DOUGLASMILLARESandROGELIOLAGDA,petitioners,vs.
NATIONALLABOR TheCourtresolvedtosetthecasefororalargumentstoenablethepartiestopresenttheir
RELATIONSCOMMISSION,TRANSGLOBALMARITIMEAGENCY,INC.andESSO
INTERNATIONALSHIPPINGCO.,LTD.respondents.(SEAFARERSARE
CONTRACTUALEMPLOYEES;NOTREGULAR)
RESOLUTION
KAPUNAN,J.:
OnMarch14,2000,theCourtpromulgateditsdecisionintheaboveentitledcase,rulingin
favorofthepetitioners.Thedispositiveportionreads,asfollows:
WHEREFORE,premisesconsidered,theassailedDecision,datedJune1,1993,ofthe
NationalLaborRelationsCommissionisherebyREVERSEDandSETASIDEandanew
judgmentisherebyrenderedorderingtheprivaterespondentsto:
(1) ReinstatepetitionersMillaresandLagdatotheirformerpositionswithoutlossof
seniorityrights,andtopayfullbackwagescomputedfromthetimeofillegaldismissaltothe
timeofactualreinstatement;
(2) Alternatively,ifreinstatementisnotpossible,paypetitionersMillaresandLagda
separationpayequivalenttoonemonthssalaryforeveryyearofservice;and,
(3) JointlyandseverallypaypetitionersOneHundredPercent(100%)oftheirtotal
creditedcontributionsasprovidedundertheConsecutiveEnlistmentIncentivePlan.
SOORDERED.i[1]
Amotionforreconsiderationwasconsequentlyfiledii[2]bytheprivaterespondentstowhich
petitionersfiledanOppositionthereto.iii[3]
InaMinuteResolutiondatedJune28,2000,theCourtresolvedtodenythemotionfor
reconsiderationwithfinality.iv[4]
Subsequently,theFilipinoAssociationforMarinersEmployment,Inc.(FAME)filedaMotion
forLeavetoInterveneandtoAdmitaMotionforReconsiderationinIntervention.
Privaterespondents,meanwhile,alsofiledaMotionforLeavetoFileaSecondMotionfor
Reconsiderationofourdecision.
Inbothmotions,theprivaterespondentsandFAMErespectivelyprayinthemainthatthe
CourtreconsideritsrulingthatFilipinoseafarersareconsideredregularemployeeswithinthe
contextofArticle280oftheLaborCode.Theyclaimthatthedecisionmayestablisha
precedentthatwilladverselyaffectthemaritimeindustry.
sides.
Torecall,thefactsofthecaseare,asfollows:
PetitionerDouglasMillareswasemployedbyprivaterespondentESSOInternationalShipping
CompanyLTD.(EssoInternational,forbrevity)throughitslocalmanningagency,private
respondentTransGlobalMaritimeAgency,Inc.(TransGlobal,forbrevity)onNovember16,
1968asamachinist.In1975,hewaspromotedasChiefEngineerwhichpositionheoccupied
untilheoptedtoretirein1989.HewasthenreceivingamonthlysalaryofUS$1,939.00.
OnJune13,1989,petitionerMillaresappliedforaleaveofabsencefortheperiodJuly9to
August7,1989.InaletterdatedJune14,1989,MichaelJ.Estaniel,Presidentofprivate
respondentTransGlobal,approvedtherequestforleaveofabsence.OnJune21,1989,
petitionerMillareswroteG.S.Hanly,OperationsManagerofExxonInternationalCo.,(now
EssoInternational)throughMichaelJ.Estaniel,informinghimofhisintentiontoavailofthe
optionalretirementplanundertheConsecutiveEnlistmentIncentivePlan(CEIP)considering
thathehadalreadyrenderedmorethantwenty(20)yearsofcontinuousservice.OnJuly13,
1989respondentEssoInternational,throughW.J.Vrints,EmployeeRelationsManager,
deniedpetitionerMillaresrequestforoptionalretirementonthefollowinggrounds,towit:(1)
hewasemployedonacontractualbasis;(2)hiscontractofenlistment(COE)didnotprovide
forretirementbeforetheageofsixty(60)years;and(3)hedidnotcomplywiththe
requirementforclaimingbenefitsundertheCEIP,i.e.,tosubmitawrittenadvicetothe
companyofhisintentiontoterminatehisemploymentwithinthirty(30)daysfromhislast
disembarkationdate.
OnAugust9,1989,petitionerMillaresrequestedforanextensionofhisleaveofabsencefrom
August9to24,1989.OnAugust19,1989,RoyC.Palomar,CrewingManager,ShipGroup
A,Transglobal,wrotepetitionerMillaresadvisinghimthatrespondentEssoInternationalhas
correctedthedeficiencyinitsmanpowerrequirementspecificallyintheChiefEngineerrank
bypromotingaFirstAssistantEngineertothispositionasaresultof(his)previousleaveof
absencewhichexpiredlastAugust8,1989.Theadjustmentinsaidrankwasrequiredinorder
tomeetmanpowerschedulesasaresultof(his)inability.
OnSeptember26,1989,respondentEssoInternational,throughH.Regenboog,Personnel
Administrator,advisedpetitionerMillaresthatinviewofhisabsencewithoutleave,whichis
equivalenttoabandonmentofhisposition,hehadbeendroppedfromtherosterofcrew
memberseffectiveSeptember1,1989.
Ontheotherhand,petitionerLagdawasemployedbyprivaterespondentEssoInternationalas
wiper/oilerinJune1969.HewaspromotedasChiefEngineerin1980,apositionhecontinued
tooccupyuntilhislastCOEexpiredonApril10,1989.Hewasthenreceivingamonthly
salaryofUS$1,939.00.
OnMay16,1989,petitionerLagdaappliedforaleaveofabsencefromJune19,1989upto
thewholemonthofAugust1989.OnJune14,1989,respondentTransGlobalsPresident,
MichaelJ.Estaniel,approvedpetitionerLagdasleaveofabsencefromJune22,1989toJuly
20,1989andadvisedhimtoreportforreassignmentonJuly21,1989.
OnJune26,1989,petitionerLagdawrotealettertoG.S.Stanley,OperationsManagerof
respondentEssoInternational,throughrespondentTransGlobalsPresidentMichaelJ.
Estaniel,informinghimofhisintentiontoavailoftheoptionalearlyretirementplaninview
ofhistwenty(20)yearscontinuousserviceinthecomplaint.
OnJuly13,1989,respondentTransglobaldeniedpetitionerLagdasrequestforavailmentof
theoptionalearlyretirementschemeonthesamegroundsuponwhichpetitionerMillares
requestwasdenied.
OnAugust3,1989,herequestedforanextensionofhisleaveofabsenceuptoAugust26,
1989andthesamewasapproved.However,onSeptember27,1989,respondentEsso
International,throughH.Regenboog,PersonnelAdministrator,advisedpetitionerLagdathat
inviewofhisunavailabilityforcontractualseaservice,hehadbeendroppedfromtheroster
ofcrewmemberseffectiveSeptember1,1989.
OnOctober5,1989,petitionersMillaresandLagdafiledacomplaintaffidavit,docketedas
POEA(M)89109671,forillegaldismissalandnonpaymentofemployeebenefitsagainst
privaterespondentsEssoInternationalandTransGlobal,beforethePOEA.v[5]
OnJuly17,1991,thePOEArenderedadecisiondismissingthecomplaintforlackofmerit.
OnappealtotheNLRC,thedecisionofthePOEAwasaffirmedonJune1,1993withthe
followingdisquisition:
Thefirstissuemustbedecidedinthenegative.Complainantsappellants,asseamenand
overseascontractworkersarenotcoveredbythetermregularemploymentasdefinedunder
Article280oftheLaborCode.ThePOEA,whichistaskedwithprotectingtherightsofthe
Filipinoworkersforoverseasemploymenttofairandequitablerecruitmentandemployment
practicesandtoensuretheirwelfare,prescribesastandardemploymentcontractforseamenon
boardoceangoingvesselsforafixedperiodbutinnocasetoexceedtwelve(12)months(Part
1,Sec.C).ThisPOEApolicyappearstobeinconsonancewiththeinternationalmaritime
practice.Moreover,theSupremeCourtinBrentSchool,Inc.vs.Zamora,181SCRA702,had
heldthatafixedtermisessentialandnaturalappurtenanceofoverseasemploymentcontracts
towhichtheconceptofregularemploymentwithallthatitimpliesisnotapplicable,Article
280oftheLaborCodenotwithstanding.Thereis,therefore,noreasontodisturbthePOEA
Administratorsfindingthatcomplainantsappellantswerehiredonacontractualbasisandfor
adefiniteperiod.Theiremploymentisthusgovernedbythecontractstheysigneachtimethey
arerehiredandisterminatedattheexpirationofthecontractperiod.vi[6]
Undaunted,thepetitionerselevatedtheircasetothisCourtvii[7]andsuccessfullyobtainedthe
favorableaction,whichisnowvehementlybeingassailed.
AtthehearingonNovember15,2000,theCourtdefinedtheissuesforresolutioninthiscase,
namely:
I. AREPETITIONERSREGULARORCONTRACTUALEMPLOYEESWHOSE
EMPLOYMENTSARETERMINATEDEVERYTIMETHEIRCONTRACTSOF
EMPLOYMENTEXPIRE?
II. ASSUMINGTHATPETITIONERSAREREGULAREMPLOYEES,WERE
THEYDISMISSEDWITHOUTJUSTCAUSESOASTOBEENTITLEDTO
REINSTATEMENTANDBACKWAGES,INCLUDINGPAYMENTOF100%OFTHEIR
TOTALCREDITEDCONTRIBUTIONSTOTHECONSECUTIVEENLISTMENT
INCENTIVEPLAN(CEIP)?
III. DOESTHEPROVISIONOFTHEPOEASTANDARDCONTRACTFOR
SEAFARERSONBOARDFOREIGNVESSELS(SEC.C.,DURATIONOFCONTRACT)
PRECLUDETHEATTAINMENTBYSEAMENOFTHESTATUSOFREGULAR
EMPLOYEES?
IV. DOESTHEDECISIONOFTHECOURTING.R.NO.110524CONTRAVENE
INTERNATIONALMARITIMELAW,ALLEGEDLYPARTOFTHELAWOFTHE
LANDUNDERSECTION2,ARTICLEIIOFTHECONSTITUTION?
V. DOESTHESAMEDECISIONOFTHECOURTCONSTITUTEADEPARTURE
FROMITSRULINGINCOYOCAVS.NLRC(G.R.NO.113658,March31,1995)?viii[8]
InanswertotheprivaterespondentsSecondMotionforReconsiderationandtoFAMEs
MotionforReconsiderationinIntervention,petitionersmaintainthattheyareregular
employeesasfoundbytheCourtintheMarch14,2000Decision.Consideringthatpetitioners
performedactivitieswhichareusuallynecessaryordesirableintheusualbusinessortradeof
privaterespondents,theyshouldbeconsideredasregularemployeespursuanttoArticle280,
Par.1oftheLaborCode.ix[9]Otherjustificationsforthisrulingincludethefactthat
petitionershaverenderedovertwenty(20)yearsofservice,asadmittedbytheprivate
respondents;x[10]thattheywererecipientsofMeritPaywhichisanexpressacknowledgment
bytheprivaterespondentsthatpetitionersareregularandnotjustcontractualemployees;xi[11]
thatpetitionerswereregisteredundertheSocialSecuritySystem(SSS).
ThepetitionersfurtherstatethatthecaseofCoyocav.NLRCxii[12]whichtheprivate
respondentsinvokeisnotapplicabletothecaseatbarasthefactualmilieuinthatcaseisnot
thesame.Furthermore,privaterespondentsfearthatourjudicialpronouncementwillspellthe
deathofthemanningindustryisfarfromreal.Instead,withthevaluablecontributionofthe
manningindustrytooureconomy,theseseafarersaresupposedtobeconsideredasHeroesof
theRepublicwhoserightsmustbeprotected.xiii[13]Finally,thefirstmotionfor
reconsiderationhasalreadybeendeniedwithfinalitybythisCourtanditisabouttimethatthe
Courtshouldwritefinistothiscase.
Theprivaterespondents,ontheotherhand,contendthat:(a)therulingholdingpetitionersas
regularemployeeswasnotinaccordwiththedecisioninCoyocav.NLRC,243SCRA190;
(b)Art.280isnotapplicableaswhatappliesisthePOEARulesandRegulationsGoverning
OverseasEmployment;(c)seafarersarenotregularemployeesbasedoninternational
maritimepractice;(d)graveconsequenceswouldresultonthefutureofseafarersandmanning
agenciesiftherulingisnotreconsidered;(e)therewasnodismissalcommitted;(f)a
dismissedseafarerisnotentitledtobackwagesandreinstatement,thatbeingnotallowed
underthePOEArulesandtheMigrantWorkersAct;and,(g)petitionersarenotentitledto
claimthetotalamountcreditedtotheiraccountundertheCEIP.xiv[14]
Meanwhile,IntervenorFilipinoAssociationofMarinersEmployment(FAME)aversthatour
decision,ifnotreconsidered,willhavenegativeconsequencesintheemploymentofFilipino
Seafarersoverseaswhich,inturn,mightleadtothedemiseofthemanningindustryinthe
Philippines.AsintervenorFAMEputsit:
xxx
7.1Foreignprincipalswillstartlookingforalternativesourcesforseafarerstomantheirships.
ASreportedbytheBIMCO/ISFstudy,thereisanexpectancythattherewillbeanincreasing
demandfor(andsupplyof)Chineseseafarers,withsomecommentatorssuggestingthatthis
maybealongtermalternativetothePhilippines.Moreover,thepoliticalchangeswithinthe
formerEasternBlochavemadenewsourcesofsupplyavailabletotheinternationalmarket.
Intervenorsrecentsurveyamongitsmembersshowsthat50Philippinemanningcompanies
hadalreadylostsome6,300slotstootherAsian,EastEuropeandChinesecompetitionforthe
lasttwoyears;
7.2ThePhilippinestandstoloseanannualforeignincomeestimatedatU.S.DOLLARSTWO
HUNDREDSEVENTYFOURMILLIONFIVEHUNDREDFORTYNINETHOUSAND
(US$274,549,000.00)fromthemanningindustryandanotherUSDOLLARSFOUR
BILLIONSIXHUNDREDFIFTYMILLIONSEVENHUNDREDSIXTHOUSAND(US$
4,650,760,000.00)fromthelandbasedsectorifseafarersandequallysituatedlandbased
contractworkerswillbedeclaredregularemployees;
7.3Some195,917(asof1998)deployedoverseasFilipinoseafarerswillberenderedjobless
shouldwelosethemarket;
7.4Some360manningagencies(asof30June2000)whoseprincipalsmaynolongerbe
doingbusinesswiththemwillclosetheirshops;
7.5ThecontributiontotheOverseasWorkersWelfareAdministrationbythesector,whichis
USD25.00percontractandtranslatestoUSDOLLARSFOURMILLION(US$
4,000,000.00)annually,willbedrasticallyreduced.Thisisnottomentiontheprocessingfees
paidtoPOEA,PhilippineRegulatoryCommission(PRC),DepartmentofForeignAffairs
(DFA)andMaritimeIndustryAuthority(MARINA)forthedocumentationoftheseseafarers;
7.6Worst,some195,917(asof1998)familieswillsuffersociallyandeconomically,astheir
breadwinnerswillberenderedjobless;and
7.7Itwillconsiderablyslowdownthegovernmentsprogramofemploymentgeneration,
consideringthat,asexpectedforeignemployerswillnowavoidhiringFilipinooverseas
contractworkersastheywillbecomeregularemployeeswithallitsconcomitanteffects.xv[15]
Significantly,theOfficeoftheSolicitorGeneral,inadeparturefromitsoriginalpositionin
thiscase,hasnowtakentheoppositeview.Ithasexpresseditsapprehensioninsustainingour
decisionandhascalledforareexaminationofourruling.xvi[16]
Consideringalltheargumentspresentedbytheprivaterespondents,theIntervenorFAMEand
theOSG,weagreethatthereisaneedtoreconsiderourpositionwithrespecttothestatusof
seafarerswhichweconsideredasregularemployeesunderArticle280oftheLaborCode.We,
therefore,partiallygrantthesecondmotionforreconsideration.
InBrentSchoolInc.v.Zamora,xvii[17]theSupremeCourtstatedthatArticle280oftheLabor
Codedoesnotapplytooverseasemployment.
InthelightoftheforegoingdescriptionofthedevelopmentoftheprovisionsoftheLabor
Codebearingontermorfixedperiodemploymentthatthequestionposedintheopening
paragraphofthisopinionshouldnowbeaddressed.Isitthenthelegislativeintentiontooutlaw
stipulationsinemploymentcontractslayingdownadefiniteperiodtherefor?Aresuch
stipulationsinessencecontrarytopublicpolicyandshouldnotonthisaccountbeaccorded
legitimacy?
Ontheotherhand,thereisthegradualandprogressiveeliminationofreferencestotermor
fixedperiodemploymentintheLaborCode,andthespecificstatementoftherulethat:
RegularandCasualEmploymentTheprovisionsofwrittenagreementtothecontrary
notwithstandingandregardlessoftheoralagreementoftheparties,anemploymentshallbe
deemedtoberegularwheretheemployeehasbeenengagedtoperformactivitieswhichare
usuallynecessaryordesirableintheusualbusinessortradeoftheemployerexceptwherethe
employmenthasbeenfixedforaspecificprojectorundertakingthecompletionortermination
ofwhichhasbeendeterminedatthetimeoftheengagementoftheemployeeorwherethe
workorservicetobeemployeeisseasonalinnatureandtheemploymentisforthedurationof
theseason.
Anemploymentshallbedeemedtobecasualifitisnotcoveredbytheprecedingparagraph;
providedthat,anyemployeewhohasrenderedatleastoneyearofservice,whethersuch
serviceiscontinuousorbroken,shallbeconsideredaregularemployeewithrespecttothe
activityinwhichheisemployedandhisemploymentshallcontinuewhilesuchactuallyexists.
Thereis,ontheotherhand,theCivilCode,whichhasalwaysrecognized,andcontinuesto
recognize,thevalidityandproprietyofcontractsandobligationswithafixedordefinite
period,andimposesnorestraintsonthefreedomofthepartiestofixthedurationofacontract,
whateveritsobject,beitspecific,goodsorservices,exceptthegeneraladmonitionagainst
stipulationscontrarytolaw,morals,goodcustoms,publicorderorpublicpolicy.Underthe
Civilcode,therefore,andasageneralproposition,fixedtermemploymentcontractsarenot
limited,astheyareunderthepresentLaborCode,tothosebynaturalseasonalorforspecific
projectswithpredetermineddatesofcompletion;theyalsoincludethosetowhichtheparties
byfreechoicehaveassignedaspecificdateoftermination.
Somefamiliarexamplesmaybecitedofemploymentcontractwhichmaybeneitherfor
seasonalworknorforspecificprojects,buttowhichafixedtermisanessentialand
naturalappurtenance:overseasemploymentcontracts,forone,towhich,whateverthe
natureoftheengagement,theconceptofregularemploymentwithallthatitimpliesdoes
notappearevertohavebeenapplied.Article280oftheLaborCodenotwithstandingalso
appointmentstothepositionsofdean,assistantdean,collegesecretary,principal,andother
administrativeofficesineducationalinstitutions,whicharebypracticeortraditionrotated
amongthefacultymembers,andwherefixedtermsareanecessitywithoutwhichno
reasonablerotationwouldbepossible.Similarly,despitetheprovisionsofArticle280,Policy
Instructions.No.8oftheMinisterofLaborimplicitlyrecognizethatcertaincompanyofficials
maybeelectedforwhatwouldamounttofixperiods,attheexpirationofwhichtheywould
havetostanddown,inprovidingthattheseofficials,xxxmaylosetheirjobsaspresident,
executivevicepresidentorvicepresident,etc.becausethestockholdersortheboardof
directorsforonereasonoranotherdidnotreelectthem.
Therecanofcoursebenoquarrelwiththepropositionthatwherefromthecircumstancesitis
apparentthatperiodshavebeenimposedtoprecludeacquisitionoftenurialsecuritybythe
employee,theyshouldbestruckdownordisregardascontrarytopublicpolicy,morals,etc.
Butwherenosuchintenttocircumventthelawisshown,orstatedotherwise,wherethe
reasonforthelawdoesnotexists,e.g.,whereitisindeedtheemployeehimselfwhoinsists
uponaperiodorwherethenatureoftheengagementissuchthat,withoutbeingseasonalor
foraspecificproject,adefinitedateofterminationisasinequanon,wouldanagreement
fixingaperiodbeessentiallyevilorillicit,thereforeanathema?Wouldsuchanagreement
comewithinthescopeofArticle280whichadmittedlywasenactedtopreventthe
circumventionoftherightoftheemployeetobesecuredinxxxhisemployment
AsitisevidentfromevenonlythethreeexamplesalreadygiventhatArticle280oftheLabor
Code,underanarrowandliteralinterpretation,notonlyfailstoexhaustthegamutof
employmentcontractstowhichthelackofafixedperiodwouldbeananomaly,butwould
alsoappeartorestrict,withoutreasonabledistinctions,therightofanemployeetofreely
stipulatewithinhisemployerthedurationofhisengagement,itlogicallyfollowsthatsucha
literalinterpretationshouldbeeschewedoravoided.Thelawmustbegivenareasonable
interpretation,toprecludeabsurdityinitsapplication.Outlawingthewholeconceptofterm
employmentandsubvertingtoboottheprincipleoffreedomofcontracttoremedytheevilof
employersusingitasameanstopreventtheiremployeesfromobtainingsecurityoftenureis
likecuttingoffthenosetospitethefaceor,morerelevantly,curingaheadachebyloppingof
thehead.
Itisasalutaryprincipleinstatutoryconstructionthatthereexistsavalidpresumptionthat
undesirableconsequenceswereneverintendedbyalegislativemeasure,andthata
constructionofwhichthestatuteisfairlysusceptibleisfavored,whichwillavoidall
objectionable,mischievous,indefensible,wrongful,evil,andinjuriousconsequences.
Nothingisbettersettledthanthatcourtsarenottogivewordsameaningwhichwouldleadto
absurdorunreasonableconsequences.ThatisaprinciplethatgoesbacktoInreAllendecided
onOctober27,1902,whereitwasheldthataliteralinterpretationistoberejectedifitwould
beunjustorleadtoabsurdresults.Thatisastrongargumentagainstitsadoption.Thewords
ofJusticeLaurelareparticularlyapt.Thus:theappellantswouldleadtoanabsurdityis
anotherargumentforrejectingit.
XxxWehave,here,thenacasewherethetrueintentofthelawisclearthatcallsforthe
applicationofthecardinalruleofstatutoryconstructionthatsuchintentofspiritmustprevail
overtheletterthereof,forwhateveriswithinthespiritofastatuteiswithinthestatute,since
adherencetotheletterwouldresultinabsurdity,injusticeandcontradictionsandwoulddefeat
theplainandvitalpurposeofthestatute.
Accordingly,andsincetheentirepurposebehindthedevelopmentoflegislation
culminatinginthepresentArticle280oftheLaborcodeclearlyappearstohavebeen,as
alreadyobserved,topreventcircumventionoftheemployeesrighttobesecureinhis
tenure,theclauseinsaidarticleindiscriminatelyandcompletelyrulingoutallwrittenor
oralagreementsconflictingwiththeconceptofregularemploymentasdefinedtherein
shouldbeconstruedtorefertothesubstantiveevilthattheCodeitselfhassingledout;
agreementsenteredintopreciselytocircumventsecurityoftenure.Itshouldhaveno
applicationtoinstanceswhereafixedperiodofemploymentwasagreeduponknowingly
andvoluntarilybytheparties,withoutanyforce,duressorimproperpressurebeing
broughttobearupontheemployeeandabsentanyothercircumstancesvitiatinghis
consent,orwhereitsatisfactorilyappearsthattheemployerandemployeedealtwith
eachotheronmoreorlessequaltermswithnomoraldominancewhateverbeing
exercisedbytheformeroverthelatter.Unlessthuslimitedinitspurview,thelawwouldbe
madetoapplytopurposesotherthanthoseexplicitlystatedbyitsframers;itthusbecomes
pointlessandarbitrary,unjustinitseffectsandapttoleadtoabsurdandunintended
consequences.
Again,inPabloCoyocav.NLRC,xviii[18]theCourtalsoheldthataseafarerisnotaregular
employeeandisnotentitledtoseparationpay.HisemploymentisgovernedbythePOEA
StandardEmploymentContractforFilipinoSeamen.
XXX. Inthisconnection,itisimportanttonotethatneitherdoesthePOEAstandard
employmentcontractforFilipinoseamenprovideforsuchbenefits.
AsaFilipinoseaman,petitionerisgovernedbytheRulesandRegulationsGoverning
OverseasEmploymentandthesaidRulesdonotprovideforseparationortermination
pay.Whatisembodiedinpetitionerscontractisthepaymentofcompensationarisingfrom
permanentpartialdisabilityduringtheperiodofemployment.Wefindthatprivaterespondent
compliedwiththetermsofcontractwhenitpaidpetitionerP42,315.00which,inouropinion,
isareasonableamount,ascompensationforhisillness.
Lastly,petitionerclaimsthatheeventuallybecamearegularemployeeofprivaterespondent
andthusfallswithinthepurviewofArticles284and95oftheLaborCode.Insupportofthis
contention,petitionercitesthecaseofWorthShippingService,Inc.,etal.v.NLRC,etal.,
whereinweheldthatthecrewmembersoftheshippingcompanyhadattainedregularstatus
andthus,wereentitledtoseparationpay.However,thefactsofsaidcasedifferfromthe
present.InWorth,weheldthattheprincipalandagenthadoperationalcontroland
managementovertheMVOrientCarrierandthus,weretheactualemployersoftheircrew
members.
Fromtheforegoingcases,itisclearthatseafarersareconsideredcontractualemployees.They
cannotbeconsideredasregularemployeesunderArticle280oftheLaborCode.Their
employmentisgovernedbythecontractstheysigneverytimetheyarerehiredandtheir
employmentisterminatedwhenthecontractexpires.Theiremploymentiscontractuallyfixed
foracertainperiodoftime.TheyfallundertheexceptionofArticle280whoseemployment
hasbeenfixedforaspecificprojectorundertakingthecompletionorterminationofwhichhas
beendeterminedatthetimeofengagementoftheemployeeorwheretheworkorservicesto
beperformedisseasonalinnatureandtheemploymentisforthedurationoftheseason.xix[19]
WeneednotdepartfromtherulingsoftheCourtinthetwoaforementionedcaseswhich
indeedconstitutestaredecisiswithrespecttotheemploymentstatusofseafarers.
Petitionersinsistthattheyshouldbeconsideredregularemployees,sincetheyhaverendered
serviceswhichareusuallynecessaryanddesirabletothebusinessoftheiremployer,andthat
theyhaverenderedmorethantwenty(20)yearsofservice.Whilethismaybetrue,theBrent
casehas,however,heldthattherearecertainformsofemploymentwhichalsorequirethe
performanceofusualanddesirablefunctionsandwhichexceedoneyearbutdonot
necessarilyattainregularemploymentstatusunderArticle280.xx[20]Overseasworkers
includingseafarersfallunderthistypeofemploymentwhicharegovernedbythemutual
agreementsoftheparties.
InthisjurisdictionandasclearlystatedintheCoyocacase,Filipinoseamenaregovernedby
theRulesandRegulationsofthePOEA.TheStandardEmploymentContractgoverningthe
employmentofAllFilipinoseamenonBoardOceanGoingVesselsofthePOEA,particularly
inPartI,Sec.Cspecificallyprovidesthatthecontractofseamenshallbeforafixedperiod.
Andinnocaseshouldthecontractofseamenbelongerthan12months.Itreads:
SectionC.DurationofContract
Theperiodofemploymentshallbeforafixedperiodbutinnocasetoexceed12monthsand
shallbestatedintheCrewContract.AnyextensionoftheContractperiodshallbesubjectto
themutualconsentoftheparties.
Moreover,itisanacceptedmaritimeindustrypracticethatemploymentofseafarersarefora
fixedperiodonly.Constrainedbythenatureoftheiremploymentwhichisquitepeculiarand
uniqueinitself,itisforthemutualinterestofboththeseafarerandtheemployerwhythe
employmentstatusmustbecontractualonlyorforacertainperiodoftime.Seafarersspend
mostoftheirtimeatseaandunderstandably,theycannotstayforalongandanindefinite
periodoftimeatsea.xxi[21]Limitedaccesstoshoresocietyduringtheemploymentwillhave
anadverseimpactontheseafarer.Thenational,culturalandlingualdiversityamongthecrew
duringtheCOEisarealitythatnecessitatesthelimitationofitsperiod.xxii[22]
Petitionersmakemuchofthefactthattheyhavebeencontinuallyrehiredortheircontracts
renewedbeforethecontractsexpired(whichhasadmittedlybeengoingonfortwenty(20)
years).Bysuchcircumstancetheyclaimtohaveacquiredregularstatuswithalltherightsand
benefitsappurtenanttoit.
Suchcontentionisuntenable.Undeniably,thiscircumstanceofcontinuousrehiringwas
dictatedbypracticalconsiderationsthatexperiencedcrewmembersaremorepreferred.
Petitionerswereonlygivenpriorityorpreferencebecauseoftheirexperienceand
qualificationsbutthisdoesnotdetractthefactthathereinpetitionersarecontractual
employees.Theycannotbeconsideredregularemployees.Wequotewithfavorthe
explanationoftheNLRCinthiswise:
XxxThereferencetopermanentandprobationarymastersandemployeesinthesepapersisa
misnomeranddoesnotalterthefactthatthecontractsforenlistmentbetweencomplainants
appellantsandrespondentappelleeEssoInternationalwereforadefiniteperiodsoftime,
rangingfrom8to12months.Althoughtheuseofthetermspermanentandprobationaryis
unfortunate,whatisreallymeantiseligibleforrehire.Thisistheonlylogicalconclusion
possiblebecausethepartiescannotandshouldnotviolatePOEAsrequirementthatacontract
ofenlistmentshallbeforalimitedperiodonly;notexceedingtwelve(12)months.xxiii[23]
Fromalltheforegoing,weherebystatethatpetitionersarenotconsideredregularor
permanentemployeesunderArticle280oftheLaborCode.Petitionersemploymenthave
automaticallyceasedupontheexpirationoftheircontractsofenlistment(COE).Sincethere
wasnodismissaltospeakof,itfollowsthatpetitionersarenotentitledtoreinstatementor
paymentofseparationpayorbackwages,asprovidedbylaw.
WithrespecttothebenefitsundertheConsecutiveEnlistmentIncentivePlan(CEIP),wehold
thatthepetitionersarestillentitledtoreceive100%ofthetotalamountcreditedtohimunder
theCEIP.Consideringthatwehavedeclaredthatpetitionersarecontractualemployees,their
compensationandbenefitsarecoveredbythecontractstheysignedandtheCEIPispartand
parcelofthecontract.
TheCEIPwasformulatedtoenticeseamentostaylonginthecompany.Asthenameimplies,
theprogramservesasanincentivefortheemployeestorenewtheircontractswiththesame
companyforaslongastheirserviceswereneeded.Forthosewhoremainedloyaltothem,
theyweredulyrewardedwiththisadditionalremunerationundertheCEIP,ifeligible.While
thisisanactofbenevolenceonthepartoftheemployer,itcannot,however,bedeniedthat
thisispartofthebenefitsaccordedtotheemployeesforservicesrendered.Suchrighttothe
benefitsisvesteduponthemupontheireligibilitytotheprogram.
TheCEIPprovidesthatanemployeebecomescoveredunderthePlanwhenhecompletes
thirtysix(36)monthsoranequivalentofthree(3)yearsofcreditedservicewithrespectto
employmentafterJune30,1973.xxiv[24]Uponeligibility,anamountshallbecreditedtohis
accountasitprovides,amongothers:
III. DistributionofBenefits
A. Retirement,DeathandDisability
 Whentheemploymentofanemployeeterminatesbecauseofhisretirement,
deathorpermanentandtotaldisability,apercentageofthetotalamount
creditedtohisaccountwillbedistributedtohim(orhiseligiblesurvivor(s)
inaccordancewiththefollowing:
ReasonforTermination
Percentage
60 100%
Whentheemploymentofanemployeeisterminatedduetohispoor
performance,misconduct,unavailability,etc.,orifemployeeisnotoffered
reengagementforsimilarreasons,nodistributionofanyportionof
employeesaccountwilleverbemadetohim(orhiseligiblesurvivor[s]).

