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DOUGLASMILLARESandROGELIOLAGDA,petitioners,vs.

NATIONALLABOR TheCourtresolvedtosetthecasefororalargumentstoenablethepartiestopresenttheir
RELATIONSCOMMISSION,TRANSGLOBALMARITIMEAGENCY,INC.andESSO sides.
INTERNATIONALSHIPPINGCO.,LTD.respondents.(SEAFARERSARE
CONTRACTUALEMPLOYEES;NOTREGULAR) Torecall,thefactsofthecaseare,asfollows:

RESOLUTION PetitionerDouglasMillareswasemployedbyprivaterespondentESSOInternationalShipping
CompanyLTD.(EssoInternational,forbrevity)throughitslocalmanningagency,private
KAPUNAN,J.: respondentTransGlobalMaritimeAgency,Inc.(TransGlobal,forbrevity)onNovember16,
1968asamachinist.In1975,hewaspromotedasChiefEngineerwhichpositionheoccupied
OnMarch14,2000,theCourtpromulgateditsdecisionintheaboveentitledcase,rulingin untilheoptedtoretirein1989.HewasthenreceivingamonthlysalaryofUS$1,939.00.
favorofthepetitioners.Thedispositiveportionreads,asfollows:
OnJune13,1989,petitionerMillaresappliedforaleaveofabsencefortheperiodJuly9to
WHEREFORE,premisesconsidered,theassailedDecision,datedJune1,1993,ofthe August7,1989.InaletterdatedJune14,1989,MichaelJ.Estaniel,Presidentofprivate
respondentTransGlobal,approvedtherequestforleaveofabsence.OnJune21,1989,
NationalLaborRelationsCommissionisherebyREVERSEDandSETASIDEandanew
petitionerMillareswroteG.S.Hanly,OperationsManagerofExxonInternationalCo.,(now
judgmentisherebyrenderedorderingtheprivaterespondentsto:
EssoInternational)throughMichaelJ.Estaniel,informinghimofhisintentiontoavailofthe
optionalretirementplanundertheConsecutiveEnlistmentIncentivePlan(CEIP)considering
(1) ReinstatepetitionersMillaresandLagdatotheirformerpositionswithoutlossof thathehadalreadyrenderedmorethantwenty(20)yearsofcontinuousservice.OnJuly13,
seniorityrights,andtopayfullbackwagescomputedfromthetimeofillegaldismissaltothe 1989respondentEssoInternational,throughW.J.Vrints,EmployeeRelationsManager,
timeofactualreinstatement; deniedpetitionerMillaresrequestforoptionalretirementonthefollowinggrounds,towit:(1)
hewasemployedonacontractualbasis;(2)hiscontractofenlistment(COE)didnotprovide
(2) Alternatively,ifreinstatementisnotpossible,paypetitionersMillaresandLagda forretirementbeforetheageofsixty(60)years;and(3)hedidnotcomplywiththe
separationpayequivalenttoonemonthssalaryforeveryyearofservice;and, requirementforclaimingbenefitsundertheCEIP,i.e.,tosubmitawrittenadvicetothe
companyofhisintentiontoterminatehisemploymentwithinthirty(30)daysfromhislast
(3) JointlyandseverallypaypetitionersOneHundredPercent(100%)oftheirtotal disembarkationdate.
creditedcontributionsasprovidedundertheConsecutiveEnlistmentIncentivePlan.
OnAugust9,1989,petitionerMillaresrequestedforanextensionofhisleaveofabsencefrom
SOORDERED.i[1] August9to24,1989.OnAugust19,1989,RoyC.Palomar,CrewingManager,ShipGroup
A,Transglobal,wrotepetitionerMillaresadvisinghimthatrespondentEssoInternationalhas
correctedthedeficiencyinitsmanpowerrequirementspecificallyintheChiefEngineerrank
Amotionforreconsiderationwasconsequentlyfiledii[2]bytheprivaterespondentstowhich bypromotingaFirstAssistantEngineertothispositionasaresultof(his)previousleaveof
petitionersfiledanOppositionthereto.iii[3] absencewhichexpiredlastAugust8,1989.Theadjustmentinsaidrankwasrequiredinorder
tomeetmanpowerschedulesasaresultof(his)inability.
InaMinuteResolutiondatedJune28,2000,theCourtresolvedtodenythemotionfor
reconsiderationwithfinality.iv[4] OnSeptember26,1989,respondentEssoInternational,throughH.Regenboog,Personnel
Administrator,advisedpetitionerMillaresthatinviewofhisabsencewithoutleave,whichis
Subsequently,theFilipinoAssociationforMarinersEmployment,Inc.(FAME)filedaMotion equivalenttoabandonmentofhisposition,hehadbeendroppedfromtherosterofcrew
forLeavetoInterveneandtoAdmitaMotionforReconsiderationinIntervention. memberseffectiveSeptember1,1989.

