250 AED USD 400 8100 AED P 20,000.00
ARSENIO

TOTAL: 6,850 AED US$3,200 64,800 AED P 400,000.00

or their peso equivalent at the time of actual payment plus attorney s fees equivalent to 10% of the judgment
award.12ςrνllςrνll

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The agency moved for reconsideration, contending that the appeal was never perfected and that the NLRC
gravely abused its discretion in reversing the labor arbiter s decision.The respondents, on the other hand,
moved for partial reconsideration, maintaining that their salaries should have covered the unexpired portion of
their employment contracts, pursuant to the Court s ruling in Serrano v. Gallant Maritime Services,
Inc.13ςrνllςrνll

The NLRC denied the agency s motion for reconsideration, but granted the respondents motion.14Ï‚rνll It
sustained the respondents argument that the award needed to be adjusted, particularly in relation to the
payment of their salaries, consistent with the Court s ruling in Serrano. The ruling declared unconstitutional the
clause, "or for three (3) months for every year of the unexpired term, whichever is less," in Section 10,
paragraph 5, of R.A. 8042, limiting the entitlement of illegally dismissed overseas Filipino workers to their
salaries for the unexpired term of their contract or three months, whichever is less. Accordingly, it modified its
earlier decision and adjusted the respondents salary entitlement based on the following matrix:

Employee Departure date Date dismissed Unexpired

Duration of
portion of
Contract
contract

51
 Vinuya, 19 months
2 years 29 March 2007 8 August 2007
ARMANDO and 21 days

Alcantara, 20 months
2 years 3 April 2007 8 August 2007
VIRGILIO and 5 days

Era, 21 months
2 years 12 May 2007 8 August 2007
MARINO and 4 days

Ladea, 19 months
2 years 29 March 2007 8 August 2007
NOEL and 21 days

Ordovez, 21 months
2 years 3 April 2007 26 July 2007
LOUIE and 23 days

Anipan, 20 months
2 years 3 April 2007 8 August 2007
ROBELITO and 5 days

Enjambre, 20 months
2 years 29 March 2007 26 July 2007
SANDY and 3 days

Lumanta, 19 months
2 years 29 March 2007 8 August 2007
ARSENIO and 21 days15ςrνll

Again, the agency moved for reconsideration, reiterating its earlier arguments and, additionally, questioning the
application of the Serrano ruling in the case because it was not yet final and executory. The NLRC denied the
motion, prompting the agency to seek recourse from the CA through a Petition for Certiorari.

The CA Decision

The CA dismissed the petition for lack of merit.16Ï‚rνll It upheld the NLRC ruling that the respondents were
illegally dismissed. It found no grave abuse of discretion in the NLRC s rejection of the respondents resignation
letters, and the accompanying quitclaim and release affidavits, as proof of their voluntary termination of
employment.

The CA stressed that the filing of a complaint for illegal dismissal is inconsistent with resignation. Moreover, it
found nothing in the records to substantiate the agency s contention that the respondents resignation was of
their own accord; on the contrary, it considered the resignation letters "dubious for having been lopsidedly-
worded to ensure that the petitioners (employers) are free from any liability."17ςrνllςrνll

The appellate court likewise refused to give credit to the compromise agreements that the respondents
executed before the POEA. It agreed with the NLRC s conclusion that the agreements pertain to the
respondents charge of recruitment violations against the agency distinct from their illegal dismissal complaint,
thus negating forum shopping by the respondents.

52
Lastly, the CA found nothing legally wrong in the NLRC correcting itself (upon being reminded by the
respondents), by adjusting the respondents salary award on the basis of the unexpired portion of their
contracts, as enunciated in the Serrano case.

The agency moved for, but failed to secure, a reconsideration of the CA decision.18ςrνllςrνll

The Petition

The agency is now before the Court seeking a reversal of the CA dispositions, contending that the CA erred
in:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

1. affirming the NLRC s finding that the respondents were illegally dismissed;

2. holding that the compromise agreements before the POEA pertain only to the respondents charge of
recruitment violations against the agency; andcralawlibrary

3. affirming the NLRC s award to the respondents of their salaries for the unexpired portion of their
employment contracts, pursuant to the Serrano ruling.

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The agency insists that it is not liable for illegal dismissal, actual or constructive. It submits that as correctly
found by the labor arbiter, the respondents voluntarily resigned from their jobs, and even executed affidavits of
quitclaim and release; the respondents stated family concerns for their resignation. The agency posits that the
letters were duly proven as they were written unconditionally by the respondents. It, therefore, assails the
conclusion that the respondents resigned under duress or that the resignation letters were dubious.

The agency raises the same argument with respect to the compromise agreements, with quitclaim and release,
it entered into with Vinuya, Era, Ladea, Enjambre, Ordovez, Alcantara, Anipan and Lumanta before the POEA,
although it submitted evidence only for six of them. Anipan, Lumanta, Vinuya and Ladea signing one
document;19Ï‚rνll Era20Ï‚rνll and Alcantara21Ï‚rνll signing a document each. It points out that the agreement
was prepared with the assistance of POEA Conciliator Judy Santillan, and was duly and freely signed by the
respondents; moreover, the agreement is not conditional as it pertains to all issues involved in the dispute
between the parties.

On the third issue, the agency posits that the Serrano ruling has no application in the present case for three
reasons. First, the respondents were not illegally dismissed and, therefore, were not entitled to their money
claims. Second, the respondents filed the complaint in 2007, while the Serrano ruling came out on March 24,
2009. The ruling cannot be given retroactive application. Third, R.A. 10022, which was enacted on March 8,
2010 and which amended R.A. 8042, restored the subject clause in Section 10 of R.A. 8042, declared
unconstitutional by the Court.

The Respondents Position

In their Comment (to the Petition) dated September 28, 2011,22Ï‚rνll the respondents ask the Court to deny the
petition for lack of merit. They dispute the agency s insistence that they resigned voluntarily. They stand firm
on their submission that because of their unbearable living and working conditions in Dubai, they were left with
no choice but to resign. Also, the agency never refuted their detailed narration of the reasons for giving up their
employment.

The respondents maintain that the quitclaim and release affidavits,23Ï‚rνll which the agency presented, betray
its desperate attempt to escape its liability to them. They point out that, as found by the NLRC, the affidavits
are ready-made documents; for instance, in Lumanta s24Ï‚rνll and Era s25Ï‚rνll affidavits, they mentioned a
certain G & A International Manpower as the agency which recruited them a fact totally inapplicable to all the

53
respondents. They contend that they had no choice but to sign the documents; otherwise, their release papers
and remaining salaries would not be given to them, a submission which the agency never refuted.