a)Attainmentofmandatoryretire 100% ItmustberecalledthatonJune21,1989,Millareswrotealettertohisemployerinforminghis

mentageof60.
b)Permanentandtotaldisability,
whileundercontract,thatis
notduetoaccidentormisconduct.
c)Permanentandtotaldisability,
whileundercontract,thatis
duetoaccident,andnotdueto
misconduct.
intentiontoavailoftheoptionalretirementplanundertheCEIPconsideringthathehas
renderedmorethantwenty(20)yearsofcontinuousservice.Lagda,likewise,manifestedthe
100% sameintentioninaletterdatedJune26,1989.Privaterespondent,however,deniedtheir
requestsforbenefitsundertheCEIPsince:(1)thecontractofenlistment(COE)didnot
provideforretirementbefore60yearsofage;andthat(2)petitionersfailedtosubmitawritten
noticeoftheirintentiontoterminatetheiremploymentwithinthirty(30)daysfromthelast
disembarkationdatepursuanttotheprovisiononVoluntaryTerminationoftheCEIP.
100%
Petitionerswereeventuallydroppedfromtherosterofcrewmembersandongroundsof
abandonmentandunavailabilityforcontractualseaservice,respectively,theywere
disqualifiedfromreceivinganybenefitsundertheCEIP.xxv[25]

InourMarch14,2000Decision,we,however,foundthatpetitionersMillaresandLagdawere
xxx
notguiltyofabandonmentorunavailabilityforcontractualseaservice,aswehavestated:

B. VoluntaryTermination
Whenanemployeevoluntaryterminateshisemploymentwithatleast36monthsofcredited
servicewithoutanymisconductonhispart,18percentofthetotalamountcreditedtohis
account,plusanadditionalofonepercentforeachmonth(uptoamaximumof164monthsof
creditedserviceinexcessof36,willbedistributedtohimprovided(1)theemployeehas
completedhislastContractofEnlistmentand(2)employeeadvisesthecompanyinwriting,
within30days,fromhislastdisembarkationdate,ofhisintentiontoterminatehis
employment.(ToadvisetheCompanyinwritingmeansthattheoriginallettermustbesentto
theCompanysagentinthePhilippines,acopysenttotheCompanyinNewYork).
xxx
C. OtherTerminations
WhentheemploymentofanemployeeisterminatedbytheCompanyfora
reasonotherthanoneinAandBabove,withoutanymisconductonhis
part,apercentageofthetotalamountcreditedtohisaccountwillbe
distributedtohiminaccordancewiththefollowing.
CreditedService Percentage
36months 50%
48
75%
Theabsenceofpetitionerswasjustifiedbythefactthattheysecuredtheapprovalofprivate
respondentstotakealeaveofabsenceaftertheterminationoftheirlastcontractsof
enlistment.Subsequently,petitionerssoughtforextensionsoftheirrespectiveleavesof
absence.Grantingarguendothattheirsubsequentrequestsforextensionswerenotapproved,it
cannotbesaidthatpetitionerswereunavailableorhadabandonedtheirworkwhentheyfailed
toreportbackforassignmentastheywerestillquestioningthedenialofprivaterespondents
oftheirdesiretoavailoftheoptionalearlyretirementpolicy,whichtheybelievedingood
faithtoexist.xxvi[26]
Neithercanweconsiderpetitionersguiltyofpoorperformanceormisconductsincetheywere
recipientsofMeritPayAwardsfortheirexemplaryperformancesinthecompany.
AnentthelettersdatedJune21,1989(forMillares)andJune26,1989(forLagda)which
privaterespondentconsideredasbelatedwrittennoticesoftermination,wefindsuchassertion
specious.Notwithstanding,wecouldconvenientlyconsiderthepetitionerseligibleunder
SectionIIIBoftheCEIP(VoluntaryTermination),butthiswould,however,awardthemonly
ameaslyamountofbenefitswhichtoourmind,thepetitionersdonotrightfullydeserveunder
thefactsandcircumstancesofthecase.AstheCEIPprovides:
III.DistributionofBenefits
xxx
E.DistributionofAccounts
Whenanemployeeterminatesunderconditionsthatwouldqualifyforadistributionofmore
thanonespecifiedinA,BorCabove,thelargestsingleamount,only,willbedistributed.
SincepetitionersterminationofemploymentundertheCEIPdonotfallunderSectionIIIA
(Retirement,DeathandDisability)orSectionIIIB(VoluntaryTermination),norcouldthey
beconsideredunderthesecondparagraphofSectionIIIC,asearlierdiscussed;itfollowsthat
theirterminationfallsunderthefirstparagraphofSectionIIICforwhichtheyareentitledto
100%ofthetotalamountcreditedtotheiraccounts.Theprivaterespondentscannotnow
renegeontheircommitmentundertheCEIPtorewarddeservingandloyalemployeesasthe
petitionersinthiscase.
IntakingcognizanceofprivaterespondentsSecondMotionforReconsideration,theCourt
herebysuspendstherulestomakethemconformabletolawandjusticeandtosubservean
overridingpublicinterest.
INVIEWOFTHEFOREGOING,THECOURTResolvedtoPartiallyGRANTPrivate
RespondentsSecondMotionforReconsiderationandIntervenorFAMESMotionfor
ReconsiderationinIntervention.TheDecisionoftheNationalLaborRelationsCommission
datedJune1,1993isherebyREINSTATEDwithMODIFICATION.ThePrivate
Respondents,TransGlobalMaritimeAgency,Inc.andEssoInternationalShippingCo.,Ltd.
areherebyjointlyandseverallyORDEREDtopaypetitionersOneHundredPercent(100%)
oftheirtotalcreditedcontributionsasprovidedundertheConsecutiveEnlistmentIncentive
Plan(CEIP).
SOORDERED.
MARSAMANMANNINGAGENCY,INC.andDIAMANTIDESMARITIME,INC.,
petitioners,vs.NATIONALLABORRELATIONSCOMMISSIONandWILFREDOT.
CAJERAS,respondents.
DECISION
BELLOSILLO,J.:
MARSAMANMANNINGAGENCY,INC.(MARSAMAN)anditsforeignprincipal
DIAMANTIDESMARITIME,INC.(DIAMANTIDES)assailtheDecisionofpublic
respondentNationalLaborRelationsCommissiondated16September1996aswellasits
Resolutiondated12November1996affirmingtheLaborArbiter'sdecisionfindingthem
guiltyofillegaldismissalandorderingthemtopayrespondentWilfredoT.Cajerassalaries
correspondingtotheunexpiredportionofhisemploymentcontract,plusattorney'sfees.
PrivaterespondentWilfredoT.CajeraswashiredbypetitionerMARSAMAN,thelocal
manningagentofpetitionerDIAMANTIDES,asChiefCookStewardontheMVPrigipos,
ownedandoperatedbyDIAMANTIDES,foracontractperiodoften(10)monthswitha
monthlysalaryofUS$600.00,evidencedbyacontractbetweenthepartiesdated15June
1995.Cajerasstartedworkon8August1995butlessthantwo(2)monthslater,oron28
September1995,hewasrepatriatedtothePhilippinesallegedlybymutualconsent.
On17November1995privaterespondentCajerasfiledacomplaintforillegaldismissal
againstpetitionerswiththeNLRCNationalCapitalRegionArbitrationBranchallegingthathe
wasdismissedillegally,denyingthathisrepatriationwasbymutualconsent,andaskingfor
hisunpaidwages,overtimepay,damages,andattorneysfees.xxvii[1]Cajerasallegedthathe
wasassignednotonlyasChiefCookStewardbutalsoasassistantcookandmessmanin
additiontoperformingvariousinventoryandrequisitionjobs.Becauseofhisadditional
assignmentshebegantofeelsickjustalittleoveramonthonthejobconstraininghimto
requestformedicalattention.HewasrefusedatfirstbyCapt.KouvakasAlekos,masterofthe
MVPrigipos,whojustorderedhimtocontinueworking.Howeveradayaftertheshipsarrival
attheportofRotterdam,Holland,on26September1995Capt.Alekosrelentedandhadhim
examinedattheMedicalCenterforSeamen.However,theexaminingphysician,Dr.Wden
Hoed,neitherapprisedprivaterespondentaboutthediagnosisnorissuedtherequested
medicalcertificateallegedlybecausehehimselfwouldforwardtheresultstoprivate
respondentssuperiors.Uponreturningtothevessel,privaterespondentwasunceremoniously
orderedtoprepareforimmediaterepatriationthefollowingdayashewassaidtobesuffering
fromadiseaseofunknownorigin.
On28September1995hewashandedhisSeaman'sServiceRecordBookwiththefollowing
entry:"CauseofdischargeMutualConsent."xxviii[2]Privaterespondentpromptlyobjectedto
theentrybutwasnotabletodoanythingmoreashewasimmediatelyusheredtoawaiting
taxiwhichtransportedhimtotheAmsterdamAirportforthereturnflighttoManila.Afterhis
arrivalinManilaon29September1995CajerascomplainedtoMARSAMANbuttono
avail.xxix[3]
MARSAMANandDIAMANTIDES,ontheotherhand,deniedtheimputationofillegal
dismissal.TheyallegedthatCajerasapproachedCapt.Alekoson26September1995and
informedthelatterthathecouldnotsleepatnightbecausehefeltsomethingcrawlingoverhis
body.Furthermore,Cajerasreportedlydeclaredthathecouldnolongerperformhisdutiesand
requestedforrepatriation.Thefollowingparagraphinthevessel'sDeckLogwasallegedly
enteredbyCapt.Alekos,towit:
Cajerasapproachedmeandhetoldmethathecannotsleepatnightandthathefeels
somethingcrawlingonhisbodyandhedeclaredthathecannolongerperformhisdutiesand
hemustberepatriated.xxx[4]
PrivaterespondentwasthensenttotheMedicalCenterforSeamenatRotterdamwherehe
wasexaminedbyDr.WdenHoedwhosediagnosisappearedinaMedicalReportasparanoia
andothermentalproblems.xxxi[5]Consequently,uponDr.Hoedsrecommendation,Cajeras
wasrepatriatedtothePhilippineson28September1995.
On29January1996LaborArbiterErnestoS.Dinopolresolvedthedisputeinfavorofprivate
respondentCajerasrulingthatthelatter'sdischargefromtheMVPrigiposallegedlybymutual
consentwasnotprovedbyconvincingevidence.TheentrymadebyCapt.AlekosintheDeck
Logwasdismissedasoflittleprobativevaluebecauseitwasamereunilateralactunsupported
byanydocumentshowingmutualconsentofCapt.Alekos,asmasteroftheMVPrigipos,and
CajerastotheprematureterminationoftheoverseasemploymentcontractasrequiredbySec.
HoftheStandardEmploymentContractGoverningtheEmploymentofallFilipinoSeamen
onBoardOceanGoingVessels.Dr.Hoedsdiagnosisthatprivaterespondentwassuffering
fromparanoiaandothermentalproblemswaslikewisedismissedasbeingoflittleevidentiary
valuebecauseitwasnotsupportedbyevidenceonhowtheparanoiawascontracted,inwhat
stageitwas,andhowitaffectedrespondent'sfunctionsasChiefCookStewardwhich,onthe
contrary,wasevenratedVeryGoodinrespondent'sServiceRecordBook.Thus,theLabor
Arbiterdisposedofthecaseasfollows:
WHEREFORE,judgmentisherebyrendereddeclaringtherepatriationanddismissalof
complaintWilfredoT.CajerasasillegalandorderingrespondentsMarsamanManning
Agency,Inc.andDiamantidesMaritime,Inc.tojointlyandseverallypaycomplainantthesum
ofUSD5,100.00oritspesoequivalentatthetimeofpaymentplusUSD510.00as10%
attorneysfeesitappearingthatcomplainanthadtoengagetheserviceofcounseltoprotecthis
interestintheprosecutionofthiscase.
Theclaimsfornonpaymentofwagesandovertimepayaredismissedforhavingbeen
withdrawn(Minutes,December18,1995).Theclaimsfordamagesarelikewisedismissedfor
lackofmerit,sincenoevidencewaspresentedtoshowthatbadfaithcharacterizedthe
dismissal.xxxii[6]
PetitionersappealedtotheNLRC.xxxiii[7]On16September1996theNLRCaffirmedthe
appealedfindingsandconclusionsoftheLaborArbiter.xxxiv[8]TheNLRCsubscribedtothe
viewthatCajerasrepatriationbyallegedmutualconsentwasnotprovedbypetitioners,
especiallyafternotingthatprivaterespondentdidnotactuallysignhisSeamansService
RecordBooktosignifyhisassenttotherepatriationasallegedbypetitioners.Theentrymade
byCapt.AlekosintheDeckLogwasnotconsideredreliableproofthatprivaterespondent
agreedtohisrepatriationbecausenoopportunitywasgiventhelattertocontesttheentry
whichwasagainsthisinterest.Similarly,theMedicalReportissuedbyDr.HoedofHolland
wasdismissedasbeingofdubiousvaluesinceitcontainedonlyasweepingstatementofthe
supposedailmentofCajeraswithoutanyelaborationonthefactualbasisthereof.
Petitioners'motionforreconsiderationwasdeniedbytheNLRCinitsResolutiondated12
November1996.xxxv[9]Hence,thispetitioncontendingthattheNLRCcommittedgraveabuse
ofdiscretion:(a)innotaccordingfullfaithandcredittotheofficialentrybyCapt.Alekosin
thevesselsDeckLogconformablywiththerulingsinHavertonShippingLtd.v.NLRCxxxvi[10]
andWallemMaritimeServices,Inc.v.NLRC;xxxvii[11](b)innotappreciatingtheMedical
ReportissuedbyDr.WdenHoedasconclusiveevidencethatrespondentCajeraswas
sufferingfromparanoiaandothermentalproblems;(c)inaffirmingtheawardofattorneys
feesdespitethefactthatCajeras'claimforexemplarydamageswasdeniedforlackofmerit;
and,(d)inorderingamonetaryawardbeyondthemaximumofthree(3)monthssalaryfor
everyyearofservicesetbyRA8042.
Wedenythepetition.IntheContractofEmploymentxxxviii[12]enteredintowithprivate
respondent,petitionersconvenantedstrictandfaithfulcompliancewiththetermsand
conditionsoftheStandardEmploymentContractapprovedbythePOEA/DOLExxxix[13]which
provides:
1.Theemploymentoftheseamanshallceaseuponexpirationofthecontractperiodindicated
intheCrewContractunlesstheMasterandtheSeaman,bymutualconsent,inwriting,agree
toanearlyterminationxxxx(underscoringours).
Clearly,undertheforegoing,theemploymentofaFilipinoseamanmaybeterminatedpriorto
theexpirationofthestipulatedperiodprovidedthatthemasterandtheseaman(a)mutually
consenttheretoand(b)reducetheirconsentinwriting.
Intheinstantcase,petitionersdonotdenythefactthattheyhavefallenshortofthe
requirement.NodocumentexistswherebyCapt.Alekosandprivaterespondentreducedto
writingtheirallegedmutualconsenttotheterminationoftheiremploymentcontract.Instead,
petitionerspresentedthevessel'sDeckLogwhereinanentryunilaterallymadebyCapt.
Alekospurportedtoshowthatprivaterespondenthimselfaskedforhisrepatriation.However,
theNLRCcorrectlydismisseditsevidentiaryvalue.Foronething,itisaunilateralactwhich
isvehementlydeniedbyprivaterespondent.Secondly,theentryinnowaysatisfiesthe
requirementofabilateraldocumentationtoproveearlyterminationofanoverseas
employmentcontractbymutualconsentrequiredbytheStandardEmploymentContract.
Hence,sincethelattersetstheminimumtermsandconditionsofemploymentforthe
protectionofFilipinoseamensubjectonlytotheadoptionofbettertermsandconditionsover
andabovetheminimumstandards,xl[14]theNLRCcouldnotbeaccusedofgraveabuseof
discretioninnotacceptinganythingless.
Howeverpetitionerscontendthattheentryshouldbeconsideredprimafacieevidencethat
respondenthimselfrequestedhisrepatriationconformablywiththerulingsinHaverton
ShippingLtd.v.NLRCxli[15]andAbacastShippingandManagementAgency,Inc.v.NLRC.xlii
[16]Indeed,Havertonsaysthatavesselslogbookisprimafacieevidenceofthefactsstated
thereinastheyareofficialentriesmadebyapersonintheperformanceofadutyrequiredby
law.However,thisjurisprudentialprincipledoesnotapplytowinthecaseforpetitioners.In
WallemMaritimeServices,Inc.v.NLRCxliii[17]theHavertonrulingwasnotgivenunqualified
applicationbecausethelogbookpresentedthereinwasameretypewrittencollationof
excerptsfromwhatcouldbethelogbook.xliv[18]TheCourtreasonedthatsincethelogbook
wastheonlypieceofevidencepresentedtoprovejustcausefortheterminationofrespondent
therein,thelogbookhadtobedulyidentifiedandauthenticatedlestaninjusticewouldresult
fromablindadoptionofitscontentswhichwerebutprimafacieevidenceoftheincidents
statedtherein.
Intheinstantcase,thedisputedentryintheDeckLogwasneitherauthenticatednorsupported
bycredibleevidence.AlthoughpetitionersclaimthatCajerassignedhisSeamansService
RecordBooktosignifyhisconformitytotherepatriation,theNLRCfoundtheallegationtobe
actuallyuntruesincenosignatureofprivaterespondentappearedintheRecordBook.
NeithercouldtheMedicalReportpreparedbyDr.Hoedbeconsideredcorroborativeand
conclusiveevidencethatprivaterespondentwassufferingfromparanoiaandothermental
problems,supposedlyjustcausesforhisrepatriation.Firstly,absolutelynoevidence,noteven
anallegation,wasofferedtoenlightentheNLRCorthisCourtastoDr.Hoed'squalifications
todiagnosementalillnesses.Itisamatterofjudicialnoticethattherearevarious
specializationsinmedicalscienceandthatageneralpractitionerisnotcompetenttodiagnose
anyandallkindsofillnessesanddiseases.Hence,thefindingsofdoctorswhoarenotproven
expertsarenotbindingonthisCourt.xlv[19]Secondly,theMedicalReportpreparedbyDr.
Hoedcontainedonlyageneralstatementthatprivaterespondentwassufferingfromparanoia
andothermentalproblemswithoutprovidingthedetailsonhowthediagnosiswasarrivedat
orinwhatstagetheillnesswas.IfDr.Hoedindeedcompetentlyexaminedprivaterespondent
thenhewouldhavebeenabletodiscussatlengththecircumstancesandprecedentsofhis
diagnosis.Petitionerscannotrelyonthepresumptionofregularityintheperformanceof
officialdutiestomaketheMedicalReportacceptablebecausethepresumptionappliesonlyto
publicofficersfromthehighesttothelowestintheserviceoftheGovernment,departments,
bureaus,offices,and/oritspoliticalsubdivisions,xlvi[20]whichDr.WdenHoedwasnotshown
tobe.Furthermore,neitherdidpetitionersprovethatprivaterespondentwasincompetentor
continuouslyincapacitatedforthedutiesforwhichhewasemployedbyreasonofhisalleged
mentalstate.OnthecontraryhisabilityasChiefCookSteward,uptotheverymomentofhis
repatriation,wasratedVeryGoodinhisSeamansServiceRecordBookascorrectlyobserved
bypublicrespondent.
Consideringalltheforegoingwecannotascribegraveabuseofdiscretiononthepartofthe
NLRCinrulingthatpetitionersfailedtoprovejustcausefortheterminationofprivate
respondent'soverseasemployment.Graveabuseofdiscretioniscommittedonlywhenthe
judgmentisrenderedinacapricious,whimsical,arbitraryordespoticmanner,whichisnot
trueinthepresentcase.xlvii[21]
Withrespecttoattorneysfees,sufficeittosaythatinactionsforrecoveryofwagesorwhere
anemployeewasforcedtolitigateandthusincurredexpensestoprotecthisrightsand
interests,amaximumawardoftenpercent(10%)ofthemonetaryawardbywayofattorneys
feesislegallyandmorallyjustifiableunderArt.111oftheLaborCode,xlviii[22]Sec.8,Rule
VIII,BookIIIofitsImplementingRules,xlix[23]andpar.7,Art.2208l[24]oftheCivilCode.li
[25]ThecaseofAlbensonEnterprisesCorporationv.CourtofAppealslii[26]citedby
petitionersinarguingagainsttheawardofattorneysfeesisclearlynotapplicable,beingacivil
actionfordamageswhichdealswithonlyoneoftheeleven(11)instanceswhenattorneysfees
couldberecoveredunderArt.2208oftheCivilCode.
Lastly,ontheamountofsalariesdueprivaterespondent,therulehasalwaysbeenthatan
illegallydismissedworkerwhoseemploymentisforafixedperiodisentitledtopaymentof
hissalariescorrespondingtotheunexpiredportionofhisemployment.liii[27]Howeveron15
July1995,RA8042otherwiseknownastheMigrantWorkersandOverseasFilipinosActof
1995tookeffect,Sec.10ofwhichprovides:
Sec.10.Incaseofterminationofoverseasemploymentwithoutjust,validorauthorizedcause
asdefinedbylaworcontract,theworkershallbeentitledtothefullreimbursementofhis
placementfeewithinterestattwelvepercent(12%)perannum,plushissalariesforthe
unexpiredportionoftheemploymentcontractorforthree(3)monthsforeveryyearofthe
unexpiredtermwhicheverisless(underscoringours).
TheLaborArbiter,rationalizingthattheaforesaidlawdidnotapplysinceitbecameeffective
onlyone(1)monthafterrespondent'soverseasemploymentcontractwasenteredintoon15
June1995,simplyawardedprivaterespondenthissalariescorrespondingtotheunexpired
portionofhisemploymentcontract,i.e.,for8.6months.TheNLRCaffirmedtheawardand
theOfficeoftheSolicitorGeneral(OSG)fullyagreed.ButpetitionersnowinsistthatSec.10,
RA8042isapplicablebecausealthoughprivaterespondentscontractofemploymentwas
enteredintobeforethelawbecameeffectivehisallegedcauseofaction,i.e.,hisrepatriation
on28September1995withoutjust,validorauthorizedcause,occurredwhenthelawwas
alreadyineffect.Petitioners'purposeinsoarguingistoinvokethelawinjustifyingalesser
monetaryawardtoprivaterespondent,i.e.,salariesforthree(3)monthsonlypursuanttothe
lastportionofSec.10asopposedtothesalariesfor8.6monthsawardedbytheLaborArbiter
andaffirmedbytheNLRC.
WeagreewithpetitionersthatSec.10,RA8042,appliesinthecaseofprivaterespondentand
toalloverseascontractworkersdismissedonorafteritseffectivityon15July1995inthe
samewaythatSec.34,liv[28]RA6715,lv[29]ismadeapplicabletolocallyemployedworkers
dismissedonorafter21March1989.lvi[30]However,wecannotsubscribetotheviewthat
privaterespondentisentitledtothree(3)monthssalaryonly.AplainreadingofSec.10
clearlyrevealsthatthechoiceofwhichamounttoawardanillegallydismissedoverseas
contractworker,i.e.,whetherhissalariesfortheunexpiredportionofhisemploymentcontract
orthree(3)monthssalaryforeveryyearoftheunexpiredterm,whicheverisless,comesinto
playonlywhentheemploymentcontractconcernedhasatermofatleastone(1)yearormore.
Thisisevidentfromthewordsforeveryyearoftheunexpiredtermwhichfollowsthewords
salariesxxxforthreemonths.Tofollowpetitionersthinkingthatprivaterespondentis
entitledtothree(3)monthssalaryonlysimplybecauseitisthelesseramountistocompletely
disregardandoverlooksomewordsusedinthestatutewhilegivingeffecttosome.Thisis
contrarytothewellestablishedruleinlegalhermeneuticsthatininterpretingastatute,care
shouldbetakenthateverypartorwordthereofbegiveneffectlvii[31]sincethelawmaking
bodyispresumedtoknowthemeaningofthewordsemployedinthestatueandtohaveused
themadvisedly.lviii[32]Utresmagisvaleatquampereat.lix[33]
WHEREFORE,thequestionedDecisionandResolutiondated16September1996and12
November1996,respectively,ofpublicrespondentNationalLaborRelationsCommissionare
AFFIRMED.PetitionersMARSAMANMANNINGAGENCY,INC.,andDIAMANTIDES
MARITIME,INC.,areordered,jointlyandseverally,topayprivaterespondentWILFREDO
T.CAJERAShissalariesfortheunexpiredportionofhisemploymentcontractor
USD$5,100.00,reimbursethelatter'splacementfeewithtwelvepercent(12%)interestper
annumconformablywithSec.10ofRA8042,aswellasattorney'sfeesoftenpercent(10%)
ofthetotalmonetaryaward.Costsagainstpetitioners.
SOORDERED.
ANTONIOM.SERRANO,Petitioner,
vs.
GallantMARITIMESERVICES,INC.andMARLOWNAVIGATIONCO.,INC.,
Respondents.
DECISION
AUSTRIAMARTINEZ,J.:
Fordecades,thetoilofsolitarymigrantshashelpedliftentirefamiliesandcommunitiesoutof
poverty.Theirearningshavebuilthouses,providedhealthcare,equippedschoolsandplanted
theseedsofbusinesses.Theyhavewoventogethertheworldbytransmittingideasand
knowledgefromcountrytocountry.Theyhaveprovidedthedynamichumanlinkbetween
cultures,societiesandeconomies.Yet,onlyrecentlyhavewebeguntounderstandnotonly
howmuchinternationalmigrationimpactsdevelopment,buthowsmartpublicpoliciescan
magnifythiseffect.
UnitedNationsSecretaryGeneralBanKiMoon
GlobalForumonMigrationandDevelopment
Brussels,July10,20071
ForAntonioSerrano(petitioner),aFilipinoseafarer,thelastclauseinthe5thparagraphof
Section10,RepublicAct(R.A.)No.8042,2towit:
Sec.10.MoneyClaims.xxxIncaseofterminationofoverseasemploymentwithoutjust,
validorauthorizedcauseasdefinedbylaworcontract,theworkersshallbeentitledtothefull
reimbursementofhisplacementfeewithinterestoftwelvepercent(12%)perannum,plushis
salariesfortheunexpiredportionofhisemploymentcontractorforthree(3)monthsfor
everyyearoftheunexpiredterm,whicheverisless.
xxxx(Emphasisandunderscoringsupplied)
OnMarch19,1998,thedateofhisdeparture,petitionerwasconstrainedtoaccepta
downgradedemploymentcontractforthepositionofSecondOfficerwithamonthlysalaryof
US$1,000.00,upontheassuranceandrepresentationofrespondentsthathewouldbemade
ChiefOfficerbytheendofApril1998.6
RespondentsdidnotdeliverontheirpromisetomakepetitionerChiefOfficer.7Hence,
petitionerrefusedtostayonasSecondOfficerandwasrepatriatedtothePhilippinesonMay
26,1998.8
Petitioner'semploymentcontractwasforaperiodof12monthsorfromMarch19,1998upto
March19,1999,butatthetimeofhisrepatriationonMay26,1998,hehadservedonlytwo
(2)monthsandseven(7)daysofhiscontract,leavinganunexpiredportionofnine(9)months
andtwentythree(23)days.
PetitionerfiledwiththeLaborArbiter(LA)aComplaint9againstrespondentsforconstructive
dismissalandforpaymentofhismoneyclaimsinthetotalamountofUS$26,442.73,broken
downasfollows:

doesnotmagnifythecontributionsofoverseasFilipinoworkers(OFWs)tonational May27/31,1998(5days)incl.Leave US$413.90

development,butexacerbatesthehardshipsbornebythembyundulylimitingtheirentitlement pay
incaseofillegaldismissaltotheirlumpsumsalaryeitherfortheunexpiredportionoftheir
employmentcontract"orforthreemonthsforeveryyearoftheunexpiredterm,whicheveris June01/30,1998 2,590.00
less"(subjectclause).PetitionerclaimsthatthelastclauseviolatestheOFWs'constitutional
rightsinthatitimpairsthetermsoftheircontract,deprivesthemofequalprotectionand July01/31,1998 2,590.00
deniesthemdueprocess.
August01/31,1998 2,590.00
BywayofPetitionforReviewunderRule45oftheRulesofCourt,petitionerassailsthe
Sept.01/30,1998 2,590.00
December8,2004Decision3andApril1,2005Resolution4oftheCourtofAppeals(CA),
whichappliedthesubjectclause,entreatingthisCourttodeclarethesubjectclause Oct.01/31,1998 2,590.00
unconstitutional.
Nov.01/30,1998 2,590.00
PetitionerwashiredbyGallantMaritimeServices,Inc.andMarlowNavigationCo.,Ltd.
(respondents)underaPhilippineOverseasEmploymentAdministration(POEA)approved Dec.01/31,1998 2,590.00
ContractofEmploymentwiththefollowingtermsandconditions:
Jan.01/31,1999 2,590.00

Durationofcontract 12months Feb.01/28,1999 2,590.00

Position ChiefOfficer Mar.1/19,1999(19days)incl.leave 1,640.00

pay
Basicmonthlysalary US$1,400.00

Hoursofwork 48.0hoursperweek
25,382.23
Overtime US$700.00permonth
Amountadjustedtochiefmate'ssalary
Vacationleavewithpay 7.00dayspermonth5