On the agency s second line of defense, the compromise agreement (with quitclaim and release) between the
respondents and the agency before the POEA, the respondents argue that the agreements pertain only to their
charge of recruitment violations against the agency. They add that based on the agreements, read and
considered entirely, the agency was discharged only with respect to the recruitment and pre-deployment
issues such as excessive placement fees, non-issuance of receipts and placement misrepresentation, but not
with respect to post-deployment issues such as illegal dismissal, breach of contract, underpayment of salaries
and underpayment and nonpayment of overtime pay. The respondents stress that the agency failed to
controvert their contention that the agreements came about only to settle their claim for refund of their airfare
which they paid for when they were repatriated.

Lastly, the respondents maintain that since they were illegally dismissed, the CA was correct in upholding the
NLRC s award of their salaries for the unexpired portion of their employment contracts, as enunciated in
Serrano. They point out that the Serrano ruling is curative and remedial in nature and, as such, should be
given retroactive application as the Court declared in Yap v. ThenamarisShip s Management.26Ï‚rνll Further,
the respondents take exception to the agency s contention that the Serrano ruling cannot, in any event, be
applied in the present case in view of the enactment of R.A. 10022 on March 8, 2010, amending Section 10 of
R.A. 8042. The amendment restored the subject clause in paragraph 5, Section 10 of R.A. 8042 which was
struck down as unconstitutional in Serrano.

The respondents maintain that the agency cannot raise the issue for the first time before this Court when it
could have raised it before the CA with its Petition for Certiorari which it filed on June 8,
2010;27Ï‚rνll otherwise, their right to due process will be violated. The agency, on the other hand, would later
claim that it is not barred by estoppel with respect to its reliance on R.A. 10022 as it raised it before the CA in
CA-G.R. SP No. 114353.28Ï‚rνll They further argue that RA 10022 cannot be applied in their case, as the law
is an amendatory statute which is, as a rule, prospective in application, unless the contrary is
provided.29Ï‚rνll To put the issue to rest, the respondents ask the Court to also declare unconstitutional
Section 7 of R.A. 10022.

Finally, the respondents submit that the petition should be dismissed outright for raising only questions of fact,
rather than of law.

The Court s Ruling

The procedural question

We deem it proper to examine the facts of the case on account of the divergence in the factual conclusions of
the labor arbiter on the one hand, and, of the NLRC and the CA, on the other.30Ï‚rνll The arbiter found no
illegal dismissal in the respondents loss of employment in Dubai because they voluntarily resigned; whereas,
the NLRC and the CA adjudged them to have been illegally dismissed because they were virtually forced to
resign.

The merits of the case

We find no merit in the petition. The CA committed no reversible error and neither did it commit grave
abuse of discretion in affirming the NLRC s illegal dismissal ruling.

The agency and its principal, Modern Metal, committed flagrant violations of the law on overseas employment,
as well as basic norms of decency and fair play in an employment relationship, pushing the respondents to
look for a better employment and, ultimately, to resign from their jobs.

First. The agency and Modern Metal are guilty of contract substitution. The respondents entered into a POEA-
approved two-year employment contract,31Ï‚rνll with Modern Metal providing among others, as earlier

54
discussed, for a monthly salary of 1350 AED. On April 2, 2007, Modern Metal issued to them appointment
letters32Ï‚rνll whereby the respondents were hired for a longer three-year period and a reduced salary, from
1,100 AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they were required to sign new
employment contracts33Ï‚rνll reflecting the same terms contained in their appointment letters, except that this
time, they were hired as "ordinary laborer," no longer aluminum fabricator/installer. The respondents
complained with the agency about the contract substitution, but the agency refused or failed to act on the
matter.

The fact that the respondents contracts were altered or substituted at the workplace had never been denied by
the agency. On the contrary, it admitted that the contract substitution did happen when it argued, "as to their
claim for underpayment of salary, their original contract mentioned 1350 AED monthly salary, which includes
allowance while in their Appointment Letters, they were supposed to receive 1,300 AED. While there was a
difference of 50 AED monthly, the same could no longer be claimed by virtue of their Affidavits of Quitclaims
and Desistance."34ςrνllςrνll

Clearly, the agency and Modern Metal committed a prohibited practice and engaged in illegal recruitment
under the law. Article 34 of the Labor Code provides:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

Art. 34. Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder of authority:

x    x    x

(i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time
of actual signing thereof by the parties up to and including the periods of expiration of the same without the
approval of the Secretary of Labor.

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Further, Article 38 of the Labor Code, as amended by R.A. 8042,35Ï‚rνll defined "illegal recruitment" to include
the following act:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the
Department of Labor and Employment from the time of actual signing thereof by the parties up to and including
the period of the expiration of the same without the approval of the Department of Labor and Employment.

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Second. The agency and Modern Metal committed breach of contract. Aggravating the contract substitution
imposed upon them by their employer, the respondents were made to suffer substandard (shocking, as they
put it) working and living arrangements. Both the original contracts the respondents signed in the Philippines
and the appointment letters issued to them by Modern Metal in Dubai provided for free housing and
transportation to and from the jobsite. The original contract mentioned free and suitable
housing.36Ï‚rνll Although no description of the housing was made in the letters of appointment except:
"Accommodation: Provided by the company," it is but reasonable to think that the housing or accommodation
would be "suitable."

As earlier pointed out, the respondents were made to work from 6:30 a.m. to 6:30 p.m., with a meal break of
one to one and a half hours, and their overtime work was mostly not paid or underpaid. Their living quarters
were cramped as they shared them with 27 other workers. The lodging house was in Sharjah, far from the
jobsite in Dubai, leaving them only three to four hours of sleep every workday because of the long hours of
travel to and from their place of work, not to mention that there was no potable water in the lodging house
which was located in an area where the air was polluted. The respondents complained with the agency about
the hardships that they were suffering, but the agency failed to act on their reports. Significantly, the agency
failed to refute their claim, anchored on the ordeal that they went through while in Modern Metal s employ.

55
Third. With their original contracts substituted and their oppressive working and living conditions unmitigated
or unresolved, the respondents decision to resign is not surprising. They were compelled by the dismal state of
their employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal
or discharge is "a quitting because continued employment is rendered impossible, unreasonable or unlikely,
as, an offer involving a demotion in rank and a diminution in pay."37ςrνllςrνll

Without doubt, the respondents continued employment with Modern Metal had become unreasonable. A
reasonable mind would not approve of a substituted contract that pays a diminished salary from 1350 AED a
month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to
250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such
inferior terms, or a "free and suitable" housing which is hours away from the job site, cramped and crowded,
without potable water and exposed to air pollution.