(March19/31,1998toApril1/30,1998) 1,060.5010
+
TOTALCLAIM US$26,442.7311
aswellasmoralandexemplarydamagesandattorney'sfees.
TheLArenderedaDecisiondatedJuly15,1999,declaringthedismissalof
petitionerillegalandawardinghimmonetarybenefits,towit:
WHEREFORE,premisesconsidered,judgmentisherebyrendereddeclaringthatthe
dismissalofthecomplainant(petitioner)bytherespondentsintheaboveentitled
casewasillegalandtherespondentsareherebyorderedtopaythecomplainant
[petitioner],jointlyandseverally,inPhilippineCurrency,basedontherateof
exchangeprevailingatthetimeofpayment,theamountofEIGHTTHOUSAND
SEVENHUNDREDSEVENTYU.S.DOLLARS(US$8,770.00),representingthe
complainantssalaryforthree(3)monthsoftheunexpiredportionofthe
aforesaidcontractofemployment.1avvphi1
Therespondentsarelikewiseorderedtopaythecomplainant[petitioner],jointlyand
severally,inPhilippineCurrency,basedontherateofexchangeprevailingatthe
timeofpayment,theamountofFORTYFIVEU.S.DOLLARS(US$45.00),12
representingthecomplainantsclaimforasalarydifferential.Inaddition,the
respondentsareherebyorderedtopaythecomplainant,jointlyandseverally,in
PhilippineCurrency,attheexchangerateprevailingatthetimeofpayment,the
complainants(petitioner's)claimforattorneysfeesequivalenttotenpercent(10%)
ofthetotalamountawardedtotheaforesaidemployeeunderthisDecision.
Theclaimsofthecomplainantformoralandexemplarydamagesarehereby
DISMISSEDforlackofmerit.
AllotherclaimsareherebyDISMISSED.
SOORDERED.13(Emphasissupplied)
InawardingpetitioneralumpsumsalaryofUS$8,770.00,theLAbasedhis
computationonthesalaryperiodofthreemonthsonlyratherthantheentire
unexpiredportionofninemonthsand23daysofpetitioner'semploymentcontract
applyingthesubjectclause.However,theLAappliedthesalaryrateof
US$2,590.00,consistingofpetitioner's"[b]asicsalary,US$1,400.00/month+
US$700.00/month,fixedovertimepay,+US$490.00/month,vacationleavepay=
US$2,590.00/compensationpermonth."14
Respondentsappealed15totheNationalLaborRelationsCommission(NLRC)to
questionthefindingoftheLAthatpetitionerwasillegallydismissed.
Petitioneralsoappealed16totheNLRConthesoleissuethattheLAerredinnot
applyingtherulingoftheCourtinTripleIntegratedServices,Inc.v.NationalLabor
RelationsCommission17thatincaseofillegaldismissal,OFWsareentitledtotheir
salariesfortheunexpiredportionoftheircontracts.18
InaDecisiondatedJune15,2000,theNLRCmodifiedtheLADecision,towit:
WHEREFORE,theDecisiondated15July1999isMODIFIED.Respondentsare
herebyorderedtopaycomplainant,jointlyandseverally,inPhilippinecurrency,at
theprevailingrateofexchangeatthetimeofpaymentthefollowing:
1.Three(3)monthssalary
$1,400x3 US$4,200.00
2.Salarydifferential 45.00
US$4,245.00
3.10%Attorneysfees 424.50
TOTAL US$4,669.50
Theotherfindingsareaffirmed.
SOORDERED.19
TheNLRCcorrectedtheLA'scomputationofthelumpsumsalaryawardedtopetitionerby
reducingtheapplicablesalaryratefromUS$2,590.00toUS$1,400.00becauseR.A.No.8042
"doesnotprovidefortheawardofovertimepay,whichshouldbeproventohavebeen
actuallyperformed,andforvacationleavepay."20
PetitionerfiledaMotionforPartialReconsideration,butthistimehequestionedthe
constitutionalityofthesubjectclause.21TheNLRCdeniedthemotion.22
PetitionerfiledaPetitionforCertiorari23withtheCA,reiteratingtheconstitutionalchallenge
againstthesubjectclause.24Afterinitiallydismissingthepetitiononatechnicality,theCA
eventuallygaveduecoursetoit,asdirectedbythisCourtinitsResolutiondatedAugust7,
2003whichgrantedthepetitionforcertiorari,docketedasG.R.No.151833,filedby
petitioner.
InaDecisiondatedDecember8,2004,theCAaffirmedtheNLRCrulingonthereductionof
theapplicablesalaryrate;however,theCAskirtedtheconstitutionalissueraisedby
petitioner.25
HisMotionforReconsideration26havingbeendeniedbytheCA,27petitionerbringshiscause
tothisCourtonthefollowinggrounds:
I
TheCourtofAppealsandthelabortribunalshavedecidedthecaseinawaynotinaccordwith
applicabledecisionoftheSupremeCourtinvolvingsimilarissueofgrantinguntothemigrant
workerbackwagesequaltotheunexpiredportionofhiscontractofemploymentinsteadof
limitingittothree(3)months
II
InthealternativethattheCourtofAppealsandtheLaborTribunalsweremerelyapplying
theirinterpretationofSection10ofRepublicActNo.8042,itissubmittedthattheCourtof
Appealsgravelyerredinlawwhenitfailedtodischargeitsjudicialdutytodecidequestionsof
substancenottheretoforedeterminedbytheHonorableSupremeCourt,particularly,the
constitutionalissuesraisedbythepetitionerontheconstitutionalityofsaidlaw,which
unreasonably,unfairlyandarbitrarilylimitspaymentoftheawardforbackwagesofoverseas
workerstothree(3)months.
III
Evenwithoutconsideringtheconstitutionallimitations[of]Sec.10ofRepublicActNo.8042,
theCourtofAppealsgravelyerredinlawinexcludingfrompetitionersawardtheovertime
payandvacationpayprovidedinhiscontractsinceunderthecontracttheyformpartofhis
salary.28
OnFebruary26,2008,petitionerwrotetheCourttowithdrawhispetitionasheisalreadyold
andsickly,andheintendstomakeuseofthemonetaryawardforhismedicaltreatmentand
medication.29Requiredtocomment,counselforpetitionerfiledamotion,urgingthecourtto
allowpartialexecutionoftheundisputedmonetaryawardand,atthesametime,prayingthat
theconstitutionalquestionberesolved.30
Consideringthatthepartieshavefiledtheirrespectivememoranda,theCourtnowtakesupthe
fullmeritofthepetitionmindfuloftheextremeimportanceoftheconstitutionalquestion
raisedtherein.
Onthefirstandsecondissues
TheunanimousfindingoftheLA,NLRCandCAthatthedismissalofpetitionerwasillegalis
notdisputed.LikewisenotdisputedisthesalarydifferentialofUS$45.00awardedto
petitionerinallthreefora.Whatremainsdisputedisonlythecomputationofthelumpsum
salarytobeawardedtopetitionerbyreasonofhisillegaldismissal.
Applyingthesubjectclause,theNLRCandtheCAcomputedthelumpsumsalaryof
petitioneratthemonthlyrateofUS$1,400.00coveringtheperiodofthreemonthsoutofthe
unexpiredportionofninemonthsand23daysofhisemploymentcontractoratotalof
US$4,200.00.
Impugningtheconstitutionalityofthesubjectclause,petitionercontendsthat,inadditionto
theUS$4,200.00awardedbytheNLRCandtheCA,heisentitledtoUS$21,182.23moreora
totalofUS$25,382.23,equivalenttohissalariesfortheentireninemonthsand23daysleftof
hisemploymentcontract,computedatthemonthlyrateofUS$2,590.00.31
TheArgumentsofPetitioner
Petitionercontendsthatthesubjectclauseisunconstitutionalbecauseitundulyimpairsthe
freedomofOFWstonegotiateforandstipulateintheiroverseasemploymentcontractsa
determinateemploymentperiodandafixedsalarypackage.32Italsoimpingesontheequal
protectionclause,forittreatsOFWsdifferentlyfromlocalFilipinoworkers(localworkers)by
puttingacapontheamountoflumpsumsalarytowhichOFWsareentitledincaseofillegal
dismissal,whilesettingnolimittothesamemonetaryawardforlocalworkerswhentheir
dismissalisdeclaredillegal;thatthedisparatetreatmentisnotreasonableasthereisno
substantialdistinctionbetweenthetwogroups;33andthatitdefeatsSection18,34ArticleIIof
theConstitutionwhichguaranteestheprotectionoftherightsandwelfareofallFilipino
workers,whetherdeployedlocallyoroverseas.35
Moreover,petitionerarguesthatthedecisionsoftheCAandthelabortribunalsarenotinline
withexistingjurisprudenceontheissueofmoneyclaimsofillegallydismissedOFWs.
Thoughthereareconflictingrulingsonthis,petitionerurgestheCourttosortthemoutforthe
guidanceofaffectedOFWs.36
PetitionerfurtherunderscoresthattheinsertionofthesubjectclauseintoR.A.No.8042serves
nootherpurposebuttobenefitlocalplacementagencies.Hemarksthestatementmadebythe
SolicitorGeneralinhisMemorandum,viz.:
Often,placementagencies,theirliabilitybeingsolidary,shoulderthepaymentofmoney
claimsintheeventthatjurisdictionovertheforeignemployerisnotacquiredbythecourtorif
theforeignemployerrenegesonitsobligation.Hence,placementagenciesthatareingood
faithandwhichfulfilltheirobligationsareunnecessarilypenalizedfortheactsoftheforeign
employer.Toprotectthemandtopromotetheircontinuedhelpfulcontributionindeploying
Filipinomigrantworkers,liabilityformoneyclaimswasreducedunderSection10ofR.A.No.
8042.37(Emphasissupplied)
Petitionerarguesthatinmitigatingthesolidaryliabilityofplacementagencies,thesubject
clausesacrificesthewellbeingofOFWs.Notonlythat,theprovisionmakesforeign
employersbetteroffthanlocalemployersbecauseincasesinvolvingtheillegaldismissalof
employees,foreignemployersareliableforsalariescoveringamaximumofonlythreemonths
oftheunexpiredemploymentcontractwhilelocalemployersareliableforthefulllumpsum
salariesoftheiremployees.Aspetitionerputsit:
Intermsofpracticalapplication,thelocalemployersarenotlimitedtotheamountof
backwagestheyhavetogivetheiremployeestheyhaveillegallydismissed,followingwell
entrenchedandunequivocaljurisprudenceonthematter.Ontheotherhand,foreignemployers
willonlybelimitedtogivingtheillegallydismissedmigrantworkersthemaximumofthree
(3)monthsunpaidsalariesnotwithstandingtheunexpiredtermofthecontractthatcanbemore
thanthree(3)months.38
Lastly,petitionerclaimsthatthesubjectclauseviolatesthedueprocessclause,foritdeprives
himofthesalariesandotheremolumentsheisentitledtounderhisfixedperiodemployment
contract.39
TheArgumentsofRespondents
IntheirCommentandMemorandum,respondentscontendthattheconstitutionalissueshould
notbeentertained,forthiswasbelatedlyinterposedbypetitionerinhisappealbeforetheCA,
andnotattheearliestopportunity,whichwaswhenhefiledanappealbeforetheNLRC.40
TheArgumentsoftheSolicitorGeneral
TheSolicitorGeneral(OSG)41pointsoutthatasR.A.No.8042tookeffectonJuly15,1995,
itsprovisionscouldnothaveimpairedpetitioner's1998employmentcontract.Rather,R.A.
No.8042havingprecededpetitioner'scontract,theprovisionsthereofaredeemedpartofthe
minimumtermsofpetitioner'semployment,especiallyonthematterofmoneyclaims,asthis
wasnotstipulateduponbytheparties.42
Moreover,theOSGemphasizesthatOFWsandlocalworkersdifferintermsofthenatureof
theiremployment,suchthattheirrightstomonetarybenefitsmustnecessarilybetreated
differently.TheOSGenumeratestheessentialelementsthatdistinguishOFWsfromlocal
workers:first,whilelocalworkersperformtheirjobswithinPhilippineterritory,OFWs
performtheirjobsforforeignemployers,overwhomitisdifficultforourcourtstoacquire
jurisdiction,oragainstwhomitisalmostimpossibletoenforcejudgment;andsecond,asheld
inCoyocav.NationalLaborRelationsCommission43andMillaresv.NationalLaborRelations
Commission,44OFWsarecontractualemployeeswhocanneveracquireregularemployment
status,unlikelocalworkerswhoareorcanbecomeregularemployees.Hence,theOSGposits
thattherearerightsandprivilegesexclusivetolocalworkers,butnotavailabletoOFWs;that
thesepeculiaritiesmakeforareasonableandvalidbasisforthedifferentiatedtreatmentunder
thesubjectclauseofthemoneyclaimsofOFWswhoareillegallydismissed.Thus,the
provisiondoesnotviolatetheequalprotectionclausenorSection18,ArticleIIofthe
Constitution.45
Lastly,theOSGdefendstherationalebehindthesubjectclauseasapolicepowermeasure
adoptedtomitigatethesolidaryliabilityofplacementagenciesforthis"redoundstothe
benefitofthemigrantworkerswhosewelfarethegovernmentseekstopromote.Thesurvival
oflegitimateplacementagencieshelps[assure]thegovernmentthatmigrantworkersare
properlydeployedandareemployedunderdecentandhumaneconditions."46
TheCourt'sRuling
TheCourtsustainspetitioneronthefirstandsecondissues.
WhentheCourtiscalledupontoexerciseitspowerofjudicialreviewoftheactsofitsco
equals,suchastheCongress,itdoessoonlywhentheseconditionsobtain:(1)thatthereisan
actualcaseorcontroversyinvolvingaconflictofrightssusceptibleofjudicialdetermination;47
(2)thattheconstitutionalquestionisraisedbyaproperparty48andattheearliest
opportunity;49and(3)thattheconstitutionalquestionistheverylismotaofthecase,50
otherwisetheCourtwilldismissthecaseordecidethesameonsomeotherground.51
Withoutadoubt,thereexistsinthiscaseanactualcontroversydirectlyinvolvingpetitioner
whoispersonallyaggrievedthatthelabortribunalsandtheCAcomputedhismonetaryaward
basedonthesalaryperiodofthreemonthsonlyasprovidedunderthesubjectclause.
Theconstitutionalchallengeisalsotimely.Itshouldbeborneinmindthattherequirement
thataconstitutionalissueberaisedattheearliestopportunityentailstheinterpositionofthe
issueinthepleadingsbeforeacompetentcourt,suchthat,iftheissueisnotraisedinthe
pleadingsbeforethatcompetentcourt,itcannotbeconsideredatthetrialand,ifnot
consideredinthetrial,itcannotbeconsideredonappeal.52Recordsdisclosethattheissueon
theconstitutionalityofthesubjectclausewasfirstraised,notinpetitioner'sappealwiththe
NLRC,butinhisMotionforPartialReconsiderationwithsaidlabortribunal,53andreiterated
inhisPetitionforCertioraribeforetheCA.54Nonetheless,theissueisdeemedseasonably
raisedbecauseitisnottheNLRCbuttheCAwhichhasthecompetencetoresolvethe
constitutionalissue.TheNLRCisalabortribunalthatmerelyperformsaquasijudicial
functionitsfunctioninthepresentcaseislimitedtodeterminingquestionsoffacttowhich
thelegislativepolicyofR.A.No.8042istobeappliedandtoresolvingsuchquestionsin
accordancewiththestandardslaiddownbythelawitself;55thus,itsforemostfunctionisto
administerandenforceR.A.No.8042,andnottoinquireintothevalidityofitsprovisions.
TheCA,ontheotherhand,isvestedwiththepowerofjudicialrevieworthepowertodeclare
unconstitutionalalaworaprovisionthereof,suchasthesubjectclause.56Petitioner's
interpositionoftheconstitutionalissuebeforetheCAwasundoubtedlyseasonable.TheCA
wasthereforeremissinfailingtotakeuptheissueinitsdecision.
Thethirdconditionthattheconstitutionalissuebecriticaltotheresolutionofthecaselikewise
obtainsbecausethemonetaryclaimofpetitionertohislumpsumsalaryfortheentire
unexpiredportionofhis12monthemploymentcontract,andnotjustforaperiodofthree
months,strikesattheverycoreofthesubjectclause.
Thus,thestageisallsetforthedeterminationoftheconstitutionalityofthesubjectclause.
DoesthesubjectclauseviolateSection10,
ArticleIIIoftheConstitutiononnonimpairment
ofcontracts?
Theanswerisinthenegative.
Petitioner'sclaimthatthesubjectclauseundulyinterfereswiththestipulationsinhiscontract
onthetermofhisemploymentandthefixedsalarypackagehewillreceive57isnottenable.
Section10,ArticleIIIoftheConstitutionprovides:
Nolawimpairingtheobligationofcontractsshallbepassed.
Theprohibitionisalignedwiththegeneralprinciplethatlawsnewlyenactedhaveonlya
prospectiveoperation,58andcannotaffectactsorcontractsalreadyperfected;59however,asto
lawsalreadyinexistence,theirprovisionsarereadintocontractsanddeemedapartthereof.60
Thus,thenonimpairmentclauseunderSection10,ArticleIIislimitedinapplicationtolaws
abouttobeenactedthatwouldinanywayderogatefromexistingactsorcontractsby
enlarging,abridgingorinanymannerchangingtheintentionofthepartiesthereto.
AsaptlyobservedbytheOSG,theenactmentofR.A.No.8042in1995precededthe
executionoftheemploymentcontractbetweenpetitionerandrespondentsin1998.Hence,it
cannotbearguedthatR.A.No.8042,particularlythesubjectclause,impairedtheemployment
contractoftheparties.Rather,whenthepartiesexecutedtheir1998employmentcontract,they
weredeemedtohaveincorporatedintoitalltheprovisionsofR.A.No.8042.
ButeveniftheCourtweretodisregardthetimeline,thesubjectclausemaynotbedeclared
unconstitutionalonthegroundthatitimpingesontheimpairmentclause,forthelawwas
enactedintheexerciseofthepolicepoweroftheStatetoregulateabusiness,professionor
calling,particularlytherecruitmentanddeploymentofOFWs,withthenobleendinviewof
ensuringrespectforthedignityandwellbeingofOFWswherevertheymaybeemployed.61
PolicepowerlegislationsadoptedbytheStatetopromotethehealth,morals,peace,education,
goodorder,safety,andgeneralwelfareofthepeoplearegenerallyapplicablenotonlyto
futurecontractsbuteventothosealreadyinexistence,forallprivatecontractsmustyieldto
thesuperiorandlegitimatemeasurestakenbytheStatetopromotepublicwelfare.62
DoesthesubjectclauseviolateSection1,
ArticleIIIoftheConstitution,andSection18,
ArticleIIandSection3,ArticleXIIIonlabor
asaprotectedsector?
Theanswerisintheaffirmative.
Section1,ArticleIIIoftheConstitutionguarantees:
Nopersonshallbedeprivedoflife,liberty,orpropertywithoutdueprocessoflawnorshall
anypersonbedeniedtheequalprotectionofthelaw.
Section18,63ArticleIIandSection3,64ArticleXIIIaccordallmembersofthelaborsector,
withoutdistinctionastoplaceofdeployment,fullprotectionoftheirrightsandwelfare.
ToFilipinoworkers,therightsguaranteedundertheforegoingconstitutionalprovisions
translatetoeconomicsecurityandparity:allmonetarybenefitsshouldbeequallyenjoyedby
workersofsimilarcategory,whileallmonetaryobligationsshouldbebornebytheminequal
degree;noneshouldbedeniedtheprotectionofthelawswhichisenjoyedby,orsparedthe
burdenimposedon,othersinlikecircumstances.65
SuchrightsarenotabsolutebutsubjecttotheinherentpowerofCongresstoincorporate,
whenitseesfit,asystemofclassificationintoitslegislation;however,tobevalid,the
classificationmustcomplywiththeserequirements:1)itisbasedonsubstantialdistinctions;
2)itisgermanetothepurposesofthelaw;3)itisnotlimitedtoexistingconditionsonly;and
4)itappliesequallytoallmembersoftheclass.66
TherearethreelevelsofscrutinyatwhichtheCourtreviewstheconstitutionalityofa
classificationembodiedinalaw:a)thedeferentialorrationalbasisscrutinyinwhichthe
challengedclassificationneedsonlybeshowntoberationallyrelatedtoservingalegitimate
stateinterest;67b)themiddletierorintermediatescrutinyinwhichthegovernmentmustshow
thatthechallengedclassificationservesanimportantstateinterestandthattheclassificationis
atleastsubstantiallyrelatedtoservingthatinterest;68andc)strictjudicialscrutiny69inwhicha
legislativeclassificationwhichimpermissiblyinterfereswiththeexerciseofafundamental
right70oroperatestothepeculiardisadvantageofasuspectclass71ispresumed
unconstitutional,andtheburdenisuponthegovernmenttoprovethattheclassificationis
necessarytoachieveacompellingstateinterestandthatitistheleastrestrictivemeansto
protectsuchinterest.72
UnderAmericanjurisprudence,strictjudicialscrutinyistriggeredbysuspectclassifications73
basedonrace74orgender75butnotwhentheclassificationisdrawnalongincomecategories.76
ItisdifferentinthePhilippinesetting.InCentralBank(nowBangkoSentralngPilipinas)
EmployeeAssociation,Inc.v.BangkoSentralngPilipinas,77theconstitutionalityofa
provisioninthecharteroftheBangkoSentralngPilipinas(BSP),agovernmentfinancial
institution(GFI),waschallengedformaintainingitsrankandfileemployeesundertheSalary
StandardizationLaw(SSL),evenwhentherankandfileemployeesofotherGFIshadbeen
exemptedfromtheSSLbytheirrespectivecharters.Findingthatthedisputedprovision
containedasuspectclassificationbasedonsalarygrade,theCourtdeliberatelyemployedthe
standardofstrictjudicialscrutinyinitsreviewoftheconstitutionalityofsaidprovision.More
significantly,itwasinthiscasethattheCourtrevealedthebroadoutlinesofitsjudicial
philosophy,towit:
Congressretainsitswidediscretioninprovidingforavalidclassification,anditspolicies
shouldbeaccordedrecognitionandrespectbythecourtsofjusticeexceptwhentheyrunafoul
oftheConstitution.Thedeferencestopswheretheclassificationviolatesafundamentalright,
orprejudicespersonsaccordedspecialprotectionbytheConstitution.Whenthese
violationsarise,thisCourtmustdischargeitsprimaryroleasthevanguardofconstitutional
guaranties,andrequireastricterandmoreexactingadherencetoconstitutionallimitations.
Rationalbasisshouldnotsuffice.
Admittedly,theviewthatprejudicetopersonsaccordedspecialprotectionbytheConstitution
requiresastricterjudicialscrutinyfindsnosupportinAmericanorEnglishjurisprudence.
Nevertheless,theseforeigndecisionsandauthoritiesarenotpersecontrollinginthis
jurisdiction.Atbest,theyarepersuasiveandhavebeenusedtosupportmanyofourdecisions.
Weshouldnotplaceundueandfawningrelianceuponthemandregardthemasindispensable
mentalcrutcheswithoutwhichwecannotcometoourowndecisionsthroughtheemployment
ofourownendowments.Weliveinadifferentambienceandmustdecideourownproblems
inthelightofourowninterestsandneeds,andofourqualitiesandevenidiosyncrasiesasa
people,andalwayswithourownconceptoflawandjustice.Ourlawsmustbeconstruedin
accordancewiththeintentionofourownlawmakersandsuchintentmaybededucedfromthe
languageofeachlawandthecontextofotherlocallegislationrelatedthereto.More
importantly,theymustbeconstruedtoserveourownpublicinterestwhichisthebealland
theendallofallourlaws.Anditneednotbestressedthatourpublicinterestisdistinctand
differentfromothers.
xxxx
Further,thequestforabetterandmore"equal"worldcallsfortheuseofequalprotectionasa
toolofeffectivejudicialintervention.
EqualityisoneidealwhichcriesoutforboldattentionandactionintheConstitution.The
Preambleproclaims"equality"asanidealpreciselyinprotestagainstcrushinginequitiesin
Philippinesociety.ThecommandtopromotesocialjusticeinArticleII,Section10,in"all
phasesofnationaldevelopment,"furtherexplicitatedinArticleXIII,areclearcommandsto
theStatetotakeaffirmativeactioninthedirectionofgreaterequality.xxx[T]hereisthusin
thePhilippineConstitutionnolackofdoctrinalsupportforamorevigorousstateeffort
towardsachievingareasonablemeasureofequality.
OurpresentConstitutionhasgonefurtheringuaranteeingvitalsocialandeconomicrightsto
marginalizedgroupsofsociety,includinglabor.Underthepolicyofsocialjustice,thelaw
bendsoverbackwardtoaccommodatetheinterestsoftheworkingclassonthehumane
justificationthatthosewithlessprivilegeinlifeshouldhavemoreinlaw.Andtheobligation
toaffordprotectiontolaborisincumbentnotonlyonthelegislativeandexecutivebranches
butalsoonthejudiciarytotranslatethispledgeintoalivingreality.Socialjusticecallsforthe
humanizationoflawsandtheequalizationofsocialandeconomicforcesbytheStatesothat
justiceinitsrationalandobjectivelysecularconceptionmayatleastbeapproximated.
xxxx
Undermostcircumstances,theCourtwillexercisejudicialrestraintindecidingquestionsof
constitutionality,recognizingthebroaddiscretiongiventoCongressinexercisingits
legislativepower.Judicialscrutinywouldbebasedonthe"rationalbasis"test,andthe
legislativediscretionwouldbegivendeferentialtreatment.
Butifthechallengetothestatuteispremisedonthedenialofafundamentalright,orthe
perpetuationofprejudiceagainstpersonsfavoredbytheConstitutionwithspecial
protection,judicialscrutinyoughttobemorestrict.Aweakandwatereddownviewwould
callfortheabdicationofthisCourtssolemndutytostrikedownanylawrepugnanttothe
Constitutionandtherightsitenshrines.Thisistruewhethertheactorcommittingthe
unconstitutionalactisaprivatepersonorthegovernmentitselforoneofitsinstrumentalities.
Oppressiveactswillbestruckdownregardlessofthecharacterornatureoftheactor.
xxxx
Inthecaseatbar,thechallengedprovisooperatesonthebasisofthesalarygradeorofficer
employeestatus.Itisakintoadistinctionbasedoneconomicclassandstatus,withthehigher
gradesasrecipientsofabenefitspecificallywithheldfromthelowergrades.Officersofthe
BSPnowreceivehighercompensationpackagesthatarecompetitivewiththeindustry,while
thepoorer,lowsalariedemployeesarelimitedtotheratesprescribedbytheSSL.The
implicationsarequitedisturbing:BSPrankandfileemployeesarepaidthestrictlyregimented
ratesoftheSSLwhileemployeeshigherinrankpossessinghigherandbettereducationand
opportunitiesforcareeradvancementaregivenhighercompensationpackagestoenticethem
tostay.Consideringthatmajority,ifnotall,therankandfileemployeesconsistofpeople
whosestatusandrankinlifearelessandlimited,especiallyintermsofjobmarketability,itis
theyandnottheofficerswhohavetherealeconomicandfinancialneedfortheadjustment.
ThisisinaccordwiththepolicyoftheConstitution"tofreethepeoplefrompoverty,provide
adequatesocialservices,extendtothemadecentstandardofliving,andimprovethequality
oflifeforall."AnyactofCongressthatrunscountertothisconstitutionaldesideratum
deservesstrictscrutinybythisCourtbeforeitcanpassmuster.(Emphasissupplied)
Imbuedwiththesamesenseof"obligationtoaffordprotectiontolabor,"theCourtinthe
presentcasealsoemploysthestandardofstrictjudicialscrutiny,foritperceivesinthesubject
clauseasuspectclassificationprejudicialtoOFWs.
Uponcursoryreading,thesubjectclauseappearsfaciallyneutral,foritappliestoallOFWs.
However,acloserexaminationrevealsthatthesubjectclausehasadiscriminatoryintent
against,andaninvidiousimpacton,OFWsattwolevels:
First,OFWswithemploymentcontractsoflessthanoneyearvisvisOFWswith
employmentcontractsofoneyearormore;
Second,amongOFWswithemploymentcontractsofmorethanoneyear;and
Third,OFWsvisvislocalworkerswithfixedperiodemployment;
OFWswithemploymentcontractsoflessthanoneyearvisvisOFWswithemployment
contractsofoneyearormore
Aspointedoutbypetitioner,78itwasinMarsamanManningAgency,Inc.v.NationalLabor
RelationsCommission79(SecondDivision,1999)thattheCourtlaiddownthefollowingrules
ontheapplicationoftheperiodsprescribedunderSection10(5)ofR.A.No.804,towit:
AplainreadingofSec.10clearlyrevealsthatthechoiceofwhichamounttoawardan
illegallydismissedoverseascontractworker,i.e.,whetherhissalariesfortheunexpired
portionofhisemploymentcontractorthree(3)monthssalaryforeveryyearofthe
unexpiredterm,whicheverisless,comesintoplayonlywhentheemploymentcontract
Skippersv.Maguad84 6months 2months 4
concernedhasatermofatleastone(1)yearormore.Thisisevidentfromthewords"for
everyyearoftheunexpiredterm"whichfollowsthewords"salariesxxxforthree
BahiaShippingv. 9months 8months 4
months."Tofollowpetitionersthinkingthatprivaterespondentisentitledtothree(3)months
ReynaldoChua85
salaryonlysimplybecauseitisthelesseramountistocompletelydisregardandoverlook
somewordsusedinthestatutewhilegivingeffecttosome.Thisiscontrarytothewell
CentennialTransmarinev. 9months 4months 5
establishedruleinlegalhermeneuticsthatininterpretingastatute,careshouldbetakenthat
delaCruzl86
everypartorwordthereofbegiveneffectsincethelawmakingbodyispresumedtoknowthe
meaningofthewordsemployedinthestatueandtohaveusedthemadvisedly.Utresmagis
Talidanov.Falcon87 12months 3months 9
valeatquampereat.80(Emphasissupplied)
Univanv.CA88 12months 3months 9
InMarsaman,theOFWinvolvedwasillegallydismissedtwomonthsintohis10month
contract,butwasawardedhissalariesfortheremaining8monthsand6daysofhiscontract. Orientalv.CA89 12months morethan2months 10

PriortoMarsaman,however,thereweretwocasesinwhichtheCourtmadeconflicting PCLv.NLRC90 12months morethan2months moreor

rulingsonSection10(5).OnewasAsianCenterforCareerandEmploymentSystemand
Servicesv.NationalLaborRelationsCommission(SecondDivision,October1998),81which Olartev.Nayona91 12months 21days 11mont
involvedanOFWwhowasawardedatwoyearemploymentcontract,butwasdismissedafter
workingforoneyearandtwomonths.TheLAdeclaredhisdismissalillegalandawardedhim JSSv.Ferrer92 12months 16days 11month
SR13,600.00aslumpsumsalarycoveringeightmonths,theunexpiredportionofhiscontract.
Onappeal,theCourtreducedtheawardtoSR3,600.00equivalenttohisthreemonthssalary, Pentagonv.Adelantar93 12months 9monthsand7days 2month
thisbeingthelesservalue,towit:
Phil.Employv.Paramio, 12months 10months 2
UnderSection10ofR.A.No.8042,aworkerdismissedfromoverseasemploymentwithout etal.94
just,validorauthorizedcauseisentitledtohissalaryfortheunexpiredportionofhis
employmentcontractorforthree(3)monthsforeveryyearoftheunexpiredterm,whichever FlourishMaritimev. 2years 26days 23mont
isless. Almanzor95

Inthecaseatbar,theunexpiredportionofprivaterespondentsemploymentcontractiseight AthennaManpowerv. 1year,10months 1month 1year,9mo

(8)months.Privaterespondentshouldthereforebepaidhisbasicsalarycorrespondingtothree Villanos96 and28days
(3)monthsoratotalofSR3,600.82

Astheforegoingmatrixreadilyshows,thesubjectclauseclassifiesOFWsintotwocategories.
AnotherwasTripleEightIntegratedServices,Inc.v.NationalLaborRelationsCommission
ThefirstcategoryincludesOFWswithfixedperiodemploymentcontractsoflessthanone
(ThirdDivision,December1998),83whichinvolvedanOFW(thereinrespondentErlinda
year;incaseofillegaldismissal,theyareentitledtotheirsalariesfortheentireunexpired
Osdana)whowasoriginallygranteda12monthcontract,whichwasdeemedrenewedfor
portionoftheircontract.ThesecondcategoryconsistsofOFWswithfixedperiod
another12months.Afterservingforoneyearandsevenandahalfmonths,respondent
employmentcontractsofoneyearormore;incaseofillegaldismissal,theyareentitledto
Osdanawasillegallydismissed,andtheCourtawardedhersalariesfortheentireunexpired
monetaryawardequivalenttoonly3monthsoftheunexpiredportionoftheircontracts.
portionoffourandonehalfmonthsofhercontract.

Thedisparityinthetreatmentofthesetwogroupscannotbediscounted.InSkippers,the
TheMarsamaninterpretationofSection10(5)hassincebeenadoptedinthefollowingcases:
respondentOFWworkedforonly2monthsoutofhis6monthcontract,butwasawardedhis
salariesfortheremaining4months.Incontrast,therespondentOFWsinOrientalandPCL
CaseTitle ContractPeriod PeriodofService whohadalsoworkedforabout2monthsoutoftheir12monthcontractswereawardedtheir
UnexpiredPeriod
salariesforonly3monthsoftheunexpiredportionoftheircontracts.EventheOFWsinvolved
inTalidanoandUnivanwhohadworkedforalongerperiodof3monthsoutoftheir12 oneyearormoreandsubjectingthemtothepeculiardisadvantageofhavingtheirmonetary
monthcontractsbeforebeingillegallydismissedwereawardedtheirsalariesforonly3 awardslimitedtotheirsalariesfor3monthsorfortheunexpiredportionthereof,whicheveris
months. less,butallthewhilesparingtheothercategoryfromsuchprejudice,simplybecausethe
latter'sunexpiredcontractsfallshortofoneyear.
Toillustratethedisparityevenmorevividly,theCourtassumesahypotheticalOFWAwith
anemploymentcontractof10monthsatamonthlysalaryrateofUS$1,000.00anda AmongOFWsWithEmploymentContractsofMoreThanOneYear
hypotheticalOFWBwithanemploymentcontractof15monthswiththesamemonthlysalary
rateofUS$1,000.00.Bothcommencedworkonthesamedayandunderthesameemployer, Uponcloserexaminationoftheterminologyemployedinthesubjectclause,theCourtnow
andwereillegallydismissedafteronemonthofwork.Underthesubjectclause,OFWAwill hasmisgivingsontheaccuracyoftheMarsamaninterpretation.
beentitledtoUS$9,000.00,equivalenttohissalariesfortheremaining9monthsofhis
contract,whereasOFWBwillbeentitledtoonlyUS$3,000.00,equivalenttohissalariesfor3
monthsoftheunexpiredportionofhiscontract,insteadofUS$14,000.00fortheunexpired TheCourtnotesthatthesubjectclause"orforthree(3)monthsforeveryyearoftheunexpired
portionof14monthsofhiscontract,astheUS$3,000.00isthelesseramount. term,whicheverisless"containsthequalifyingphrases"everyyear"and"unexpiredterm."
Byitsordinarymeaning,theword"term"meansalimitedordefiniteextentoftime.105
Corollarily,that"everyyear"isbutpartofan"unexpiredterm"issignificantinmanyways:
ThedisparitybecomesmoreaggravatingwhentheCourttakesintoaccountjurisprudencethat, first,theunexpiredtermmustbeatleastoneyear,forifitwereanyshorter,therewouldbeno
priortotheeffectivityofR.A.No.8042onJuly14,1995,97illegallydismissedOFWs,no occasionforsuchunexpiredtermtobemeasuredbyeveryyear;andsecond,theoriginalterm
matterhowlongtheperiodoftheiremploymentcontracts,wereentitledtotheirsalariesfor mustbemorethanoneyear,forotherwise,whateverwouldbetheunexpiredtermthereofwill
theentireunexpiredportionsoftheircontracts.Thematrixbelowspeaksforitself: notreachevenayear.Consequently,themoredecisivefactorinthedeterminationofwhenthe
subjectclause"forthree(3)monthsforeveryyearoftheunexpiredterm,whicheverisless"
shallapplyisnotthelengthoftheoriginalcontractperiodasheldinMarsaman,106butthe
CaseTitle ContractPeriod PeriodofService UnexpiredPeriod
lengthoftheunexpiredportionofthecontractperiodthesubjectclauseappliesincases
whentheunexpiredportionofthecontractperiodisatleastoneyear,whicharithmetically
requiresthattheoriginalcontractperiodbemorethanoneyear.
ATCIv.CA,etal.98 2years 2months 22months
Viewedinthatlight,thesubjectclausecreatesasublayerofdiscriminationamongOFWs
Phil.Integratedv.NLRC99 2years 7days 23monthsand23days
whosecontractperiodsareformorethanoneyear:thosewhoareillegallydismissedwithless
thanoneyearleftintheircontractsshallbeentitledtotheirsalariesfortheentireunexpired
JGBv.NLC100 2years 9months 15months
portionthereof,whilethosewhoareillegallydismissedwithoneyearormoreremainingin
theircontractsshallbecoveredbythesubjectclause,andtheirmonetarybenefitslimitedto
Agoyv.NLRC101 2years 2months 22months
theirsalariesforthreemonthsonly.

EDIv.NLRC,etal.102 2years 5months 19months

Toconcretelyillustratetheapplicationoftheforegoinginterpretationofthesubjectclause,the
CourtassumeshypotheticalOFWCandOFWD,whoeachhavea24monthcontractata
Barrosv.NLRC,etal. 103
12months 4months salaryrateofUS$1,000.00permonth.OFWCisillegallydismissedonthe12thmonth,and
OFWD,onthe13thmonth.Consideringthatthereisatleast12monthsremaininginthe
PhilippineTransmarinev. 12months 6monthsand22days 5monthsand18days
contractperiodofOFWC,thesubjectclauseappliestothecomputationofthelatter's
Carilla104 monetarybenefits.Thus,OFWCwillbeentitled,nottoUS$12,000,00orthelatter'stotal
salariesforthe12monthsunexpiredportionofthecontract,buttothelesseramountof
US$3,000.00orthelatter'ssalariesfor3monthsoutofthe12monthunexpiredtermofthe
ItisplainthatpriortoR.A.No.8042,allOFWs,regardlessofcontractperiodsorthe contract.Ontheotherhand,OFWDissparedfromtheeffectsofthesubjectclause,forthere
unexpiredportionsthereof,weretreatedalikeintermsofthecomputationoftheirmonetary areonly11monthsleftinthelatter'scontractperiod.Thus,OFWDwillbeentitledto
benefitsincaseofillegaldismissal.Theirclaimsweresubjectedtoauniformruleof
US$11,000.00,whichisequivalenttohis/hertotalsalariesfortheentire11monthunexpired
computation:theirbasicsalariesmultipliedbytheentireunexpiredportionoftheir
portion.
employmentcontracts.