We thus cannot accept the agency s insistence that the respondents voluntarily resigned since they personally
prepared their resignation letters38Ï‚rνll in their own handwriting, citing family problems as their common
ground for resigning. As the CA did, we find the resignation letters "dubious,"39Ï‚rνll not only for having been
lopsidedly worded to ensure that the employer is rendered free from any liability, but also for the odd
coincidence that all the respondents had, at the same time, been confronted with urgent family problems so
that they had to give up their employment and go home. The truth, as the respondents maintain, is that they
cited family problems as reason out of fear that Modern Metal would not give them their salaries and their
release papers. Only Era was bold enough to say the real reason for his resignation to protest company policy.

We likewise find the affidavits40of quitclaim and release which the respondents executed suspect. Obviously,
the affidavits were prepared as a follow through of the respondents supposed voluntary resignation. Unlike the
resignation letters, the respondents had no hand in the preparation of the affidavits. They must have been
prepared by a representative of Modern Metal as they appear to come from a standard form and were
apparently introduced for only one purpose to lend credence to the resignation letters. In Modern Metal s
haste, however, to secure the respondents affidavits, they did not check on the model they used. Thus,
Lumanta s affidavit41Ï‚rνll mentioned a G & A International Manpower as his recruiting agency, an entity totally
unknown to the respondents; the same thing is true for Era s affidavit.42Ï‚rνll This confusion is an indication of
the employer s hurried attempt to avoid liability to the respondents.

The respondents position is well-founded. The NLRC itself had the same impression, which we find in order
and hereunder quote:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The acts of respondents of requiring the signing of new contracts upon reaching the place of work and
requiring employees to sign quitclaims before they are paid and repatriated to the Philippines are all too
familiar stories of despicable labor practices which our employees are subjected to abroad. While it is true that
quitclaims are generally given weight, however, given the facts of the case, We are of the opinion that the
complainants-appellants executed the same under duress and fear that they will not be allowed to return to the
Philippines.43ςrνllςrνll

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Fourth. The compromise agreements (with quitclaim and release)44Ï‚rνll between the respondents and the
agency before the POEA did not foreclose their employer-employee relationship claims before the NLRC. The
respondents, except Ordovez and Enjambre, aver in this respect that they all paid for their own airfare when
they returned home45Ï‚rνll and that the compromise agreements settled only their claim for refund of their
airfare, but not their other claims.46Ï‚rνll Again, this submission has not been refuted or denied by the agency.

On the surface, the compromise agreements appear to confirm the agency s position, yet a closer examination
of the documents would reveal their true nature. Copy of the compromise agreement is a standard POEA
document, prepared in advance and readily made available to parties who are involved in disputes before the
agency, such as what the respondents filed with the POEA ahead (filed in 2007) of the illegal dismissal
complaint before the NLRC (filed on March 5, 2008).

56
Under the heading "Post-Deployment," the agency agreed to pay Era47Ï‚rνll and Alcantara48Ï‚rνllP 12,000.00
each, purportedly in satisfaction of the respondents claims arising from overseas employment, consisting of
unpaid salaries, salary differentials and other benefits, including money claims with the NLRC. The last
document was signed by (1) Anipan, (2) Lumanta, (3) Ladea, (4) Vinuya, (5) Jonathan Nangolinola, and (6)
ZosimoGatchalian (the last four signing on the left hand side of the document; the last two were not among
those who filed the illegal dismissal complaint).49ςrνllςrνll

The agency agreed to pay them a total of P 72,000.00. Although there was no breakdown of the entitlement for
each of the six, but guided by the compromise agreement signed by Era and Alcantara, we believe that the
agency paid them P 12,000.00 each, just like Era and Alcantara.

The uniform insubstantial amount for each of the signatories to the agreement lends credence to their
contention that the settlement pertained only to their claim for refund of the airfare which they shouldered when
they returned to the Philippines. The compromise agreement, apparently, was intended by the agency as a
settlement with the respondents and others with similar claims, which explains the inclusion of the two
(Nangolinola and Gatchalian) who were not involved in the case with the NLRC. Under the circumstances, we
cannot see how the compromise agreements can be considered to have fully settled the respondents claims
before the NLRC illegal dismissal and monetary benefits arising from employment. We thus find no reversible
error nor grave abuse of discretion in the rejection by the NLRC and the CA of said agreements.

Fifth. The agency s objection to the application of the Serrano ruling in the present case is of no moment. Its
argument that the ruling cannot be given retroactive effect, because it is curative and remedial, is untenable. It
points out, in this respect, that the respondents filed the complaint in 2007, while the Serrano ruling was
handed down in March 2009. The issue, as the respondents correctly argue, has been resolved in Yap v.
ThenamarisShip s Management,50Ï‚rνll where the Court sustained the retroactive application of the Serrano
ruling which declared unconstitutional the subject clause in Section 10, paragraph 5 of R.A. 8042, limiting to
three months the payment of salaries to illegally dismissed Overseas Filipino Workers.

Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022,
entitled "An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas
Filipinos Act of 1995, As Amended, Further Improving the Standard of Protection and Promotion of the Welfare
of Migrant Workers, Their Families and Overseas Filipinos in Distress, and For Other Purposes." 51Ï‚rνll It
argues that R.A. 10022, which lapsed into law (without the Signature of the President) on March 8, 2010,
restored the subject clause in the 5th paragraph, Section 10 of R.A. 8042. The amendment, contained in
Section 7 of R.A. 10022, reads as follows:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

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 "of" 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.52Ï‚rνll (emphasis ours)

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This argument fails to persuade us. Laws shall have no retroactive effect, unless the contrary is
provided.53Ï‚rνll By its very nature, the amendment introduced by R.A. 10022 restoring a provision of R.A.
8042 declared unconstitutional cannot be given retroactive effect, not only because there is no express
declaration of retroactivity in the law, but because retroactive application will result in an impairment of a right
that had accrued to the respondents by virtue of the Serrano ruling - entitlement to their salaries for the
unexpired portion of their employment contracts.

All statutes are to be construed as having only a prospective application, unless the purpose and intention of
the legislature to give them a retrospective effect are expressly declared or are necessarily implied from the
language used.54Ï‚rνll We thus see no reason to nullity the application of the Serrano ruling in the present
case. Whether or not R.A. 1 0022 is constitutional is not for us to rule upon in the present case as this is an

57
issue that is not squarely before us. In other words, this is an issue that awaits its proper day in court; in the
meanwhile, we make no pronouncement on it.

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision dated May 9, 2011 and
the Resolution dated June 23, 2011 of the Court of Appeals in CA-G.R. SP No. 114353 are AFFIRMED. Let
this Decision be brought to the attention of the Honorable Secretary of Labor and Employment and the
Administrator of the Philippine Overseas Employment Administration as a black mark in the deployment record
of petitioner Pert/CPM Manpower Exponent Co., Inc., and as a record that should be considered in any similar
future violations.

Costs against the petitioner.ςrαlαωlιbrαrÿ

SO ORDERED.

58
G.R. No. 170139               August 5, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, 

vs.
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 RelationsCommission’s resolution dated March
31, 2004,3declaring respondent’s dismissal illegal, directing petitioner to pay respondent’s three-month salary
equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from
respondent, and pay her NT$300.00 attorney’s fees.4

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.5 Responding to
an ad it published, respondent, Joy C. Cabiles, submitted her application for a quality control job in Taiwan.6

Joy’s application was accepted.7 Joy was later asked to sign a oneyear employment contract for a monthly
salary of NT$15,360.00.8 She alleged that Sameer Overseas Agency required her to pay a placement fee of
₱70,000.00 when she signed the employment contract.9

Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997.10 She alleged that in her
employment contract, she agreed to work as quality control for one year.11 In Taiwan, she was asked to work
as a cutter.12

Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain Mr. Huwang from Wacoal
informedJoy, without prior notice, that she was terminated and that "she should immediately report to their
office to get her salary and passport."13 She was asked to "prepare for immediate repatriation."14

Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of
NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.16

On October 15, 1997, Joy filed a 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.19She identified Wacoal as Sameer Overseas Placement Agency’s foreign principal.20

Sameer Overseas Placement Agency alleged that respondent's termination was due to her inefficiency,
negligence in her duties, and her "failure to comply with the work requirements [of] her foreign
[employer]."21 The agency also claimed that it did not ask for a placement fee of ₱70,000.00.22 As evidence, it
showedOfficial 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

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

59
the employer’s contractual obligations might be identified.29 It further denied that it assumed liability for
petitioner’s illegal acts.30

On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint.31 Acting Executive Labor Arbiter Pedro
C.Ramos ruled that her complaint was based on mereallegations.32 The Labor Arbiter found that there was no
excess payment of placement fees, based on the official receipt presented by petitioner.33 The Labor Arbiter
found unnecessary a discussion on petitioner’s transfer of obligations to Pacific34 and considered the matter
immaterial in view of the dismissal of respondent’s complaint.35

Joy appealed36 to the National Labor Relations Commission.

In a resolution37 dated March 31, 2004, the National Labor Relations Commission declared that Joy was
illegally dismissed.38 It reiterated the doctrine that the burden of proof to show that the dismissal was based on
a just or valid cause belongs to the employer.39 It found that Sameer Overseas Placement Agency failed to
prove that there were just causes for termination.40 There was no sufficient proofto show that respondent was
inefficient in her work and that she failed to comply with company requirements.41 Furthermore, procedural
dueprocess was not observed in terminating respondent.42

The National Labor Relations Commission did not rule on the issue of reimbursement of placement fees for
lack of jurisdiction.43 It refused to entertain the issue of the alleged transfer of obligations to Pacific.44 It did not
acquire jurisdiction over that issue because Sameer Overseas Placement Agency failed to appeal the Labor
Arbiter’s decision not to rule on the matter.45

The National Labor Relations Commission awarded respondent only three (3) months worth of salaryin the
amount of NT$46,080, the reimbursement of the NT$3,000 withheld from her, and attorney’s fees of NT$300.46

The Commission denied the agency’s motion for reconsideration47 dated May 12, 2004 through a
resolution48dated July 2, 2004.

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition49 for certiorari with
the Court of Appeals assailing the National Labor Relations Commission’s resolutions dated March 31, 2004
and July 2, 2004.

The Court of Appeals50 affirmed the decision of the National Labor Relations Commission with respect to the
finding of illegal dismissal, Joy’s entitlement to the equivalent of three months worth of salary, reimbursement
of withheld repatriation expense, and attorney’s fees.51 The Court of Appeals remanded the case to the
National Labor Relations Commission to address the validity of petitioner's allegations against Pacific.52 The
Court of Appeals held, thus: Although the public respondent found the dismissal of the complainant-respondent
illegal, we should point out that the NLRC merely awarded her three (3) months backwages or the amount of
NT$46,080.00, which was based upon its finding that she was dismissed without due process, a finding that
we uphold, given petitioner’s lack of worthwhile discussion upon the same in the proceedings below or before
us. Likewise we sustain NLRC’s finding in regard to the reimbursement of her fare, which is squarely based on
the law; as well as the award of attorney’s fees.

But we do find it necessary to remand the instant case to the public respondent for further proceedings, for the
purpose of addressing the validity or propriety of petitioner’s third-party complaint against the transferee agent
or the Pacific Manpower & Management Services, Inc. and Lea G. Manabat. We should emphasize that as far
as the decision of the NLRC on the claims of Joy Cabiles, is concerned, the same is hereby affirmed with
finality, and we hold petitioner liable thereon, but without prejudice to further hearings on its third party
complaint against Pacific for reimbursement.

WHEREFORE, premises considered, the assailed Resolutions are hereby partly AFFIRMED in accordance
with the foregoing discussion, but subject to the caveat embodied inthe last sentence. No costs.

SO ORDERED.53

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Dissatisfied, Sameer Overseas Placement Agency filed this petition.54

We are asked to determine whether the Court of Appeals erred when it affirmed the ruling of the National
Labor Relations Commission finding respondent illegally dismissed and awarding her three months’ worth of
salary, the reimbursement of the cost ofher repatriation, and attorney’s fees despite the alleged existence of
just causes of termination.

Petitioner reiterates that there was just cause for termination because there was a finding of Wacoal that
respondent was inefficient in her work.55

Therefore, it claims that respondent’s dismissal was valid.56

Petitioner also reiterates that since Wacoal’s accreditation was validly transferred to Pacific at the time
respondent filed her complaint, it should be Pacific that should now assume responsibility for Wacoal’s
contractual obligations to the workers originally recruited by petitioner.57

Sameer Overseas Placement Agency’spetition is without merit. We find for respondent.

Sameer Overseas Placement Agency failed to show that there was just cause for causing Joy’s dismissal. The
employer, Wacoal, also failed to accord her due process of law.