OFWsvisvisLocalWorkers
TheenactmentofthesubjectclauseinR.A.No.8042introducedadifferentiatedruleof
WithFixedPeriodEmployment
computationofthemoneyclaimsofillegallydismissedOFWsbasedontheiremployment
periods,intheprocesssinglingoutonecategorywhosecontractshaveanunexpiredportionof
Asdiscussedearlier,priortoR.A.No.8042,auniformsystemofcomputationofthemonetary
awardsofillegallydismissedOFWswasinplace.Thisuniformsystemwasapplicableevento
localworkerswithfixedtermemployment.107
TheearliestruleprescribingauniformsystemofcomputationwasactuallyArticle299ofthe
CodeofCommerce(1888),108towit:
Article299.Ifthecontractsbetweenthemerchantsandtheirshopclerksandemployees
shouldhavebeenmadeofafixedperiod,noneofthecontractingparties,withouttheconsent
oftheother,maywithdrawfromthefulfillmentofsaidcontractuntiltheterminationofthe
periodagreedupon.
Personsviolatingthisclauseshallbesubjecttoindemnifythelossanddamagesuffered,with
theexceptionoftheprovisionscontainedinthefollowingarticles.
InReyesv.TheCompaiaMaritima,109theCourtappliedtheforegoingprovisiontodetermine
theliabilityofashippingcompanyfortheillegaldischargeofitsmanagerspriortothe
expirationoftheirfixedtermemployment.TheCourtthereinheldtheshippingcompany
liableforthesalariesofitsmanagersfortheremainderoftheirfixedtermemployment.
Thereisamorespecificruleasfarasseafarersareconcerned:Article605oftheCodeof
Commercewhichprovides:
Article605.Ifthecontractsofthecaptainandmembersofthecrewwiththeagentshouldbe
foradefiniteperiodorvoyage,theycannotbedischargeduntilthefulfillmentoftheir
contracts,exceptforreasonsofinsubordinationinseriousmatters,robbery,theft,habitual
drunkenness,anddamagecausedtothevesselortoitscargobymaliceormanifestorproven
negligence.
Article605wasappliedtoMadrigalShippingCompany,Inc.v.Ogilvie,110in
whichtheCourtheldtheshippingcompanyliableforthesalariesandsubsistenceallowanceof
itsillegallydismissedemployeesfortheentireunexpiredportionoftheiremployment
contracts.
WhileArticle605hasremainedgoodlawuptothepresent,111Article299oftheCodeof
CommercewasreplacedbyArt.1586oftheCivilCodeof1889,towit:
Article1586.Fieldhands,mechanics,artisans,andotherlaborershiredforacertaintimeand
foracertainworkcannotleaveorbedismissedwithoutsufficientcause,beforethefulfillment
ofthecontract.(Emphasissupplied.)
CitingManresa,theCourtinLemoinev.Alkan112readthedisjunctive"or"inArticle1586as
aconjunctive"and"soastoapplytheprovisiontolocalworkerswhoareemployedforatime
certainalthoughfornoparticularskill.ThisinterpretationofArticle1586wasreiteratedin
GarciaPalomarv.HoteldeFranceCompany.113AndinbothLemoineandPalomar,theCourt
adoptedthegeneralprinciplethatinactionsforwrongfuldischargefoundedonArticle1586,
localworkersareentitledtorecoverdamagestotheextentoftheamountstipulatedtobepaid
tothembythetermsoftheircontract.Onthecomputationoftheamountofsuchdamages,the
CourtinAldazv.Gay114held:
ThedoctrineiswellestablishedinAmericanjurisprudence,andnothinghasbeenbroughtto
ourattentiontothecontraryunderSpanishjurisprudence,thatwhenanemployeeis
wrongfullydischargeditishisdutytoseekotheremploymentofthesamekindinthesame
community,forthepurposeofreducingthedamagesresultingfromsuchwrongfuldischarge.
However,whilethisisthegeneralrule,theburdenofshowingthathefailedtomakeaneffort
tosecureotheremploymentofalikenature,andthatotheremploymentofalikenaturewas
obtainable,isuponthedefendant.Whenanemployeeiswrongfullydischargedundera
contractofemploymenthisprimafaciedamageistheamountwhichhewouldbeentitledto
hadhecontinuedinsuchemploymentuntiltheterminationoftheperiod.(Howardvs.Daly,
61N.Y.,362;Allenvs.Whitlark,99Mich.,492;Farrellvs.SchoolDistrictNo.2,98Mich.,
43.)115(Emphasissupplied)
OnAugust30,1950,theNewCivilCodetookeffectwithnewprovisionsonfixedterm
employment:Section2(ObligationswithaPeriod),Chapter3,TitleI,andSections2
(ContractofLabor)and3(ContractforaPieceofWork),Chapter3,TitleVIII,BookIV.116
MuchlikeArticle1586oftheCivilCodeof1889,thenewprovisionsoftheCivilCodedonot
expresslyprovidefortheremediesavailabletoafixedtermworkerwhoisillegally
discharged.However,itisnotedthatinMackayRadio&TelegraphCo.,Inc.v.Rich,117the
CourtcarriedovertheprinciplesonthepaymentofdamagesunderlyingArticle1586ofthe
CivilCodeof1889andappliedthesametoacaseinvolvingtheillegaldischargeofalocal
workerwhosefixedperiodemploymentcontractwasenteredintoin1952,whenthenewCivil
Codewasalreadyineffect.118
Moresignificantly,thesameprincipleswereappliedtocasesinvolvingoverseasFilipino
workerswhosefixedtermemploymentcontractswereillegallyterminated,suchasinFirst
AsianTrans&ShippingAgency,Inc.v.Ople,119involvingseafarerswhowereillegally
discharged.InTeknikaSkillsandTradeServices,Inc.v.NationalLaborRelations
Commission,120anOFWwhowasillegallydismissedpriortotheexpirationofherfixed
periodemploymentcontractasababysitter,wasawardedsalariescorrespondingtothe
unexpiredportionofhercontract.TheCourtarrivedatthesamerulinginAndersonv.
NationalLaborRelationsCommission,121whichinvolvedaforemanhiredin1988inSaudi
Arabiaforafixedtermoftwoyears,butwhowasillegallydismissedafteronlyninemonths
onthejobtheCourtawardedhimsalariescorrespondingto15months,theunexpired
portionofhiscontract.InAsiaWorldRecruitment,Inc.v.NationalLaborRelations
Commission,122aFilipinoworkingasasecurityofficerin1989inAngolawasawardedhis
salariesfortheremainingperiodofhis12monthcontractafterhewaswrongfullydischarged.
Finally,inVintaMaritimeCo.,Inc.v.NationalLaborRelationsCommission,123anOFW
whose12monthcontractwasillegallycutshortinthesecondmonthwasdeclaredentitledto
hissalariesfortheremaining10monthsofhiscontract.
Insum,priortoR.A.No.8042,OFWsandlocalworkerswithfixedtermemploymentwho
wereillegallydischargedweretreatedalikeintermsofthecomputationoftheirmoney
claims:theywereuniformlyentitledtotheirsalariesfortheentireunexpiredportionsoftheir
contracts.ButwiththeenactmentofR.A.No.8042,specificallytheadoptionofthesubject
clause,illegallydismissedOFWswithanunexpiredportionofoneyearormoreintheir
employmentcontracthavesincebeendifferentlytreatedinthattheirmoneyclaimsaresubject
toa3monthcap,whereasnosuchlimitationisimposedonlocalworkerswithfixedterm
employment.
TheCourtconcludesthatthesubjectclausecontainsasuspectclassificationinthat,inthe
computationofthemonetarybenefitsoffixedtermemployeeswhoareillegallydischarged,
itimposesa3monthcapontheclaimofOFWswithanunexpiredportionofoneyearor
moreintheircontracts,butnoneontheclaimsofotherOFWsorlocalworkerswithfixed
termemployment.ThesubjectclausesinglesoutoneclassificationofOFWsandburdensit
withapeculiardisadvantage.
Therebeingasuspectclassificationinvolvingavulnerablesectorprotectedbythe
Constitution,theCourtnowsubjectstheclassificationtoastrictjudicialscrutiny,and
determineswhetheritservesacompellingstateinterestthroughtheleastrestrictivemeans.
Whatconstitutescompellingstateinterestismeasuredbythescaleofrightsandpowers
arrayedintheConstitutionandcalibratedbyhistory.124Itisakintotheparamountinterestof
thestate125forwhichsomeindividuallibertiesmustgiveway,suchasthepublicinterestin
safeguardinghealthormaintainingmedicalstandards,126orinmaintainingaccessto
informationonmattersofpublicconcern.127
Inthepresentcase,theCourtdugdeepintotherecordsbutfoundnocompellingstateinterest
thatthesubjectclausemaypossiblyserve.
TheOSGdefendsthesubjectclauseasapolicepowermeasure"designedtoprotectthe
employmentofFilipinoseafarersoverseasxxx.Bylimitingtheliabilitytothreemonths[sic],
Filipinoseafarershavebetterchanceofgettinghiredbyforeignemployers."Thelimitation
alsoprotectstheinterestoflocalplacementagencies,whichotherwisemaybemadeto
shouldermillionsofpesosin"terminationpay."128
TheOSGexplainedfurther:
Often,placementagencies,theirliabilitybeingsolidary,shoulderthepaymentofmoney
claimsintheeventthatjurisdictionovertheforeignemployerisnotacquiredbythecourtorif
theforeignemployerrenegesonitsobligation.Hence,placementagenciesthatareingood
faithandwhichfulfilltheirobligationsareunnecessarilypenalizedfortheactsoftheforeign
employer.Toprotectthemandtopromotetheircontinuedhelpfulcontributionindeploying
Filipinomigrantworkers,liabilityformoneyarereducedunderSection10ofRA8042.
Thismeasureredoundstothebenefitofthemigrantworkerswhosewelfarethegovernment
seekstopromote.Thesurvivaloflegitimateplacementagencieshelps[assure]thegovernment
thatmigrantworkersareproperlydeployedandareemployedunderdecentandhumane
conditions.129(Emphasissupplied)
However,nowhereintheCommentorMemorandumdoestheOSGcitethesourceofits
perceptionofthestateinterestsoughttobeservedbythesubjectclause.
TheOSGlocatesthepurposeofR.A.No.8042inthespeechofRep.BonifacioGallegoin
sponsorshipofHouseBillNo.14314(HB14314),fromwhichthelaworiginated;130butthe
speechmakesnoreferencetotheunderlyingreasonfortheadoptionofthesubjectclause.
Thatisonlynaturalfornoneofthe29provisionsinHB14314resemblesthesubjectclause.
Ontheotherhand,SenateBillNo.2077(SB2077)containsaprovisiononmoneyclaims,to
wit:
Sec.10.MoneyClaims.Notwithstandinganyprovisionoflawtothecontrary,theLabor
ArbitersoftheNationalLaborRelationsCommission(NLRC)shallhavetheoriginaland
exclusivejurisdictiontohearanddecide,withinninety(90)calendardaysafterthefilingof
thecomplaint,theclaimsarisingoutofanemployeremployeerelationshiporbyvirtueofthe
complaint,theclaimarisingoutofanemployeremployeerelationshiporbyvirtueofanylaw
orcontractinvolvingFilipinoworkersforoverseasemploymentincludingclaimsforactual,
moral,exemplaryandotherformsofdamages.
Theliabilityoftheprincipalandtherecruitment/placementagencyoranyandallclaimsunder
thisSectionshallbejointandseveral.
Anycompromise/amicablesettlementorvoluntaryagreementonanymoneyclaimsexclusive
ofdamagesunderthisSectionshallnotbelessthanfiftypercent(50%)ofsuchmoneyclaims:
Provided,Thatanyinstallmentpayments,ifapplicable,tosatisfyanysuchcompromiseor
voluntarysettlementshallnotbemorethantwo(2)months.Anycompromise/voluntary
agreementinviolationofthisparagraphshallbenullandvoid.
Noncompliancewiththemandatoryperiodforresolutionsofcasesprovidedunderthis
Sectionshallsubjecttheresponsibleofficialstoanyorallofthefollowingpenalties:
(1)Thesalaryofanysuchofficialwhofailstorenderhisdecisionorresolution
withintheprescribedperiodshallbe,orcausedtobe,withhelduntilthesaidofficial
compliestherewith;
(2)Suspensionfornotmorethanninety(90)days;or
(3)Dismissalfromtheservicewithdisqualificationtoholdanyappointivepublic
officeforfive(5)years.
Provided,however,Thatthepenaltieshereinprovidedshallbewithoutprejudicetoany
liabilitywhichanysuchofficialmayhaveincurredunderotherexistinglawsorrulesand
regulationsasaconsequenceofviolatingtheprovisionsofthisparagraph.
Butsignificantly,Section10ofSB2077doesnotprovideforanyruleonthecomputationof
moneyclaims.
Aruleonthecomputationofmoneyclaimscontainingthesubjectclausewasinsertedand
eventuallyadoptedasthe5thparagraphofSection10ofR.A.No.8042.TheCourtexamined
therationaleofthesubjectclauseinthetranscriptsofthe"BicameralConferenceCommittee
(ConferenceCommittee)MeetingsontheMagnaCartaonOCWs(DisagreeingProvisionsof
SenateBillNo.2077andHouseBillNo.14314)."However,theCourtfindsnodiscernible
stateinterest,letaloneacompellingone,thatissoughttobeprotectedoradvancedbythe
adoptionofthesubjectclause.
Infine,theGovernmenthasfailedtodischargeitsburdenofprovingtheexistenceofa
compellingstateinterestthatwouldjustifytheperpetuationofthediscriminationagainst
OFWsunderthesubjectclause.
Assumingthat,asadvancedbytheOSG,thepurposeofthesubjectclauseistoprotectthe
employmentofOFWsbymitigatingthesolidaryliabilityofplacementagencies,suchcallous
andcavalierrationalewillhavetoberejected.Therecanneverbeajustificationforanyform
ofgovernmentactionthatalleviatestheburdenofonesector,butimposesthesameburdenon
anothersector,especiallywhenthefavoredsectoriscomposedofprivatebusinessessuchas
placementagencies,whilethedisadvantagedsectoriscomposedofOFWswhoseprotection
nolessthantheConstitutioncommands.Theideathatprivatebusinessinterestcanbeelevated
tothelevelofacompellingstateinterestisodious.
Moreover,evenifthepurposeofthesubjectclauseistolessenthesolidaryliabilityof
placementagenciesvisavistheirforeignprincipals,therearemechanismsalreadyinplace
thatcanbeemployedtoachievethatpurposewithoutinfringingontheconstitutionalrightsof
OFWs.
ThePOEARulesandRegulationsGoverningtheRecruitmentandEmploymentofLand
BasedOverseasWorkers,datedFebruary4,2002,imposesadministrativedisciplinary
measuresonerringforeignemployerswhodefaultontheircontractualobligationstomigrant
workersand/ortheirPhilippineagents.Thesedisciplinarymeasuresrangefromtemporary
disqualificationtopreventivesuspension.ThePOEARulesandRegulationsGoverningthe
RecruitmentandEmploymentofSeafarers,datedMay23,2003,containssimilar
administrativedisciplinarymeasuresagainsterringforeignemployers.
Resorttotheseadministrativemeasuresisundoubtedlythelessrestrictivemeansofaiding
localplacementagenciesinenforcingthesolidaryliabilityoftheirforeignprincipals.
Thus,thesubjectclauseinthe5thparagraphofSection10ofR.A.No.8042isviolativeofthe
rightofpetitionerandotherOFWstoequalprotection.1avvphi1
Further,therewouldbecertainmisgivingsifoneistoapproachthedeclarationofthe
unconstitutionalityofthesubjectclausefromtheloneperspectivethattheclausedirectly
violatesstatepolicyonlaborunderSection3,131ArticleXIIIoftheConstitution.
Whilealltheprovisionsofthe1987Constitutionarepresumedselfexecuting, thereare
132
somewhichthisCourthasdeclarednotjudiciallyenforceable,ArticleXIIIbeingone,133
particularlySection3thereof,thenatureofwhich,thisCourt,inAgabonv.NationalLabor
RelationsCommission,134hasdescribedtobenotselfactuating:
Thus,theconstitutionalmandatesofprotectiontolaborandsecurityoftenuremaybedeemed
asselfexecutinginthesensethattheseareautomaticallyacknowledgedandobservedwithout
needforanyenablinglegislation.However,todeclarethattheconstitutionalprovisionsare
enoughtoguaranteethefullexerciseoftherightsembodiedtherein,andtherealizationof
idealsthereinexpressed,wouldbeimpractical,ifnotunrealistic.Theespousalofsuchview
presentsthedangeroustendencyofbeingoverbroadandexaggerated.Theguaranteesof"full
protectiontolabor"and"securityoftenure",whenexaminedinisolation,arefacially
unqualified,andthebroadestinterpretationpossiblesuggestsablanketshieldinfavoroflabor
againstanyformofremovalregardlessofcircumstance.Thisinterpretationimpliesan
unimpeachablerighttocontinuedemploymentautopiannotion,doubtlessbutstillhardly
withinthecontemplationoftheframers.Subsequentlegislationisstillneededtodefinethe
parametersoftheseguaranteedrightstoensuretheprotectionandpromotion,notonlythe
rightsofthelaborsector,butoftheemployers'aswell.Withoutspecificandpertinent
legislation,judicialbodieswillbeataloss,formulatingtheirownconclusiontoapproximate
atleasttheaimsoftheConstitution.
Ultimately,therefore,Section3ofArticleXIIIcannot,onitsown,beasourceofapositive
enforceablerighttostaveoffthedismissalofanemployeeforjustcauseowingtothefailure
toservepropernoticeorhearing.Asmanifestedbyseveralframersofthe1987Constitution,
theprovisionsonsocialjusticerequirelegislativeenactmentsfortheirenforceability.135
(Emphasisadded)
Thus,Section3,ArticleXIIIcannotbetreatedasaprincipalsourceofdirectenforceable
rights,fortheviolationofwhichthequestionedclausemaybedeclaredunconstitutional.It
mayunwittinglyriskopeningthefloodgatesoflitigationtoeveryworkerorunionoverevery
conceivableviolationofsobroadaconceptassocialjusticeforlabor.
ItmustbestressedthatSection3,ArticleXIIIdoesnotdirectlybestowontheworkingclass
anyactualenforceableright,butmerelyclothesitwiththestatusofasectorforwhomthe
Constitutionurgesprotectionthroughexecutiveorlegislativeactionandjudicialrecognition.
Itsutilityisbestlimitedtobeinganimpetusnotjustfortheexecutiveandlegislative
departments,butforthejudiciaryaswell,toprotectthewelfareoftheworkingclass.Andit
wasinfactconsistentwiththatconstitutionalagendathattheCourtinCentralBank(now
BangkoSentralngPilipinas)EmployeeAssociation,Inc.v.BangkoSentralngPilipinas,
pennedbythenAssociateJusticenowChiefJusticeReynatoS.Puno,formulatedthejudicial
preceptthatwhenthechallengetoastatuteispremisedontheperpetuationofprejudice
againstpersonsfavoredbytheConstitutionwithspecialprotectionsuchastheworking
classorasectionthereoftheCourtmayrecognizetheexistenceofasuspectclassification
andsubjectthesametostrictjudicialscrutiny.
Theviewthattheconceptsofsuspectclassificationandstrictjudicialscrutinyformulatedin
CentralBankEmployeeAssociationexaggeratethesignificanceofSection3,ArticleXIIIisa
groundlessapprehension.CentralBankappliedArticleXIIIinconjunctionwiththeequal
protectionclause.ArticleXIII,byitself,withouttheapplicationoftheequalprotectionclause,
hasnolifeorforceofitsownaselucidatedinAgabon.
Alongthesamelineofreasoning,theCourtfurtherholdsthatthesubjectclauseviolates
petitioner'srighttosubstantivedueprocess,foritdepriveshimofproperty,consistingof
monetarybenefits,withoutanyexistingvalidgovernmentalpurpose.136
TheargumentoftheSolicitorGeneral,thattheactualpurposeofthesubjectclauseoflimiting
theentitlementofOFWstotheirthreemonthsalaryincaseofillegaldismissal,istogive
themabetterchanceofgettinghiredbyforeignemployers.Thisisplainspeculation.As
earlierdiscussed,thereisnothinginthetextofthelawortherecordsofthedeliberations
leadingtoitsenactmentorthepleadingsofrespondentthatwouldindicatethatthereisan
existinggovernmentalpurposeforthesubjectclause,orevenjustapretextofone.
Thesubjectclausedoesnotstateorimplyanydefinitivegovernmentalpurpose;anditisfor
thatprecisereasonthattheclauseviolatesnotjustpetitioner'srighttoequalprotection,but
alsoherrighttosubstantivedueprocessunderSection1,137ArticleIIIoftheConstitution.
Thesubjectclausebeingunconstitutional,petitionerisentitledtohissalariesfortheentire
unexpiredperiodofninemonthsand23daysofhisemploymentcontract,pursuanttolawand
jurisprudencepriortotheenactmentofR.A.No.8042.
OntheThirdIssue
Petitionercontendsthathisovertimeandleavepayshouldformpartofthesalarybasisinthe
computationofhismonetaryaward,becausethesearefixedbenefitsthathavebeenstipulated
intohiscontract.
Petitionerismistaken.
ThewordsalariesinSection10(5)doesnotincludeovertimeandleavepay.Forseafarerslike
petitioner,DOLEDepartmentOrderNo.33,series1996,providesaStandardEmployment
ContractofSeafarers,inwhichsalaryisunderstoodasthebasicwage,exclusiveofovertime,
leavepayandotherbonuses;whereasovertimepayiscompensationforallwork"performed"
inexcessoftheregulareighthours,andholidaypayiscompensationforanywork
"performed"ondesignatedrestdaysandholidays.
Bytheforegoingdefinitionalone,thereisnobasisfortheautomaticinclusionofovertimeand
holidaypayinthecomputationofpetitioner'smonetaryaward,unlessthereisevidencethathe
performedworkduringthoseperiods.AstheCourtheldinCentennialTransmarine,Inc.v.
DelaCruz,138
However,thepaymentofovertimepayandleavepayshouldbedisallowedinlightofour
rulinginCagampanv.NationalLaborRelationsCommission,towit:
Therenditionofovertimeworkandthesubmissionofsufficientproofthatsaidwasactually
performedareconditionstobesatisfiedbeforeaseamancouldbeentitledtoovertimepay
whichshouldbecomputedonthebasisof30%ofthebasicmonthlysalary.Inshort,the
contractprovisionguaranteestherighttoovertimepaybuttheentitlementtosuchbenefitmust
firstbeestablished.
Inthesamevein,theclaimfortheday'sleavepayfortheunexpiredportionofthecontractis
unwarrantedsincethesameisgivenduringtheactualserviceoftheseamen.
WHEREFORE,theCourtGRANTSthePetition.Thesubjectclause"orforthreemonthsfor
everyyearoftheunexpiredterm,whicheverisless"inthe5thparagraphofSection10of
RepublicActNo.8042isDECLAREDUNCONSTITUTIONAL;andtheDecember8,2004
DecisionandApril1,2005ResolutionoftheCourtofAppealsareMODIFIEDtotheeffect
thatpetitionerisAWARDEDhissalariesfortheentireunexpiredportionofhisemployment
contractconsistingofninemonthsand23dayscomputedattherateofUS$1,400.00per
month.
Nocosts.
SOORDERED.
EDISTAFFBUILDERSINTERNATIONAL,INC.,petitioner,
vs.
NATIONALLABORRELATIONSCOMMISSIONandELEAZARS.GRAN,
respondents.
DECISION
VELASCO,JR.,J.:
TheCase
ThisPetitionforReviewonCertiorari1seekstosetasidetheOctober18,2000Decision2ofthe
CourtofAppeals(CA)inCAG.R.SPNo.56120whichaffirmedtheJanuary15,1999
Decision3andSeptember30,1999Resolution4renderedbytheNationalLaborRelations
Commission(NLRC)(ThirdDivision)inPOEAADJ(L)94062194,orderingExpertise
SearchInternational(ESI),EDIStaffbuildersInternational,Inc.(EDI),andOmarAhmedAli
BinBechrEst.(OAB)jointlyandseverallytopayEleazarS.Gran(Gran)theamountofUSD
16,150.00asunpaidsalaries.
TheFacts
PetitionerEDIisacorporationengagedinrecruitmentandplacementofOverseasFilipino
Workers(OFWs).5ESIisanotherrecruitmentagencywhichcollaboratedwithEDItoprocess
thedocumentationanddeploymentofprivaterespondenttoSaudiArabia.
PrivaterespondentGranwasanOFWrecruitedbyEDI,anddeployedbyESItoworkfor
OAB,inRiyadh,KingdomofSaudiArabia.6
ItappearsthatOABaskedEDIthroughitsOctober3,1993letterforcurriculavitaeof
qualifiedapplicantsforthepositionof"ComputerSpecialist."7Inafacsimiletransmission
datedNovember29,1993,OABinformedEDIthat,fromtheapplicants'curriculavitae
submittedtoitforevaluation,itselectedGranforthepositionof"ComputerSpecialist."The
faxedletteralsostatedthatifGranagreestothetermsandconditionsofemployment
containedinit,oneofwhichwasamonthlysalaryofSR(SaudiRiyal)2,250.00(USD
600.00),EDImayarrangeforGran'simmediatedispatch.8
AfteracceptingOAB'sofferofemployment,Gransignedanemploymentcontract9that
grantedhimamonthlysalaryofUSD850.00foraperiodoftwoyears.Granwasthen
deployedtoRiyadh,KingdomofSaudiArabiaonFebruary7,1994.
UponarrivalinRiyadh,Granquestionedthediscrepancyinhismonthlysalaryhis
employmentcontractstatedUSD850.00;whilehisPhilippineOverseasEmploymentAgency
(POEA)InformationSheetindicatedUSD600.00only.However,throughtheassistanceof
theEDIofficeinRiyadh,OABagreedtopayGranUSD850.00amonth.10
AfterGranhadbeenworkingforaboutfivemonthsforOAB,hisemploymentwasterminated
throughOAB'sJuly9,1994letter,11onthefollowinggrounds:
1.Noncompliancetocontractrequirementsbytherecruitmentagencyprimarilyon
yoursalaryandcontractduration.
2.Noncompliancetoprequalificationrequirementsbytherecruitmentagency[,]
videOABletterref.F575193,datedOctober3,1993.12
3.InsubordinationordisobediencetoTopManagementOrderand/orinstructions
(nonsubmittalofdailyactivityreportsdespiteseveralinstructions).
OnJuly11,1994,GranreceivedfromOABthetotalamountofSR2,948.00representinghis
finalpay,andonthesameday,heexecutedaDeclaration13releasingOABfromanyfinancial
obligationorotherwise,towardshim.
AfterhisarrivalinthePhilippines,Graninstitutedacomplaint,onJuly21,1994,against
ESI/EDI,OAB,CountryBankersInsuranceCorporation,andWesternGuarantyCorporation
withtheNLRC,NationalCapitalRegion,QuezonCity,whichwasdocketedasPOEAADJ
(L)94062194forunderpaymentofwages/salariesandillegaldismissal.
TheRulingoftheLaborArbiter
InhisFebruary10,1998Decision,14LaborArbiterManuelR.Caday,towhomGran'scase
wasassigned,ruledthattherewasneitherunderpaymentnorillegaldismissal.
TheLaborArbiterreasonedthattherewasnounderpaymentofsalariessinceaccordingtothe
POEAOverseasContractWorker(OCW)InformationSheet,Gran'smonthlysalarywasUSD
600.00,andinhisConfirmationofAppointmentasComputerSpecialist,hismonthlybasic
salarywasfixedatSR2,500.00,whichwasequivalenttoUSD600.00.
ArbiterCadayalsocitedtheDeclarationexecutedbyGran,tojustifythatGranhadnoclaim
forunpaidsalariesorwagesagainstOAB.
Withregardtotheissueofillegaldismissal,theLaborArbiterfoundthatGranfailedtorefute
EDI'sallegations;namely,(1)thatGrandidnotsubmitasingleactivityreportofhisdaily
activityasdictatedbycompanypolicy;(2)thathewasnotqualifiedforthejobascomputer
specialistduetohisinsufficientknowledgeinprogrammingandlackofknowledgeinACAD
system;(3)thatGranrefusedtofollowmanagement'sinstructionforhimtogainmore
knowledgeofthejobtoprovehisworthascomputerspecialist;(4)thatGran'semployment
contracthadneverbeensubstituted;(5)andthatGranwaspaidamonthlysalaryofUSD
850.00,andUSD350.00monthlyasfoodallowance.
Accordingly,theLaborArbiterdecidedthatGranwasvalidlydismissedfromhisworkdueto
insubordination,disobedience,andhisfailuretosubmitdailyactivityreports.
Thus,onFebruary10,1998,ArbiterCadaydismissedGran'scomplaintforlackofmerit.
Dissatisfied,GranfiledanAppeal15onApril6,1998withtheNLRC,ThirdDivision.
However,itappearsfromtherecordsthatGranfailedtofurnishEDIwithacopyofhisAppeal
Memorandum.
TheRulingoftheNLRC
TheNLRCheldthatEDI'sseeminglyharmlesstransferofGran'scontracttoESIisactually
"reprocessing,"whichisaprohibitedtransactionunderArticle34(b)oftheLaborCode.This
schemeconstitutedmisrepresentationthroughtheconspiracybetweenEDIandESIin
misleadingGranandevenPOEAoftheactualtermsandconditionsoftheOFW's
employment.Inaddition,itwasfoundthatGrandidnotcommitanyactthatconstituteda
legalgroundfordismissal.Theallegednoncompliancewithcontractualstipulationsrelating
toGran'ssalaryandcontractduration,andtheabsenceofprequalificationrequirements
cannotbeattributedtoGranbuttoEDI,whichdealtdirectlywithOAB.Inaddition,the
chargeofinsubordinationwasnotsubstantiated,andGranwasnotevenaffordedtherequired
noticeandinvestigationonhisallegedoffenses.
Thus,theNLRCreversedtheLaborArbiter'sDecisionandrenderedanewone,thedispositive
portionofwhichreads:
WHEREFORE,theassaileddecisionisSETASIDE.RespondentsExpertiseSearch
International,Inc.,EDIStaffbuildersInt'l.,Inc.andOmarAhmedAliBinBechrEst.
(OAB)areherebyorderedjointlyandseverallyliabletopaythecomplainant
EleazarGranthePhilippinepesoequivalentatthetimeofactualpaymentof
SIXTEENTHOUSANDONEHUNDREDFIFTYUSDOLLARS(US$16,150.00)
representinghissalariesfortheunexpiredportionofhiscontract.
 SOORDERED.16
GranthenfiledaMotionforExecutionofJudgment17onMarch29,1999withtheNLRCand
petitionerreceivingacopyofthismotiononthesamedate.18
Topreventtheexecution,petitionerfiledanOpposition19toGran'smotionarguingthatthe
WritofExecutioncannotissuebecauseitwasnotnotifiedoftheappellateproceedingsbefore
theNLRCandwasnotgivenacopyofthememorandumofappealnoranyopportunityto
participateintheappeal.
SeeingthattheNLRCdidnotactonGran'smotionafterEDIhadfileditsOpposition,
petitionerfiled,onAugust26,1999,aMotionforReconsiderationoftheNLRCDecisionafter
receivingacopyoftheDecisiononAugust16,1999.20
TheNLRCthenissuedaResolution21denyingpetitioner'sMotionforReconsideration,
ratiocinatingthattheissuesandargumentsraisedinthemotion"hadalreadybeenamply
discussed,considered,andruledupon"intheDecision,andthattherewas"nocogentreason
orpatentorpalpableerrorthatwarrantanydisturbancethereof."
UnconvincedoftheNLRC'sreasoning,EDIfiledaPetitionforCertioraribeforetheCA.
PetitionerclaimedinitspetitionthattheNLRCcommittedgraveabuseofdiscretioningiving
duecoursetotheappealdespiteGran'sfailuretoperfecttheappeal.
TheRulingoftheCourtofAppeals
TheCAsubsequentlyruledontheproceduralandsubstantiveissuesofEDI'spetition.
Ontheproceduralissue,theappellatecourtheldthat"Gran'sfailuretofurnishacopyofhis
appealmemorandum[toEDIwas]amereformallapse,anexcusableneglectandnota
jurisdictionaldefectwhichwouldjustifythedismissalofhisappeal."22Thecourtalsoheldthat
petitionerEDIfailedtoprovethatprivaterespondentwasterminatedforavalidcauseandin
accordancewithdueprocess;andthatGran'sDeclarationreleasingOABfromanymonetary