Indeed, employers have the prerogative to impose productivity and quality standards at work.58 They may also
impose reasonable rules to ensure that the employees comply with these standards.59 Failure to comply may
be a just cause for their dismissal.60 Certainly, employers cannot be compelled to retain the services of
anemployee who is guilty of acts that are inimical to the interest of the employer.61 While the law acknowledges
the plight and vulnerability of workers, it does not "authorize the oppression or self-destruction of the
employer."62 Management prerogative is recognized in law and in our jurisprudence.

This prerogative, however, should not be abused. It is "tempered with the employee’s right to security of
tenure."63Workers are entitled to substantive and procedural due process before termination. They may not be
removed from employment without a validor just cause as determined by law and without going through the
proper procedure.

Security of tenure for labor is guaranteed by our Constitution.64

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:

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 tomake it appear that the labor laws of Saudi Arabia do not require any certification by a
competent public health authority in the dismissal of employees due to illness.

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. Herein 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:

61
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 selforganization, 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. Theyshall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.

....

This public policy should be borne in mind in this case because to allow foreign employers to determine for and
by themselves whether an overseas contract worker may be dismissed on the ground of illness would
encourage illegal or arbitrary pretermination of employment contracts.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:

Petitioners admit that they did notinform private respondent in writing of the charges against him and that they
failed to conduct a formal investigation to give him opportunity to air his side. However, petitioners contend that
the twin requirements ofnotice and hearing applies strictly only when the employment is within the Philippines
and that these need not be strictly observed in cases of international maritime or overseas employment.

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:

Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;

(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

(e) Other causes analogous to the foregoing.

Petitioner’s allegation that respondentwas 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.

62
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

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 tothe 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 ofthe
employee only when there is "just cause or when [the probationary employee] fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the employee at the time
of his [or her] engagement."72

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 adjusthis 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 constantlyattempt 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 communicatework standards that would govern one’s employment "if
[these are] to discharge in good faith [their] duty to adjudicate."73

In this case, petitioner merely alleged that respondent failed to comply with her foreign employer’s work
requirements and was inefficient in her work.74 No 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
onlyfailure on the partof petitioner to comply with the requirement of the existence of just cause for termination.
They patently show that the employersdid not comply with the due process requirement.

63
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."79

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
ofthe 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
of1995, states thatoverseas 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/placementagency, 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 orpartnership 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)

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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: 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 feeswhen
the withholding is unlawful.

The Court of Appeals affirmedthe National Labor Relations Commission’s decision to award respondent
NT$46,080.00 or the threemonth 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

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

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:

Section 7.Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows:

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.

65
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 executoryjudgement 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 providedunder this section shall subject the
responsible officials to any or all of the following penalties:

(a) The salary of any such official who fails to render his decision or resolution within the prescribed
period shall be, or caused to be, withheld until the said official complies therewith;

(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 byRepublic 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 mootand 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.

66
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 sochanged 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 thatwill
reduce their hardearned wages as well as add to the indignity of having been deprived of the protection of our
laws simply because our precedents have not been followed. 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.91Petitioner is also of the view that the clause was already declared as constitutional in Serrano.92

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 asreinstated in Republic Act No. 10022,
its contention is that it is beyond judicial review.94

On the other hand, respondentargued that the clause was unconstitutional because it infringed on workers’
right to contract.95

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 changein 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
anillegally 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

In creating laws, the legislature has the power "to make distinctions and classifications." 99

In exercising such power, it has a wide discretion.100

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

67
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 prescribesa reasonable classification.104

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

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 fixedperiod 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

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

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

We also noted in Serranothat before the passage of Republic Act No. 8042, the money claims of illegally
terminated overseas and local workers with fixed-term employment werecomputed in the same
manner.112 Their money claims were computed based onthe "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

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

Observing the terminologies used inthe 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

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 norless
than the rights violated when a fixed-period overseas worker is illegally terminated. It is state policy to protect

68
the rights of workers withoutqualification 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 employeeswho
can never acquire regular employment status, unlike local workers"121 because it already justifies differentiated
treatment in terms ofthe computation of money claims.122

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 classificationsare 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."125

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 incentivizedby the reinstated clause to enter
into contracts of at least a year because it gives them more flexibility to violate our overseas workers’ rights.
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:

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 wrongfuldismissal 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 ofliability 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 takenfrom 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

69
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
bea 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 suchas placement agencies, while the disadvantaged sector is composed ofOFWs whose
protection no less than the Constitution commands. The idea thatprivate business interest can be elevated to
the level of a compelling state interest is odious."127

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

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

III

On the interest rate, the BangkoSentralngPilipinas 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: 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:

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 rateof 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

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:

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

70
 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

We add that Circular No. 799 is not applicable when there is a law that states otherwise. While the
BangkoSentralngPilipinas 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

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
BangkoSentralngPilipinas circulars cannotrepeal 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 overseasworker 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 awardsof 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 ofWacoal as principal and petitioner as the employment agency that facilitated
respondent’s overseas employment.

71
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

In overseas employment, the filing of money claims against the foreign employer is attended by practical and
legal complications.1âwphi1 The distance of the foreign employer alonemakes it difficult for an overseas
worker to reach it and make it liable for violations of the Labor Code. There are also possible conflict of laws,
jurisdictional issues, and procedural rules that may be raised to frustrate an overseas worker’sattempt 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

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 oneof 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 violationsthat 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
sufficientpayment of what is due them.140

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 leftwithout 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 localagencies jointly and severally liable with the foreign employer is thatan
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 agenciesmust 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.

Many times, this court has spoken on what Filipinos may encounter as they travel into the farthest and
mostdifficult reaches of our planet to provide for their families. In Prieto v. NLRC: 141

72
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 towhich they are subjected by their foreign employers, who probably feel they can do as
they please in their own country. Whilethese 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

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 weil.

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.

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G.R. No. 180636               March 13, 2013

LORENZO T. TANGGA-AN,* Petitioner, 
vs.
PIDLIPPINE TRANSMARINE CARRIERS, INC., UNIVERSE TANKSHIP DELAWARE LLC, and CARLOS C.
SALINAS, Respondents.

DECISION

DEL CASTILLO, J.:

This Court's labor pronouncements must be read and applied with utmost care and caution, taking to mind that
in the very heart of the judicial system, labor cases occupy a special place. More than the State guarantees of
protection of labor and security of tenure, labor disputes involve the fundamental survival of the employees and
their families, who depend -upon the former for all the basic necessities in life.

This Petition for Review on Certiorari1 seeks a modification of the November 30, 2006 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 00806. Also assailed is the November 15, 2007 Resolution3 denying
petitioner's Motion for Reconsideration.

Factual Antecedents

The facts, as found by the CA, are as follows:

This is a case for illegal dismissal with a claim for the payment of salaries corresponding to the unexpired term
of the contract, damages and attorney’s fees filed by private respondent Lorenzo T. Tangga-an against the
petitioners Philippine Transmarine Carriers, Inc., Universe Tankship Delaware LLC, and Carlos C. Salinas 4 or
herein respondents.

In his position paper, Tangga-an alleged that on January 31, 2002, he entered into an overseas employment
contract with Philippine Transmarine Carriers, Inc. (PTC) for and in behalf of its foreign employer, Universe
Tankship Delaware, LLC. Under the employment contract, he was to be employed for a period of six months
as chief engineer of the vessel the S.S. "Kure". He was to be paid a basic salary of US$5,000.00; vacation
leave pay equivalent to 15 days a months [sic] or US$2,500.00 per month and tonnage bonus in the amount of
US$700.00 a month.

On February 11, 2002, Tangga-an was deployed. While performing his assigned task, he noticed that while
they were loading liquid cargo at Cedros, Mexico, the vessel suddenly listed too much at the bow. At that
particular time both the master and the chief mate went on shore leave together, which under maritime
standard was prohibited. To avoid any conflict, he chose to ignore the unbecoming conduct of the senior
officers of the vessel.

On or about March 13, 2002, the vessel berthed at a port in Japan to discharge its cargo. Thereafter, it sailed
to the U.S.A. While the vessel was still at sea, the master required Tangga-an and the rest of the Filipino
Engineer Officers to report to his office where they were informed that they would be repatriated on account of
the delay in the cargo discharging in Japan, which was principally a duty belonging to the deck officers. He
imputed the delay to the non-readiness of the turbo generator and the inoperation of the boom, since the turbo
generator had been prepared and synchronized for 3.5 hours or even before the vessel arrived in Japan.
Moreover, upon checking the boom, they found the same [sic] operational. Upon verification, they found out
that when the vessel berthed in Japan, the cargo hold was not immediately opened and the deck officers
concerned did not prepare the stock. Moreover, while cargo discharging was ongoing, both the master and the
chief mate again went on shore leave together at 4:00 in the afternoon and returned to the vessel only after
midnight. To save face, they harped on the Engine Department for their mistake. Tangga-an and the other

74
Engineering Officers were ordered to disembark from the vessel on April 2, 2002 and thereafter repatriated.
Thence, the complaint.

Philippine Transmarine Carriers, Inc., Universe Tankship Delaware LLC, and Carlos C. Salinas on the other
hand, contended that sometime on [sic] March 2002, during a test of the cargo discharging conveyor system,
Tangga-an and his assistant engineers failed to start the generator that supplied power to the conveyor. They
spent 3 hours trying to start the generator but failed. It was only the third assistant engineer who previously
served in the same vessel who was able to turn on the generator. When the master tried to call the engine
room to find out the problem, Tangga-an did not answer and merely hang [sic] up. The master proceeded to
the engine room to find out the problem by [sic] Tangga-an and his assistant engineers were running around
trying to appear busy.

At another time, during a cargo discharging operation requiring the use of a generator system and the
conveyor boom, Tangga-an was nowhere to be found. Apparently, he went on shore leave resulting in a delay
of 2 hours because the machine could not be operated well. Both incidents were recorded in the official
logbook. Due to the delay, protests were filed by the charter [sic].

The master required Tangga-an to submit a written explanation to which he did but blamed the captain and the
chief officer. He failed to explain why he did not personally supervise the operation of the generator system
and the conveyor boom during the cargo discharging operations. His explanation not having been found
satisfactory, respondents decided to terminate Tangga-an’s services. Thus, a notice of dismissal was issued
against Tangga-an. He arrived in the Philippines on April 4, 2002.5

Tangga-an filed a Complaint6 for illegal dismissal with prayer for payment of salaries for the unexpired portion
of his contract, leave pay, exemplary and moral damages, attorney’s fees and interest.

On January 27, 2004, Labor Arbiter Jose G. Gutierrez rendered a Decision7 finding petitioner to have been
illegally dismissed. The Labor Arbiter noted that in petitioner’s letter to respondent Universe Tankship
Delaware, LLC dated April 1, 20028 he categorically denied any negligence on his part relative to the delay in
the discharge of the cargo while the vessel was berthed in Japan. In view thereof, the Labor Arbiter opined that
an investigation should have been conducted in order to ferret out the truth instead of dismissing petitioner
outright. Consequently, petitioner’s dismissal was illegal for lack of just cause and for failure to comply with the
twin requirements of notice and hearing.9

As regards petitioner’s claim for back salaries, the Labor Arbiter found petitioner entitled not to four months
which is equivalent to the unexpired portion of his contract, but only to three months, inclusive of vacation
leave pay and tonnage bonus (or US$8,200 x 3 months = US$24,600) pursuant to Section 10 of Republic Act
(RA) No. 8042 or The Migrant Workers and Overseas Filipinos Act of 2005.

Regarding petitioner’s claim for damages, the same was denied for failure to prove bad faith on the part of the
respondents. However, attorney’s fees equivalent to 10% of the total back salaries was awarded because
petitioner was constrained to litigate.

The dispositive portion of the Labor Arbiter’s Decision, reads:

WHEREFORE, the foregoing premises considered, judgment is hereby rendered finding Tangga-an illegally
dismissed from his employment and directing the respondent Phil. Transmarine Carriers, Inc. to pay Tangga-
an the amount of US$24,600.00 PLUS US$2,460.00 attorney’s fees or a total aggregate amount of US Dollars:
TWENTY SEVEN THOUSAND SIXTY (US$27,060.00) or its peso equivalent at the exchange rate prevailing at
the time of payment.

SO ORDERED.10

Ruling of the National Labor Relations Commission

75
Respondents appealed to the National Labor Relations Commission (NLRC). They claimed that the Labor
Arbiter committed grave abuse of discretion in finding that petitioner was illegally dismissed; in awarding
unearned vacation leave pay and tonnage bonus when the law and jurisprudence limit recovery to the
employee’s basic salary; and in awarding attorney’s fees despite the absence of proof of bad faith on their part.

On August 25, 2004, the NLRC issued its Decision,11 the dispositive portion of which reads:

WHEREFORE, the Decision dated January 27, 2004 of the Labor Arbiter is AFFIRMED.

Respondents-appellants’ Memorandum of Appeal, dated 23 March 2004 is DISMISSED for lack of merit.

SO ORDERED.12

The NLRC affirmed the finding of illegal dismissal. It held that no notice of hearing was served upon petitioner,
and no hearing whatsoever was conducted on the charges against him. It ruled that respondents could not
dispense with the twin requirements of notice and hearing, which are essential elements of procedural due
process. For this reason, no valid cause for termination has been shown. The NLRC likewise found
respondents guilty of bad faith in illegally dismissing petitioner’s services.