obligationhadnoforceandeffect.TheappellatecourtratiocinatedthatEDIhadtheburdenof
provingGran'sincompetence;however,otherthantheterminationletter,noevidencewas
presentedtoshowhowandwhyGranwasconsideredtobeincompetent.Thecourtheldthat
sincethelawrequirestherecruitmentagenciestosubjectOFWstotradetestsbefore
deployment,Granmusthavebeencompetentandqualified;otherwise,hewouldnothave
beenhiredanddeployedabroad.
AsforthechargeofinsubordinationanddisobedienceduetoGran'sfailuretosubmita"Daily
ActivityReport,"theappellatecourtfoundthatEDIfailedtoshowthatthesubmissionofthe
"DailyActivityReport"wasapartofGran'sdutyorthecompany'spolicy.Thecourtalsoheld
thatevenifGranwasguiltyofinsubordination,heshouldhavejustbeensuspendedor
reprimanded,butnotdismissed.
TheCAalsoheldthatGranwasnotaffordeddueprocess,giventhatOABdidnotabidebythe
twinnoticerequirement.ThecourtfoundthatGranwasterminatedonthesamedayhe
receivedtheterminationletter,withouthavingbeenapprisedofthebasesofhisdismissalor
affordedanopportunitytoexplainhisside.
Finally,theCAheldthattheDeclarationsignedbyGrandidnotbarhimfromdemanding
benefitstowhichhewasentitled.TheappellatecourtfoundthattheDeclarationwasinthe
formofaquitclaim,andassuchisfrowneduponascontrarytopublicpolicyespeciallywhere
themonetaryconsiderationgivenintheDeclarationwasverymuchlessthanwhathewas
legallyentitledtohisbackwagesamountingtoUSD16,150.00.
Asaresultofthesefindings,onOctober18,2000,theappellatecourtdeniedthepetitiontoset
asidetheNLRCDecision.
Hence,thisinstantpetitionisbeforetheCourt.
TheIssues
Petitionerraisesthefollowingissuesforourconsideration:
I.WHETHERTHEFAILUREOFGRANTOFURNISHACOPYOFHIS
APPEALMEMORANDUMTOPETITIONEREDIWOULDCONSTITUTEA
JURISDICTIONALDEFECTANDADEPRIVATIONOFPETITIONEREDI'S
RIGHTTODUEPROCESSASWOULDJUSTIFYTHEDISMISSALOF
GRAN'SAPPEAL.
II.WHETHERPETITIONEREDIHASESTABLISHEDBYWAYOF
SUBSTANTIALEVIDENCETHATGRAN'STERMINATIONWAS
JUSTIFIABLEBYREASONOFINCOMPETENCE.COROLLARYHERETO,
WHETHERTHEPRIETOVS.NLRCRULING,ASAPPLIEDBYTHECOURT
OFAPPEALS,ISAPPLICABLEINTHEINSTANTCASE.
III.WHETHERPETITIONERHASESTABLISHEDBYWAYOF
SUBSTANTIALEVIDENCETHATGRAN'STERMINATIONWAS
JUSTIFIABLEBYREASONOFINSUBORDINATIONANDDISOBEDIENCE.
IV.WHETHERGRANWASAFFORDEDDUEPROCESSPRIORTO
TERMINATION.
V.WHETHERGRANISENTITLEDTOBACKWAGESFORTHEUNEXPIRED
PORTIONOFHISCONTRACT.23
TheCourt'sRuling
ThepetitionlacksmeritexceptwithrespecttoGran'sfailuretofurnishEDIwithhisAppeal
MemorandumfiledwiththeNLRC.
FirstIssue:NLRC'sDutyistoRequireRespondenttoProvidePetitioneraCopyofthe
Appeal
PetitionerEDIclaimsthatGran'sfailuretofurnishitacopyoftheAppealMemorandum
constitutesajurisdictionaldefectandadeprivationofdueprocessthatwouldwarranta
rejectionoftheappeal.
Thispositionisdevoidofmerit.
Inacatenaofcases,itwasruledthatfailureofappellanttofurnishacopyoftheappealto
theadversepartyisnotfataltotheappeal.
InEstradav.NationalLaborRelationsCommission,24thisCourtsetasidetheorderofthe
NLRCwhichdismissedanappealonthesolegroundthattheappellantdidnotfurnishthe
appelleeamemorandumofappealcontrarytotherequirementsofArticle223oftheNew
LaborCodeandSection9,RuleXIIIofitsImplementingRulesandRegulations.
Also,inJ.D.MagpayoCustomsBrokerageCorp.v.NLRC,theorderofdismissalofanappeal
totheNLRCbasedonthegroundthat"thereisnoshowingwhatsoeverthatacopyofthe
appealwasservedbytheappellantontheappellee"25wasannulled.TheCourtratiocinatedas
follows:
Thefailuretogiveacopyoftheappealtotheadversepartywasamereformal
lapse,anexcusableneglect.TimeandagainWehaveactedonpetitionstoreview
decisionsoftheCourtofAppealsevenintheabsenceofproofofserviceofacopy
thereoftotheCourtofAppealsasrequiredbySection1ofRule45,RulesofCourt.
Weactonthepetitionsandsimplyrequirethepetitionerstocomplywiththe
rule.26(Emphasissupplied.)
TheJ.D.MagpayorulingwasreiteratedinCarnationPhilippinesEmployeesLaborUnion
FFWv.NationalLaborRelationsCommission,27Pagdonsalanv.NLRC,28andinSunrise
ManningAgency,Inc.v.NLRC.29
Thus,thedoctrinethatevolvedfromthesecasesisthatfailuretofurnishtheadverseparty
withacopyoftheappealistreatedonlyasaformallapse,anexcusableneglect,andhence,
notajurisdictionaldefect.Accordingly,insuchasituation,theappealshouldnotbe
dismissed;however,itshouldnotbegivenduecourseeither.AsenunciatedinJ.D.Magpayo,
thedutythatisimposedontheNLRC,insuchacase,istorequiretheappellantto
complywiththerulethattheopposingpartyshouldbeprovidedwithacopyofthe
appealmemorandum.
WhileGran'sfailuretofurnishEDIwithacopyoftheAppealMemorandumisexcusable,the
abjectfailureoftheNLRCtoorderGrantofurnishEDIwiththeAppealMemorandum
constitutesgraveabuseofdiscretion.
TherecordsrevealthattheNLRCdiscoveredthatGranfailedtofurnishEDIacopyofthe
AppealMemorandum.TheNLRCthenorderedGrantopresentproofofservice.In
compliancewiththeorder,GransubmittedacopyofCampCramePostOffice'slistof
mail/parcelssentonApril7,1998.30Thepostoffice'slistshowsthatprivaterespondentGran
senttwopiecesofmailonthesamedate:oneaddressedtoacertainDanO.deGuzmanof
LegaspiVillage,Makati;andtheotherappearstobeaddressedtoNeilB.Garcia(orGran),31
ofErmita,Manilabothofwhomarenotconnectedwithpetitioner.
Thismailinglist,however,isnotaconclusiveproofthatEDIindeedreceivedacopyofthe
AppealMemorandum.
Sec.5oftheNLRCRulesofProcedure(1990)providesfortheproofandcompletenessof
serviceinproceedingsbeforetheNLRC:
Section5.32Proofandcompletenessofservice.Thereturnisprimafacieproofof
thefactsindicatedtherein.Servicebyregisteredmailiscompleteuponreceiptby
theaddresseeorhisagent;butiftheaddresseefailstoclaimhismailfromthepost
officewithinfive(5)daysfromthedateoffirstnoticeofthepostmaster,service
shalltakeeffectaftersuchtime.(Emphasissupplied.)
Hence,iftheserviceisdonethroughregisteredmail,itisonlydeemedcompletewhenthe
addresseeorhisagentreceivedthemailorafterfive(5)daysfromthedateoffirstnoticeof
thepostmaster.However,theNLRCRulesdonotstatewhatwouldconstituteproperproofof
service.
Sec.13,Rule13oftheRulesofCourt,providesforproofsofservice:
Section13.Proofofservice.Proofofpersonalserviceshallconsistofawritten
admissionofthepartyservedortheofficialreturnoftheserver,ortheaffidavitof
thepartyserving,containingafullstatementofthedate,placeandmannerof
service.Iftheserviceisbyordinarymail,proofthereofshallconsistofanaffidavit
ofthepersonmailingoffactsshowingcompliancewithsection7ofthisRule.If
serviceismadebyregisteredmail,proofshallbemadebysuchaffidavitand
registryreceiptissuedbythemailingoffice.Theregistryreturncardshallbe
filedimmediatelyuponitsreceiptbythesender,orinlieuthereofthe
unclaimedlettertogetherwiththecertifiedorsworncopyofthenoticegivenby
thepostmastertotheaddressee(emphasissupplied).
Basedontheforegoingprovision,itisobviousthatthelistsubmittedbyGranisnot
conclusiveproofthathehadservedacopyofhisappealmemorandumtoEDI,norisit
conclusiveproofthatEDIreceiveditscopyoftheAppealMemorandum.Heshouldhave
submittedanaffidavitprovingthathemailedtheAppealMemorandumtogetherwiththe
registryreceiptissuedbythepostoffice;afterwards,Granshouldhaveimmediatelyfiledthe
registryreturncard.
Hence,afterseeingthatGranfailedtoattachtheproofofservice,theNLRCshouldnothave
simplyacceptedthepostoffice'slistofmailandparcelssent;butitshouldhaverequired
GrantoproperlyfurnishtheopposingpartieswithcopiesofhisAppealMemorandumas
prescribedinJ.D.Magpayoandtheothercases.TheNLRCshouldnothaveproceeded
withtheadjudicationofthecase,asthisconstitutesgraveabuseofdiscretion.
TheglaringfailureofNLRCtoensurethatGranshouldhavefurnishedpetitionerEDIacopy
oftheAppealMemorandumbeforerenderingjudgmentreversingthedismissalofGran's
complaintconstitutesanevasionofthepertinentNLRCRulesandestablishedjurisprudence.
Worse,thisfailuredeprivedEDIofproceduraldueprocessguaranteedbytheConstitution
whichcanserveasbasisforthenullificationofproceedingsintheappealbeforetheNLRC.
OnecanonlysurmisetheshockanddismaythatOAB,EDI,andESIexperiencedwhenthey
thoughtthatthedismissalofGran'scomplaintbecamefinal,onlytoreceiveacopyofGran's
MotionforExecutionofJudgmentwhichalsoinformedthemthatGranhadobtaineda
favorableNLRCDecision.Thisisnotlevelplayingfieldandabsolutelyunfairand
discriminatoryagainsttheemployerandthejobrecruiters.Therightsoftheemployersto
proceduraldueprocesscannotbecavalierlydisregardedfortheytoohaverightsassuredunder
theConstitution.
However,insteadofannullingthedispositionsoftheNLRCandremandingthecasefor
furtherproceedingswewillresolvethepetitionbasedontherecordsbeforeustoavoida
protractedlitigation.33
ThesecondandthirdissueshaveacommonmatterwhethertherewasjustcauseforGran's
dismissalhence,theywillbediscussedjointly.
SecondandThirdIssues:WhetherGran'sdismissalisjustifiablebyreasonof
incompetence,insubordination,anddisobedience
IncasesinvolvingOFWs,therightsandobligationsamongandbetweentheOFW,thelocal
recruiter/agent,andtheforeignemployer/principalaregovernedbytheemploymentcontract.
Acontractfreelyenteredintoisconsideredlawbetweentheparties;andhence,shouldbe
respected.Informulatingthecontract,thepartiesmayestablishsuchstipulations,clauses,
termsandconditionsastheymaydeemconvenient,providedtheyarenotcontrarytolaw,
morals,goodcustoms,publicorder,orpublicpolicy.34
Inthepresentcase,theemploymentcontractsignedbyGranspecificallystatesthatSaudi
LaborLawswillgovernmattersnotprovidedforinthecontract(e.g.specificcausesfor
termination,terminationprocedures,etc.).Beingthelawintendedbytheparties(lexloci
intentiones)toapplytothecontract,SaudiLaborLawsshouldgovernallmattersrelatingto
theterminationoftheemploymentofGran.
Ininternationallaw,thepartywhowantstohaveaforeignlawappliedtoadisputeorcasehas
theburdenofprovingtheforeignlaw.Theforeignlawistreatedasaquestionoffacttobe
properlypleadedandprovedasthejudgeorlaborarbitercannottakejudicialnoticeofa
foreignlaw.Heispresumedtoknowonlydomesticorforumlaw.35
Unfortunatelyforpetitioner,itdidnotprovethepertinentSaudilawsonthematter;thus,the
InternationalLawdoctrineofpresumedidentityapproachorprocessualpresumptioncomes
intoplay.36Whereaforeignlawisnotpleadedor,evenifpleaded,isnotproved,the
presumptionisthatforeignlawisthesameasours.37Thus,weapplyPhilippinelaborlawsin
determiningtheissuespresentedbeforeus.
PetitionerEDIclaimsthatithadproventhatGranwaslegallydismissedduetoincompetence
andinsubordinationordisobedience.
Thisclaimhasnomerit.
Inillegaldismissalcases,ithasbeenestablishedbyPhilippinelawandjurisprudencethatthe
employershouldprovethatthedismissalofemployeesorpersonnelislegalandjust.
Section33ofArticle277oftheLaborCode38statesthat:
ART.277.MISCELLANEOUSPROVISIONS39
(b)Subjecttotheconstitutionalrightofworkerstosecurityoftenureandtheirright
tobeprotectedagainstdismissalexceptforajustandauthorizedcauseandwithout
prejudicetotherequirementofnoticeunderArticle283ofthisCode,theemployer
shallfurnishtheworkerwhoseemploymentissoughttobeterminatedawritten
noticecontainingastatementofthecausesforterminationandshallaffordthelatter
ampleopportunitytobeheardandtodefendhimselfwiththeassistanceofhis
representativeifhesodesiresinaccordancewithcompanyrulesandregulations
promulgatedpursuanttoguidelinessetbytheDepartmentofLaborand
Employment.Anydecisiontakenbytheemployershallbewithoutprejudicetothe
rightoftheworkerstocontestthevalidityorlegalityofhisdismissalbyfilinga
complaintwiththeregionalbranchoftheNationalLaborRelationsCommission.
Theburdenofprovingthattheterminationwasforavalidorauthorizedcause
shallrestontheemployer.xxx
Inmanycases,ithasbeenheldthatinterminationdisputesorillegaldismissalcases,the
employerhastheburdenofprovingthatthedismissalisforjustandvalidcauses;andfailure
todosowouldnecessarilymeanthatthedismissalwasnotjustifiedandthereforeillegal.40
Takingintoaccountthecharacterofthechargesandthepenaltymetedtoanemployee,the
employerisboundtoadduceclear,accurate,consistent,andconvincingevidencetoprovethat
thedismissalisvalidandlegal.41Thisisconsistentwiththeprincipleofsecurityoftenureas
guaranteedbytheConstitutionandreinforcedbyArticle277(b)oftheLaborCodeofthe
Philippines.42
Intheinstantcase,petitionerclaimsthatprivaterespondentGranwasvalidlydismissedfor
justcause,duetoincompetenceandinsubordinationordisobedience.Toproveitsallegations,
EDIsubmittedtwolettersasevidence.ThefirstistheJuly9,1994terminationletter,43
addressedtoGran,fromAndreaE.Nicolaou,ManagingDirectorofOAB.Thesecondisan
unsignedApril11,1995letter44fromOABaddressedtoEDIandESI,whichoutlinedthe
reasonswhyOABhadterminatedGran'semployment.
PetitionerclaimsthatGranwasincompetentfortheComputerSpecialistpositionbecausehe
had"insufficientknowledgeinprogrammingandzeroknowledgeof[the]ACADsystem."45
PetitioneralsoclaimsthatGranwasjustifiablydismissedduetoinsubordinationor
disobediencebecausehecontinuallyfailedtosubmittherequired"DailyActivityReports."46
However,otherthantheabovementionedletters,nootherevidencewaspresentedtoshow
howandwhyGranwasconsideredincompetent,insubordinate,ordisobedient.PetitionerEDI
hadclearlyfailedtoovercometheburdenofprovingthatGranwasvalidlydismissed.
Petitioner'simputationofincompetenceonprivaterespondentduetohis"insufficient
knowledgeinprogrammingandzeroknowledgeoftheACADsystem"basedonlyonthe
abovementionedletters,withoutanyotherevidence,cannotbegivencredence.
Anallegationofincompetenceshouldhaveafactualfoundation.Incompetencemaybeshown
byweighingitagainstastandard,benchmark,orcriterion.However,EDIfailedtoestablish
anysuchbasestoshowhowpetitionerfoundGranincompetent.
Inaddition,theelementsthatmustconcurforthechargeofinsubordinationorwillful
disobediencetoprosperwerenotpresent.
InMicroSalesOperationNetworkv.NLRC,weheldthat:
Forwillfuldisobediencetobeavalidcausefordismissal,thefollowingtwin
elementsmustconcur:(1)theemployee'sassailedconductmusthavebeenwillful,
thatis,characterizedbyawrongfulandperverseattitude;and(2)theorderviolated
musthavebeenreasonable,lawful,madeknowntotheemployeeandmustpertain
tothedutieswhichhehadbeenengagedtodischarge.47
EDIfailedtodischargetheburdenofprovingGran'sinsubordinationorwillfuldisobedience.
AsindicatedbythesecondrequirementprovidedforinMicroSalesOperationNetwork,in
ordertojustifywillfuldisobedience,wemustdeterminewhethertheorderviolatedbythe
employeeisreasonable,lawful,madeknowntotheemployee,andpertainstothedutieswhich
hehadbeenengagedtodischarge.Inthecaseatbar,petitionerfailedtoshowthattheorderof
thecompanywhichwasviolatedthesubmissionof"DailyActivityReports"waspartof
Gran'sdutiesasaComputerSpecialist.BeforetheLaborArbiter,EDIshouldhaveprovideda
copyofthecompanypolicy,Gran'sjobdescription,oranyotherdocumentthatwouldshow
thatthe"DailyActivityReports"wererequiredforsubmissionbytheemployees,more
particularlybyaComputerSpecialist.
EventhoughEDIand/orESIweremerelythelocalemploymentorrecruitmentagenciesand
nottheforeignemployer,theyshouldhaveadducedadditionalevidencetoconvincinglyshow
thatGran'semploymentwasvalidlyandlegallyterminated.Theburdendevolvesnotonly
upontheforeignbasedemployerbutalsoontheemploymentorrecruitmentagencyforthe
latterisnotonlyanagentoftheformer,butisalsosolidarilyliablewiththeforeignprincipal
foranyclaimsorliabilitiesarisingfromthedismissaloftheworker.48
Thus,petitionerfailedtoprovethatGranwasjustifiablydismissedduetoincompetence,
insubordination,orwillfuldisobedience.
PetitioneralsoraisedtheissuethatPrietov.NLRC,49asusedbytheCAinitsDecision,isnot
applicabletothepresentcase.
InPrieto,thisCourtruledthat"[i]tispresumedthatbeforetheirdeployment,thepetitioners
weresubjectedtotradetestsrequiredbylawtobeconductedbytherecruitingagencyto
insureemploymentofonlytechnicallyqualifiedworkersfortheforeignprincipal."50TheCA,
usingtherulinginthesaidcase,ruledthatGranmusthavepassedthetest;otherwise,he
wouldnothavebeenhired.Therefore,EDIwasatfaultwhenitdeployedGranwhowas
allegedly"incompetent"forthejob.
Accordingtopetitioner,thePrietorulingisnotapplicablebecauseinthecaseathand,Gran
misrepresentedhimselfinhiscurriculumvitaeasaComputerSpecialist;thus,hewasnot
qualifiedforthejobforwhichhewashired.
Wedisagree.
TheCAiscorrectinapplyingPrieto.Thepurposeoftherequiredtradetestistoweedout
incompetentapplicantsfromthepoolofavailableworkers.Itissupposedtorevealapplicants
withfalseeducationalbackgrounds,andexposebogusqualifications.SinceEDIdeployed
GrantoRiyadh,itcanbepresumedthatGranhadpassedtherequiredtradetestandthatGran
isqualifiedforthejob.EveniftherewasnoobjectivetradetestdonebyEDI,itwasstillEDI's
responsibilitytosubjectGrantoatradetest;anditsfailuretodosoonlyweakeneditsposition
butshouldnotinanywayprejudiceGran.Inanycase,theissueisrenderedmootand
academicbecauseGran'sincompetencyisunproved.
FourthIssue:GranwasnotAffordedDueProcess
Asdiscussedearlier,intheabsenceofproofofSaudilaws,PhilippineLaborlawsand
regulationsshallgoverntherelationshipbetweenGranandEDI.Thus,ourlawsandruleson
therequisitesofdueprocessrelatingtoterminationofemploymentshallapply.
PetitionerEDIclaimsthatprivaterespondentGranwasaffordeddueprocess,sincehewas
allowedtoworkandimprovehiscapabilitiesforfivemonthspriortohistermination.51EDI
alsoclaimsthattherequirementsofdueprocess,asenunciatedinSantos,Jr.v.NLRC,52and
MalayaShippingServices,Inc.v.NLRC,53citedbytheCAinitsDecision,wereproperly
observedinthepresentcase.
Thispositionisuntenable.
InAgabonv.NLRC,54thisCourtheldthat:
Procedurally,(1)ifthedismissalisbasedonajustcauseunderArticle282,the
employermustgivetheemployeetwowrittennoticesandahearingoropportunity
tobeheardifrequestedbytheemployeebeforeterminatingtheemployment:a
noticespecifyingthegroundsforwhichdismissalissoughtahearingoran
opportunitytobeheardandafterhearingoropportunitytobeheard,anoticeofthe
 decisiontodismiss;and(2)ifthedismissalisbasedonauthorizedcausesunder
Articles283and284,theemployermustgivetheemployeeandtheDepartmentof
LaborandEmploymentwrittennotices30dayspriortotheeffectivityofhis
separation.
Underthetwinnoticerequirement,theemployeesmustbegiventwo(2)noticesbeforetheir
employmentcouldbeterminated:(1)afirstnoticetoapprisetheemployeesoftheirfault,and
(2)asecondnoticetocommunicatetotheemployeesthattheiremploymentisbeing
terminated.Inbetweenthefirstandsecondnotice,theemployeesshouldbegivenahearingor
opportunitytodefendthemselvespersonallyorbycounseloftheirchoice.55
Acarefulexaminationoftherecordsrevealedthat,indeed,OAB'smannerofdismissingGran
fellshortofthetwonoticerequirement.WhileitfurnishedGranthewrittennoticeinforming
himofhisdismissal,itfailedtofurnishGranthewrittennoticeapprisinghimofthecharges
againsthim,asprescribedbytheLaborCode.56Consequently,hewasdeniedtheopportunity
torespondtosaidnotice.Inaddition,OABdidnotscheduleahearingorconferencewithGran
todefendhimselfandadduceevidenceinsupportofhisdefenses.Moreover,theJuly9,1994
terminationletterwaseffectiveonthesameday.ThisshowsthatOABhadalready
condemnedGrantodismissal,evenbeforeGranwasfurnishedtheterminationletter.Itshould
alsobepointedoutthatOABfailedtogiveGranthechancetobeheardandtodefendhimself
withtheassistanceofarepresentativeinaccordancewithArticle277oftheLaborCode.
Clearly,therewasnointentiontoprovideGranwithdueprocess.Summingup,Granwas
notifiedandhisemploymentarbitrarilyterminatedonthesameday,throughthesameletter,
andforunjustifiedgrounds.Obviously,Granwasnotaffordeddueprocess.
PursuanttothedoctrinelaiddowninAgabon,57anemployerisliabletopaynominaldamages
asindemnityforviolatingtheemployee'srighttostatutorydueprocess.SinceOABwasin
breachofthedueprocessrequirementsundertheLaborCodeanditsregulations,OAB,ESI,
andEDI,jointlyandsolidarily,areliabletoGranintheamountofPhP30,000.00as
indemnity.
FifthandLastIssue:GranisEntitledtoBackwages
Wereiteratetherulethatwithregardtoemployeeshiredforafixedperiodofemployment,in
casesarisingbeforetheeffectivityofR.A.No.804258(MigrantWorkersandOverseas
FilipinosAct)onAugust25,1995,thatwhenthecontractisforafixedtermandthe
employeesaredismissedwithoutjustcause,theyareentitledtothepaymentoftheirsalaries
correspondingtotheunexpiredportionoftheircontract.59Ontheotherhand,forcasesarising
aftertheeffectivityofR.A.No.8042,whentheterminationofemploymentiswithoutjust,
validorauthorizedcauseasdefinedbylaworcontract,theworkershallbeentitledtothefull
reimbursementofhisplacementfeewithinterestoftwelvepercent(12%)perannum,plushis
salariesfortheunexpiredportionofhisemploymentcontractorforthree(3)monthsforevery
yearoftheunexpiredtermwhicheverisless.60
Inthepresentcase,theemploymentcontractprovidesthattheemploymentcontractshallbe
validforaperiodoftwo(2)yearsfromthedatetheemployeestartstoworkwiththe
employer.61GranarrivedinRiyadh,SaudiArabiaandstartedtoworkonFebruary7,1994;62
hence,hisemploymentcontractisuntilFebruary7,1996.Sincehewasillegallydismissedon
July9,1994,beforetheeffectivityofR.A.No.8042,heisthereforeentitledtobackwages
correspondingtotheunexpiredportionofhiscontract,whichwasequivalenttoUSD16,150.
PetitionerEDIquestionsthelegalityoftheawardofbackwagesandmainlyreliesonthe
DeclarationwhichisclaimedtohavebeenfreelyandvoluntarilyexecutedbyGran.The
relevantportionsoftheDeclarationareasfollows:
I,ELEAZARGRAN(COMPUTERSPECIALIST)AFTERRECEIVINGMY
FINALSETTLEMENTONTHISDATETHEAMOUNTOF:
S.R.2,948.00(SAUDIRIYALSTWOTHOUSANDNINE
HUNDREDFORTYEIGHTONLY)
REPRESENTINGCOMPLETEPAYMENT(COMPENSATION)FORTHE
SERVICESIRENDEREDTOOABESTABLISHMENT.
IHEREBYDECLARETHATOABEST.HASNOFINANCIALOBLIGATION
INMYFAVOURAFTERRECEIVINGTHEABOVEMENTIONEDAMOUNT
INCASH.
ISTATEFURTHERTHATOABEST.HASNOOBLIGATIONTOWARDSME
INWHATEVERFORM.
IATTESTTOTHETRUTHFULNESSOFTHISSTATEMENTBYAFFIXING
MYSIGNATUREVOLUNTARILY.
SIGNED.
ELEAZARGRAN
Courtsmustundertakeameticulousandrigorousreviewofquitclaimsorwaivers,more
particularlythoseexecutedbyemployees.ThisrequirementwasclearlyarticulatedbyChief
JusticeArtemioV.PanganibaninLandandHousingDevelopmentCorporationv.Esquillo:
Quitclaims,releasesandotherwaiversofbenefitsgrantedbylawsorcontractsin
favorofworkersshouldbestrictlyscrutinizedtoprotecttheweakandthe
disadvantaged.Thewaiversshouldbecarefullyexamined,inregardnotonlyto
thewordsandtermsused,butalsothefactualcircumstancesunderwhichthey
havebeenexecuted.63(Emphasissupplied.)
ThisCourthadalsooutlinedinLandandHousingDevelopmentCorporation,citingPeriquet
v.NLRC,64theparametersforvalidcompromiseagreements,waivers,andquitclaims:
 Notallwaiversandquitclaimsareinvalidasagainstpublicpolicy.Iftheagreement
wasvoluntarilyenteredintoandrepresentsareasonablesettlement,itisbindingon
thepartiesandmaynotlaterbedisownedsimplybecauseofachangeofmind.Itis
onlywherethereisclearproofthatthewaiverwaswangledfromanunsuspectingor
gullibleperson,orthetermsofsettlementareunconscionableonitsface,thatthe
lawwillstepintoannulthequestionabletransaction.Butwhereitisshownthatthe
personmakingthewaiverdidsovoluntarily,withfullunderstandingofwhat
hewasdoing,andtheconsiderationforthequitclaimiscredibleand
reasonable,thetransactionmustberecognizedasavalidandbindingundertaking.
(Emphasissupplied.)
IsthewaiverandquitclaimlabeledaDeclarationvalid?Itisnot.
TheCourtfindsthewaiverandquitclaimnullandvoidforthefollowingreasons:
1.ThesalarypaidtoGranuponhistermination,intheamountofSR2,948.00,is
unreasonablylow.Ascorrectlypointedoutbythecourtaquo,thepaymentofSR2,948.00is
evenlowerthanhismonthlysalaryofSR3,190.00(USD850.00).Inaddition,itisalsovery
muchlessthantheUSD16,150.00whichistheamountGranislegallyentitledtogetfrom
petitionerEDIasbackwages.
2.TheDeclarationrevealsthatthepaymentofSR2,948.00isactuallythepaymentforGran's
salaryfortheservicesherenderedtoOABasComputerSpecialist.IftheDeclarationisa
quitclaim,thentheconsiderationshouldbemuchmuchmorethanthemonthlysalaryofSR
3,190.00(USD850.00)althoughpossiblylessthantheestimatedGran'ssalariesforthe
remainingdurationofhiscontractandotherbenefitsasemployeeofOAB.Aquitclaimwill
understandablybelowerthanthesumtotaloftheamountsandbenefitsthatcanpossiblybe
awardedtoemployeesortobeearnedfortheremainderofthecontractperiodsinceitisa
compromisewheretheemployeeswillhavetoforfeitacertainportionoftheamountstheyare
claiminginexchangefortheearlypaymentofacompromiseamount.Thecourtmayhowever
stepinwhensuchamountisunconscionablyloworunreasonablealthoughtheemployee
voluntarilyagreedtoit.InthecaseoftheDeclaration,theamountisunreasonablysmall
comparedtothefuturewagesofGran.
3.ThefactualcircumstancessurroundingtheexecutionoftheDeclarationwouldshowthat
Grandidnotvoluntarilyandfreelyexecutethedocument.Considerthefollowingchronology
ofevents:
a.OnJuly9,1994,Granreceivedacopyofhisletteroftermination;
b.OnJuly10,1994,GranwasinstructedtodepartSaudiArabiaandrequiredtopay
hisplaneticket;65
c.OnJuly11,1994,hesignedtheDeclaration;
d.OnJuly12,1994,GrandepartedfromRiyadh,SaudiArabia;and
e.OnJuly21,1994,GranfiledtheComplaintbeforetheNLRC.
TheforegoingeventsreadilyrevealthatGranwas"forced"tosigntheDeclarationand
constrainedtoreceivetheamountofSR2,948.00evenifitwasagainsthiswillsincehewas
toldonJuly10,1994toleaveRiyadhonJuly12,1994.Hehadnootherchoicebuttosignthe
DeclarationasheneededtheamountofSR2,948.00forthepaymentofhisticket.Hecould
haveentertainedsomeapprehensionsastothestatusofhisstayorsafetyinSaudiArabiaifhe
wouldnotsignthequitclaim.
4.ThecourtaquoiscorrectinitsfindingthattheDeclarationisacontractofadhesionwhich
shouldbeconstruedagainsttheemployer,OAB.Anadhesioncontractiscontrarytopublic
policyasitleavestheweakerpartytheemployeeina"takeitorleaveit"situation.
Certainly,theemployerisbeingunjusttotheemployeeasthereisnomeaningfulchoiceon
thepartoftheemployeewhilethetermsareunreasonablyfavorabletotheemployer.66
Thus,theDeclarationpurportingtobeaquitclaimandwaiverisunenforceableunder
PhilippinelawsintheabsenceofproofoftheapplicablelawofSaudiArabia.
Inordertopreventdisputesonthevalidityandenforceabilityofquitclaimsandwaiversof
employeesunderPhilippinelaws,saidagreementsshouldcontainthefollowing:
1.Afixedamountasfullandfinalcompromisesettlement;
2.Thebenefitsoftheemployeesifpossiblewiththecorrespondingamounts,whichthe
employeesaregivingupinconsiderationofthefixedcompromiseamount;
3.AstatementthattheemployerhasclearlyexplainedtotheemployeeinEnglish,Filipino,or
inthedialectknowntotheemployeesthatbysigningthewaiverorquitclaim,theyare
forfeitingorrelinquishingtheirrighttoreceivethebenefitswhichareduethemunderthelaw;
and
4.Astatementthattheemployeessignedandexecutedthedocumentvoluntarily,andhadfully
understoodthecontentsofthedocumentandthattheirconsentwasfreelygivenwithoutany
threat,violence,duress,intimidation,orundueinfluenceexertedontheirperson.
ItisadvisablethatthestipulationsbemadeinEnglishandTagalogorinthedialectknownto
theemployee.Thereshouldbetwo(2)witnessestotheexecutionofthequitclaimwhomust
alsosignthequitclaim.Thedocumentshouldbesubscribedandsworntounderoath
preferablybeforeanyadministeringofficialoftheDepartmentofLaborandEmploymentor
itsregionaloffice,theBureauofLaborRelations,theNLRCoralaborattachinaforeign
country.Suchofficialshallassistthepartiesregardingtheexecutionofthequitclaimand
waiver.67ThiscompromisesettlementbecomesfinalandbindingunderArticle227ofthe
LaborCodewhichprovidesthat:
[A]nycompromisesettlementvoluntarilyagreeduponwiththeassistanceofthe
BureauofLaborRelationsortheregionalofficeoftheDOLE,shallbefinaland
 bindinguponthepartiesandtheNLRCoranycourt"shallnotassumejurisdiction
overissuesinvolvedthereinexceptincaseofnoncompliancethereoforifthereis MONTEHERMOZO,
primafacieevidencethatthesettlementwasobtainedthroughfraud,
misrepresentation,orcoercion.
Respondents.