On the issue covering the award of unearned vacation leave pay and tonnage bonus, the NLRC struck down
respondents’ arguments and held that in illegal dismissal cases, the employee is entitled to all the salaries,
allowances and other benefits or their monetary equivalents from the time his compensation is withheld from
him until he is actually reinstated, in effect citing Article 27913 of the Labor Code. It held that vacation leave pay
and tonnage bonus are provided in petitioner’s employment contract, which thus entitles the latter to the same
in the event of illegal dismissal.

Finally, on the issue of attorney’s fees, the NLRC held that since respondents were found to be in bad faith for
the illegal dismissal and petitioner was constrained to litigate with counsel, the award of attorney’s fees is
proper.

Respondents moved for reconsideration which was denied by the NLRC in its March 18, 2005 Resolution.14

Ruling of the Court of Appeals

Respondents went up to the CA by Petition for Certiorari,15 seeking to annul the Decision of the NLRC, raising
essentially the same issues taken up in the NLRC.

On November 30, 2006, the CA rendered the assailed Decision, the dispositive portion of which reads, as
follows:

WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The Decision of public
respondent is MODIFIED in the following manner:

a. Tangga-an is entitled to three (3) months salary representing the unexpired portion of his contract in
the total amount of US$15,000.00 or its peso equivalent at the exchange rate prevailing at the time of
payment;

b. Tangga-an’s placement fee should be reimbursed with 12% interest per annum;

c. The award of attorney’s fees is deleted.

SO ORDERED.16

The CA adhered to the finding of illegal dismissal. But on the subject of monetary awards, the CA considered
only petitioner’s monthly US$5,000.00 basic salary and disregarded his monthly US$2,500.00 vacation leave

76
pay and US$700.00 tonnage bonus. It likewise held that petitioner’s "unexpired portion of contract" for which
he is entitled to back salaries should only be three months pursuant to Section 1017 of RA 8042. In addition,
petitioner should be paid back his placement fee with interest at the rate of twelve per cent (12%) per annum.

As to attorney’s fees, the CA did not agree with the NLRC’s finding that bad faith on the part of respondents
was present to justify the award of attorney’s fees. It held that there is nothing from the facts and proceedings
to suggest that respondents acted with dishonesty, moral obliquity or conscious doing of wrong in terminating
petitioner’s services.

Petitioner filed a Motion for (Partial) Reconsideration,18 which was denied in the assailed November 15, 2007
Resolution. Thus, he filed the instant Petition.

Issues

In this Petition, Tangga-an seeks a modification of the CA Decision and the reinstatement of the monetary
awards as decreed in the Labor Arbiter’s January 27, 2004 Decision, or in the alternative, the grant of back
salaries equivalent to four months which corresponds to the unexpired portion of the contract, inclusive of
vacation leave pay and tonnage bonus, plus 10% thereof as attorney’s fees.19

Petitioner submits the following issues for resolution:

I. Whether x xx the CA’s issuance of the writ of certiorari reversing the NLRC decision is in accordance
with law;

II. Whether x xx the indemnity provided in Section 10, R. A. 8042 x xx be limited only to the seafarer’s
basic monthly salary or x xx include, based on civil law concept of damages as well as Labor Code
concept of backwages, allowances/benefits or their monetary equivalent as a further relief to restore the
seafarer’s income that was lost by reason of his unlawful dismissal;

III. Whether x xx the indemnity awarded by the CA in petitioner’s favor consisting only of 3 months’
basic salaries conform with the proper interpretation of Section 10 R. A. 8042 and with the ruling in
Skippers Pacific, Inc. v. Mira, et al., G.R. No. 144314, November 21, 2002 and related cases or is
petitioner entitled to at least 4 months salaries being the unexpired portion of his contract; and

IV. Whether x xx the CA’s disallowance of the award of attorney’s fees, based on the alleged absence
of bad faith on the part of respondent, is in accordance with law or is the attorney’s fees awarded by the
NLRC to petitioner, who was forced to litigate to enforce his rights, justified x x x.20

Petitioner’s Arguments

Petitioner essentially contends that respondents’ resort to an original Petition for Certiorari in the CA is
erroneous because the issues they raised did not involve questions of jurisdiction but of fact and law. He adds
that the CA Decision went against the factual findings of the labor tribunals which ought to be binding, given
their expertise in matters falling within their jurisdiction.

Petitioner likewise contends that the CA erred in excluding his vacation leave pay and tonnage bonus in the
computation of his back salaries as they form part of his salaries and benefits under his employment contract
with the respondents, a covenant which is deemed to be the law governing their relations. He adds that under
Article 279 of the Labor Code, he is entitled to full backwages inclusive of allowances and other benefits or
their monetary equivalent from the time his compensation was withheld up to the time he is actually reinstated.

Petitioner accuses the CA of misapplying the doctrine laid down in Skippers Pacific, Inc. v. Skippers Maritime
Services, Ltd.21 He points out that the CA wrongly interpreted and applied what the Court said in the case, and
that the pronouncement therein should have benefited him rather than the respondents.

77
Petitioner would have the Court reinstate the award of attorney’s fees, on the argument that the presence of
bad faith is not necessary to justify such award. He maintains that the grant of attorney’s fees in labor cases
constitutes an exception to the general requirement that bad faith or malice on the part of the adverse party
must first be proved.

Finally, petitioner prays that this Court reinstate the Labor Arbiter’s monetary awards in his January 27, 2004
Decision or, in the alternative, to grant him full back salaries equivalent to the unexpired portion of his contract,
or four months, plus 10% thereof as attorney’s fees.

Respondents’ Arguments

In seeking affirmance of the assailed CA issuances, respondents basically submit that the CA committed no
reversible error in excluding petitioner’s claims for vacation leave pay, tonnage bonus, and attorney’s fees.
They support and agree with the CA’s reliance upon Skippers Pacific, Inc. v. Skippers Maritime Services,
Ltd.,22 and emphasize that in the absence of bad faith on their part, petitioner may not recover attorney’s fees.

Our Ruling

The Court grants the Petition.

There remains no issue regarding illegal dismissal. In spite of the consistent finding below that petitioner was
illegally dismissed, respondents did not take issue, which thus renders all pronouncements on the matter final.