Itismadeclearthattheforegoingrulesonquitclaimorwaivershallapplyonlytolabor

contractsofOFWsintheabsenceofproofofthelawsoftheforeigncountryagreeduponto
governsaidcontracts.Otherwise,theforeignlawsshallapply.

WHEREFORE,thepetitionisDENIED.TheOctober18,2000DecisioninCAG.R.SPNo.
56120oftheCourtofAppealsaffirmingtheJanuary15,1999DecisionandSeptember30, Promulgated:
1999ResolutionoftheNLRC

isAFFIRMEDwiththeMODIFICATIONthatpetitionerEDIStaffbuildersInternational,
Inc.shallpaytheamountofPhP30,000.00torespondentGranasnominaldamagesfornon January25,2006
compliancewithstatutorydueprocess.

Nocosts.

SOORDERED. xx

SUNACEINTERNATIONAL G.R.No.161757

MANAGEMENTSERVICES,INC.
DECISION
Petitioner, Present:



QUISUMBING,J.,Chairperson,
CARPIOMORALES,J.:
versus CARPIO,

CARPIOMORALES,and

TINGA,JJ. Petitioner,SunaceInternationalManagementServices(Sunace),acorporationduly
organized and existing under the laws of the Philippines, deployed to Taiwan Divina A.
NATIONAL LABOR RELATIONS
COMMISSION, Second Division; HON. Montehermozo(Divina)asadomestichelperundera12monthcontracteffectiveFebruary1,
ERNESTOS.DINOPOL,inhiscapacityas 1997.[1] ThedeploymentwaswiththeassistanceofaTaiwanesebroker, EdmundWang,
Labor Arbiter, NLRC; NCR, Arbitration
PresidentofJetCrownInternationalCo.,Ltd.
Branch, Quezon City and DIVINA A.

IncomeTax
Afterher12monthcontractexpiredonFebruary1,1998,Divinacontinuedworking
forherTaiwaneseemployer,HangRuiXiong,fortwomoreyears,afterwhichshereturnedto
thePhilippinesonFebruary4,2000.

1997 NT10,450.00 NT23,100.00

ShortlyafterherreturnoronFebruary14,2000,Divinafiledacomplaint[2]before 1998 NT9,500.00 NT36,000.00

theNationalLaborRelationsCommission(NLRC)againstSunace,oneAdelaidePerez,the
Taiwanesebroker,andtheemployerforeignprincipalallegingthatshewasjailedforthree
1999 NT13,300.00 NT36,000.00;[5]
monthsandthatshewasunderpaid.

ThefollowingdayoronFebruary15,2000,LaborArbitrationAssociateReginaT.
GavinissuedSummons[3] totheManagerofSunace,furnishingitwithacopyofDivinas
complaintanddirectingittoappearformandatoryconferenceonFebruary28,2000.
andwhiletheamountsdeductedin1997wererefundedtoher,thosedeductedin1998and
1999werenot.Onevendate,Sunace,byitsProprietor/GeneralManagerMariaLuisaOlarte,
fileditsVerifiedAnswerandPositionPaper,[6]claimingasfollows,quotedverbatim:
Thescheduledmandatoryconferencewasreset.Itappearstohavebeenconcluded,
however.

COMPLAINANTISNOTENTITLED
FORTHEREFUNDOFHER24MONTHS
SAVINGS
OnApril6,2000,DivinafiledherPositionPaper[4]claimingthatunderheroriginal

oneyearcontractandthe2yearextendedcontractwhichwaswiththeknowledgeandconsent
ofSunace,thefollowingamountsrepresentingincometaxandsavingswerededucted:
Year Deductionfor DeductionforSavings
3.Complainantcouldnotanymoreclaimnorentitledfortherefundofher24months
savings as she already took back her saving already last year and the
employerdidnotdeductanymoneyfromhersalary,inaccordancewitha
FascimileMessagefromtherespondentSUNACEsemployer,JetCrown
InternationalCo.Ltd.,axerographiccopyofwhichisherewithattachedas
ANNEX2hereof;
COMPLAINANTISNOTENTITLED
TOREFUNDOFHER14MONTHSTAX
ANDPAYMENTOFATTORNEYSFEES
4.Thereisnobasisforthegrantoftaxrefundtothecomplainantastheshefinished therefrom,andDivinainfactexecutedaWaiver/QuitclaimandReleaseofResponsibilityand
year contract and
her one hence, was not illegally dismissed by her
anAffidavitofDesistance,copyofeachdocumentwasannexedtosaid ... ANSWER TO
employer.Shecouldonlylayclaimoverthetaxrefundormuchmorebe
awardedofdamagessuchasattorneysfeesassaidreliefsareavailable COMPLAINANTSPOSITIONPAPER.
only when the dismissal of a migrant worker is without just valid or
lawfulcauseasdefinedbylaworcontract.

Therationalesbehindtheawardoftaxrefundandpaymentofattorneysfeesisnot
to enrich the complainant but to compensate him for actual injury
ToSunaces... ANSWER TO COMPLAINANTS POSITION PAPER,Divinafileda2pagereply,[8]
suffered.Complainantdidnotsufferinjury,hence,doesnotdeservetobe
compensatedforwhateverkindofdamages. without,however,refutingSunacesdisclaimerofknowledgeoftheextensionofhercontract

and without saying anything about the Release, Waiver and Quitclaim and Affidavit of
Hence,thecomplainanthas NOcauseofactionagainstrespondentSUNACEfor
monetary claims, considering that she has been totally paid of all the Desistance.
monetary benefits due her under her Employment Contract to her full
satisfaction.

6. Furthermore, the tax deducted from her salary is in
compliancewiththeTaiwaneselaw,whichrespondentSUNACEhasno
TheLaborArbiter,rejectedSunacesclaimthattheextensionofDivinascontractfortwomore
controlandcomplainanthastoobeyandthisHonorableOfficehasno
authority/jurisdictiontointervenebecausethepowertotaxisasovereign yearswaswithoutitsknowledgeandconsentinthiswise:
powerwhichtheTaiwaneseGovernmentissupremeinitsownterritory.
The sovereign power of taxation of a state is recognized under
internationallawandamongsovereignstates.

WerejectSunacessubmissionthatitshouldnotbe
heldresponsiblefortheamountwithheldbecausehercontract
was extended for 2 more years without its knowledge and

consent because as
Annex B[9]
shows, Sunace and Edmund
Wanghavenotstoppedcommunicatingwitheachotherandyet
thematterofthecontractsextensionand Sunacesallegednon
consenttheretohasnotbeencategoricallyestablished.

WhatSunaceshouldhavedonewastowritetoPOEA
7.ThatrespondentSUNACErespectfullyreservestherighttofilesupplemental abouttheextensionanditsobjectionthereto,copyfurnishedthe
VerifiedAnswerand/orPositionPapertosubstantiateitsprayerforthe complainantherself,herforeignemployer,HangRuiXiongand
dismissaloftheabovecaseagainstthehereinrespondent.ANDBYWAY theTaiwanesebroker,EdmundWang.
OF
And because it did not, it is presumed to have
consentedtotheextensionandshouldbeliableforanythingthat
resultedthereform(sic).[10](Underscoringsupplied)
xxxx(Emphasisandunderscoringsupplied)

Reacting to Divinas Position Paper, Sunace filed on April 25, 2000 an . . . ANSWER TO
COMPLAINANTS POSITION PAPER[7]allegingthatDivinas2yearextensionofhercontractwas

withoutitsknowledgeandconsent,hence,ithadnoliabilityattachingtoanyclaimarising
TheLaborArbiterrejectedtooSunacesargumentthatitisnotliableonaccountofDivinas
executionofaWaiverandQuitclaimandanAffidavitofDesistance.ObservedtheLabor

Arbiter:
OnappealofSunace,theNLRC,byResolutionofApril30,2002,[14]affirmedthe
LaborArbitersdecision.

Shouldthepartiesarriveatanyagreementastothewholeorany
partofthedispute,thesameshallbereducedtowritingandsignedbythe
partiesandtheirrespectivecounsel(sic),ifany,beforetheLaborArbiter.

Viapetitionforcertiorari,[15] SunaceelevatedthecasetotheCourtofAppeals
The settlement shall be approved by the Labor Arbiter after
beingsatisfiedthatitwasvoluntarilyenteredintobythepartiesandafter whichdismisseditoutrightbyResolutionofNovember12,2002,[16] thefulltextofwhich
havingexplainedtothemthetermsandconsequencesthereof.
reads:

Acompromiseagreemententeredintobythepartiesnotinthe
presenceoftheLaborArbiterbeforewhomthecaseispendingshallbe
approved by him, if after confronting the parties, particularly the
complainants,heissatisfiedthattheyunderstandthetermsandconditions
ofthesettlementandthatitwasenteredintofreelyvoluntarily(sic) by Thepetitionforcertiorarifacesoutrightdismissal.
themandtheagreementisnotcontrarytolaw,morals,andpublicpolicy.

Andbecausenoconsiderationisindicatedinthedocuments,we Thepetitionfailedtoallegefactsconstitutiveofgraveabuseof
strikethemdownascontrarytolaw,morals,andpublicpolicy.[11] discretion on the part of the public respondent amounting to lack of
jurisdiction when the NLRC affirmed the Labor Arbiters finding that
petitionerSunaceInternationalManagementServicesimpliedlyconsented
to the extension of the contract of private respondent Divina A.
Montehermozo. It is undisputed that petitioner was continually
communicatingwithprivaterespondentsforeignemployer(sic).Asagent
of the foreign principal, petitioner cannot profess ignorance of such
HeaccordinglydecidedinfavorofDivina,bydecisionofOctober9,2000,[12]thedispositive extensionasobviously,theactoftheprincipalextendingcomplainant
portionofwhichreads: (sic) employment contract necessarily bound it. Grave abuse of
discretionisnotpresentinthecaseatbar.

ACCORDINGLY, the petition is hereby DENIED DUE
COURSEandDISMISSED.[17]
Wherefore,judgmentisherebyrenderedorderingrespondents
SUNACE INTERNATIONAL SERVICES and its owner ADELAIDA SOORDERED.
PERGE, both in their personal capacities and as agent of Hang Rui
Xiong/EdmundWang tojointlyandseverallypaycomplainantDIVINA (Emphasisonwordsincapitallettersintheoriginal;emphasis
A.MONTEHERMOZOthesumofNT91,950.00initspesoequivalentat onwordsinsmalllettersandunderscoringsupplied)
the date of payment, as refund for the amounts which she is hereby
adjudgedentitledtoasearlierdiscussedplus10%thereofasattorneysfees
since compelled to litigate, complainant had to engage the services of
counsel.

SO ORDERED.[13] (Underescoring
supplied)
ItsMotionforReconsiderationhavingbeendeniedbytheappellatecourtbyResolutionof
January14,2004,[18]Sunacefiledthepresentpetitionforreviewoncertiorari.
TheCourtofAppealsaffirmedtheLaborArbiterandNLRCsfindingthatSunace
knewofandimpliedlyconsentedtotheextensionofDivinas2yearcontract.Itwentonto ThemessagedoesnotprovideevidencethatSunacewasprivytothenewcontractexecuted
statethatItisundisputedthat[Sunace]wascontinuallycommunicatingwith[Divinas]foreign
employer.Itthusconcludedthat[a]sagentoftheforeignprincipal,petitionercannotprofess
ignoranceofsuchextensionasobviously,theactoftheprincipalextendingcomplainant(sic)
employmentcontractnecessarilyboundit.
ContrarytotheCourtofAppealsfinding,theallegedcontinuouscommunication
waswiththeTaiwanesebrokerWang,notwiththeforeignemployerXiong.
The February21,2000 telefaxmessagefromtheTaiwanesebrokertoSunace,the
onlybasisofafindingofcontinuouscommunication,readsverbatim:
xxxx
Regarding to Divina, she did not say
anything about her saving in police station. As we
contactwithheremployer,shetookbackhersaving
alreadylastyears.Andtheydidnotdeductanymoney
fromhersalary.Orshewillcallbackheremployerto
checkitagain.Ifheremployersaidyes!wewillgetit
backforher.
Thankyouandbestregards.
(sgd.)
EdmundWang
President[19]
ThefindingoftheCourtofAppealssolelyonthebasisoftheabovequotedtelefax
message,thatSunacecontinuallycommunicatedwiththeforeignprincipal(sic)andtherefore
wasawareofandhadconsentedtotheexecutionoftheextensionofthecontractismisplaced.
after the expiration on February 1, 1998 of the original contract. That Sunace and the
Taiwanese broker communicated regarding Divinas allegedly withheld savings does not
necessarilymeanthatSunaceratifiedtheextensionofthecontract.AsSunacepointsoutinits
Reply[20]filedbeforetheCourtofAppeals,
Ascanbeseenfromthatlettercommunication,itwas
just an information given to the petitioner that the private
respondent had t[aken] already her savings from her foreign
employer and that no deduction was made on her salary. It
containsnothingabouttheextensionorthepetitionersconsent
thereto.[21]
Parenthetically,sincethetelefaxmessageisdatedFebruary21,2000,itissafeto
assumethatitwassenttoenlightenSunacewhohadbeendirected,bySummonsissuedon
February15,2000,toappearonFebruary28,2000foramandatoryconferencefollowing
DivinasfilingofthecomplaintonFebruary14,2000.
RespectingtheCourtofAppealsfollowingdictum:
As agent of its foreign principal, [Sunace] cannot profess
ignorance of such an extension as obviously, the act of its principal
extending[Divinas]employmentcontractnecessarilyboundit,[22]
ittooisamisapplication,amisapplicationofthetheoryofimputedknowledge.

Inlightoftheforegoingdiscussions,considerationofthevalidityoftheWaiverand
AffidavitofDesistancewhichDivinaexecutedinfavorofSunaceisrenderedunnecessary.
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the
principal,employerXiong,nottheotherwayaround.[23]Theknowledgeoftheprincipal
foreignemployercannot,therefore,beimputedtoitsagentSunace.
WHEREFORE, the petition is GRANTED. The challenged resolutions of the
CourtofAppealsarehereby REVERSED and SETASIDE.Thecomplaintofrespondent
DivinaA.MontehermozoagainstpetitionerisDISMISSED.
TherebeingnosubstantialproofthatSunaceknewofandconsentedtobebound
underthe2yearemploymentcontractextension,itcannotbesaidtobeprivythereto.Assuch,
itanditsownercannotbeheldsolidarilyliableforanyofDivinasclaimsarisingfromthe2
yearemploymentextension.AstheNewCivilCodeprovides, SOORDERED.

Contracts take effect only between the parties, their

assigns, and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by
theirnature,orbystipulationorbyprovisionoflaw.[24]

Furthermore,asSunacecorrectlypointsout,therewasanimpliedrevocationofits
agency relationship with its foreign principal when, after the termination of the original
employmentcontract,theforeignprincipaldirectlynegotiatedwithDivinaandenteredintoa
newandseparateemploymentcontractinTaiwan.Article1924oftheNewCivilCodereading

The agency is revoked if the principal directly manages the

businessentrustedtotheagent,dealingdirectlywiththirdpersons.

thusapplies.
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