In resolving petitioner’s monetary claims, the CA utterly misinterpreted the Court’s ruling in Skippers Pacific,
Inc. v. Skippers Maritime Services, Ltd.,23 using it to support a view which the latter case precisely ventured to
strike down. In that case, the employee was hired as the vessel’s Master on a six-months employment
contract, but was able to work for only two months, as he was later on illegally dismissed. The Labor Arbiter,
NLRC, and the CA all took the view that the complaining employee was entitled to his salary for the unexpired
portion of his contract, but limited to only three months pursuant to Section 1024 of RA 8042. The Court did not
agree and hence modified the judgment in said case. It held that, following the wording of Section 10 and its
ruling in Marsaman Manning Agency, Inc. v. National Labor Relations Commission, 25 when the illegally
dismissed employee’s employment contract has a term of less than one year, he/she shall be entitled to
recovery of salaries representing the unexpired portion of his/her employment contract. Indeed, there was
nothing even vaguely confusing in the Court’s citation therein of Marsaman:

In Marsaman Manning Agency, Inc. vs. NLRC, involving Section 10 of Republic Act No. 8042, we held:

We cannot subscribe to the view that private respondent is entitled to three (3) months salary only.1âwphi1 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 wording
"for every year of the unexpired term" which follows the wording "salaries x xx for three months." To follow
petitioners’ thinking that private respondent is entitled to three (3) months salary only simply because it is the
lesser amount is to completely disregard and overlook some words used in the statute while giving effect to
some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care
should be taken that every part or word thereof be given effect since the lawmaking body is presumed to know
the meaning of the words employed in the statute and to have used them advisedly. Ut res magisvaleat quam
pereat.

It is not disputed that private respondent’s employment contract in the instant case was for six (6) months.
Hence, we see no reason to disregard the ruling in Marsaman that private respondent should be paid his
salaries for the unexpired portion of his employment contract.26 (Emphases supplied)

78
At this juncture, the courts, especially the CA, should be reminded to read and apply this Court’s labor
pronouncements with utmost care and caution, taking to mind that in the very heart of the judicial system, labor
cases occupy a special place. More than the State guarantees of protection of labor and security of tenure,
labor disputes involve the fundamental survival of the employees and their families, who depend upon the
former for all the basic necessities in life.

Thus, petitioner must be awarded his salaries corresponding to the unexpired portion of his six-months
employment contract, or equivalent to four months. This includes all his corresponding monthly vacation leave
pay and tonnage bonuses which are expressly provided and guaranteed in his employment contract as part of
his monthly salary and benefit package. These benefits were guaranteed to be paid on a monthly basis, and
were not made contingent. In fact, their monetary equivalent was fixed under the contract: US$2,500.00 for
vacation leave pay and US$700.00 for tonnage bonus each month. Thus, petitioner is entitled to back salaries
of US$32,800 (or US$5,000 + US$2,500 + US$700 = US$8,200 x 4 months). "Article 279 of the Labor Code
mandates that an employee’s full backwages shall be inclusive of allowances and other benefits or their
monetary equivalent."27 As we have time and again held, "it is the obligation of the employer to pay an illegally
dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits and bonuses
and general increases, to which he would have been normally entitled had he not been dismissed and had not
stopped working."28 This well-defined principle has likewise been lost on the CA in the consideration of the
case.

The CA likewise erred in deleting the award of attorney’s fees on the ground that bad faith may not readily be
attributed to the respondents given the circumstances. The Court’s discussion on the award of attorney’s fees
in Kaisahan at KapatiranngmgaManggagawa at Kawanisa MWC-East Zone Union v. Manila Water Company,
Inc.,29 speaking through Justice Brion, is instructive, viz:

Article 111 of the Labor Code, as amended, governs the grant of attorney’s fees in labor cases:

‘Art. 111. Attorney’s fees. – (a) In cases of unlawful withholding of wages, the culpable party may be assessed
attorney’s fees equivalent to ten percent of the amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the
recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.’

Section 8, Rule VIII, Book III of its Implementing Rules also provides, viz.:

‘Section 8. Attorney’s fees. – Attorney’s fees in any judicial or administrative proceedings for the recovery of
wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the
winning party.’

We explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission that there are two
commonly accepted concepts of attorney’s fees – the ordinary and extraordinary. In its ordinary concept, an
attorney’s fee is the reasonable compensation paid to a lawyer by his client for the legal services the former
renders; compensation is paid for the cost and/or results of legal services per agreement or as may be
assessed. In its extraordinary concept, attorney’s fees are deemed indemnity for damages ordered by the court
to be paid by the losing party to the winning party. The instances when these may be awarded are enumerated
in Article 2208 of the Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable
not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to
the lawyer as additional or part of compensation.

We also held in PCL Shipping that Article 111 of the Labor Code, as amended, contemplates the extraordinary
concept of attorney’s fees and that Article 111 is an exception to the declared policy of strict construction in the
award of attorney’s fees. Although an express finding of facts and law is still necessary to prove the merit of
the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld
the wages. x xx

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We similarly so ruled in RTG Construction, Inc. v. Facto and in Ortiz v. San Miguel Corporation. In RTG
Construction, we specifically stated:

'Settled is the rule that in actions for recovery of wages, or where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interests, a monetary award by way of attorney's fees is justifiable
under Article Ill of the Labor Code; Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7,
Article 208 of the Civil Code. The award of attorney's fees is proper, and there need not be any showing that
the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that
the lawful wages were not paid accordingly.'

In PCL Shipping, we found the award of attorney's fees due and appropriate since the respondent therein
incurred legal expenses after he was forced to file an action for recovery of his lawful wages and other benefits
to protect his rights. From this perspective and the above precedents, we conclude that the CA erred in ruling
that a finding of the employer's malice or bad faith in withholding wages must precede an award of attorney's
fees under Article Ill of the Labor Code. To reiterate, a plain showing that the lawful wages were not paid
without justification is sufficient.30

In this case, it is already settled that petitioner's employment was illegally terminated. As a result, his wages as
well as allowances were withheld without valid and legal basis. Otherwise stated, he was not paid his lawful
wages without any valid justification. Consequently, he was impelled to litigate to protect his interests. Thus,
pursuant to the above ruling, he is entitled to receive attorney’s fees. An award of attorney's fees in petitioner’s
favor is in order in the amount of US$3, 280 (or US$32, 800 x 10%).

WHEREFORE, the Petition is GRANTED. Petitioner Lorenzo T. Tangga-an is hereby declared ENTITLED to
back salaries for the unexpired portion of his contract, inclusive of vacation leave pay and tonnage bonus
which is equivalent to US$32,800 plus US$3,280 as attorney's fees or a total of US$36,080 or its peso
equivalent at the exchange rate prevailing at the time of payment.

SO ORDERED.

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