Privaterespondents,meanwhile,alsofiledaMotionforLeavetoFileaSecondMotionfor Ontheotherhand,petitionerLagdawasemployedbyprivaterespondentEssoInternationalas
Reconsiderationofourdecision. wiper/oilerinJune1969.HewaspromotedasChiefEngineerin1980,apositionhecontinued
tooccupyuntilhislastCOEexpiredonApril10,1989.Hewasthenreceivingamonthly
Inbothmotions,theprivaterespondentsandFAMErespectivelyprayinthemainthatthe salaryofUS$1,939.00.
CourtreconsideritsrulingthatFilipinoseafarersareconsideredregularemployeeswithinthe
contextofArticle280oftheLaborCode.Theyclaimthatthedecisionmayestablisha OnMay16,1989,petitionerLagdaappliedforaleaveofabsencefromJune19,1989upto
precedentthatwilladverselyaffectthemaritimeindustry. thewholemonthofAugust1989.OnJune14,1989,respondentTransGlobalsPresident,
MichaelJ.Estaniel,approvedpetitionerLagdasleaveofabsencefromJune22,1989toJuly I. AREPETITIONERSREGULARORCONTRACTUALEMPLOYEESWHOSE
20,1989andadvisedhimtoreportforreassignmentonJuly21,1989. EMPLOYMENTSARETERMINATEDEVERYTIMETHEIRCONTRACTSOF
EMPLOYMENTEXPIRE?
OnJune26,1989,petitionerLagdawrotealettertoG.S.Stanley,OperationsManagerof
respondentEssoInternational,throughrespondentTransGlobalsPresidentMichaelJ. II. ASSUMINGTHATPETITIONERSAREREGULAREMPLOYEES,WERE
Estaniel,informinghimofhisintentiontoavailoftheoptionalearlyretirementplaninview THEYDISMISSEDWITHOUTJUSTCAUSESOASTOBEENTITLEDTO
ofhistwenty(20)yearscontinuousserviceinthecomplaint. REINSTATEMENTANDBACKWAGES,INCLUDINGPAYMENTOF100%OFTHEIR
TOTALCREDITEDCONTRIBUTIONSTOTHECONSECUTIVEENLISTMENT
OnJuly13,1989,respondentTransglobaldeniedpetitionerLagdasrequestforavailmentof INCENTIVEPLAN(CEIP)?
theoptionalearlyretirementschemeonthesamegroundsuponwhichpetitionerMillares
requestwasdenied. III. DOESTHEPROVISIONOFTHEPOEASTANDARDCONTRACTFOR
SEAFARERSONBOARDFOREIGNVESSELS(SEC.C.,DURATIONOFCONTRACT)
OnAugust3,1989,herequestedforanextensionofhisleaveofabsenceuptoAugust26, PRECLUDETHEATTAINMENTBYSEAMENOFTHESTATUSOFREGULAR
1989andthesamewasapproved.However,onSeptember27,1989,respondentEsso EMPLOYEES?
International,throughH.Regenboog,PersonnelAdministrator,advisedpetitionerLagdathat
inviewofhisunavailabilityforcontractualseaservice,hehadbeendroppedfromtheroster IV. DOESTHEDECISIONOFTHECOURTING.R.NO.110524CONTRAVENE
ofcrewmemberseffectiveSeptember1,1989. INTERNATIONALMARITIMELAW,ALLEGEDLYPARTOFTHELAWOFTHE
LANDUNDERSECTION2,ARTICLEIIOFTHECONSTITUTION?
OnOctober5,1989,petitionersMillaresandLagdafiledacomplaintaffidavit,docketedas
POEA(M)89109671,forillegaldismissalandnonpaymentofemployeebenefitsagainst V. DOESTHESAMEDECISIONOFTHECOURTCONSTITUTEADEPARTURE
privaterespondentsEssoInternationalandTransGlobal,beforethePOEA.v[5] FROMITSRULINGINCOYOCAVS.NLRC(G.R.NO.113658,March31,1995)?viii[8]

OnJuly17,1991,thePOEArenderedadecisiondismissingthecomplaintforlackofmerit. InanswertotheprivaterespondentsSecondMotionforReconsiderationandtoFAMEs
MotionforReconsiderationinIntervention,petitionersmaintainthattheyareregular
OnappealtotheNLRC,thedecisionofthePOEAwasaffirmedonJune1,1993withthe employeesasfoundbytheCourtintheMarch14,2000Decision.Consideringthatpetitioners
followingdisquisition: performedactivitieswhichareusuallynecessaryordesirableintheusualbusinessortradeof
privaterespondents,theyshouldbeconsideredasregularemployeespursuanttoArticle280,
Par.1oftheLaborCode.ix[9]Otherjustificationsforthisrulingincludethefactthat
Thefirstissuemustbedecidedinthenegative.Complainantsappellants,asseamenand
petitionershaverenderedovertwenty(20)yearsofservice,asadmittedbytheprivate
overseascontractworkersarenotcoveredbythetermregularemploymentasdefinedunder
respondents;x[10]thattheywererecipientsofMeritPaywhichisanexpressacknowledgment
Article280oftheLaborCode.ThePOEA,whichistaskedwithprotectingtherightsofthe
bytheprivaterespondentsthatpetitionersareregularandnotjustcontractualemployees;xi[11]
Filipinoworkersforoverseasemploymenttofairandequitablerecruitmentandemployment
thatpetitionerswereregisteredundertheSocialSecuritySystem(SSS).
practicesandtoensuretheirwelfare,prescribesastandardemploymentcontractforseamenon
boardoceangoingvesselsforafixedperiodbutinnocasetoexceedtwelve(12)months(Part
1,Sec.C).ThisPOEApolicyappearstobeinconsonancewiththeinternationalmaritime ThepetitionersfurtherstatethatthecaseofCoyocav.NLRCxii[12]whichtheprivate
practice.Moreover,theSupremeCourtinBrentSchool,Inc.vs.Zamora,181SCRA702,had respondentsinvokeisnotapplicabletothecaseatbarasthefactualmilieuinthatcaseisnot
heldthatafixedtermisessentialandnaturalappurtenanceofoverseasemploymentcontracts thesame.Furthermore,privaterespondentsfearthatourjudicialpronouncementwillspellthe
towhichtheconceptofregularemploymentwithallthatitimpliesisnotapplicable,Article deathofthemanningindustryisfarfromreal.Instead,withthevaluablecontributionofthe
280oftheLaborCodenotwithstanding.Thereis,therefore,noreasontodisturbthePOEA manningindustrytooureconomy,theseseafarersaresupposedtobeconsideredasHeroesof
Administratorsfindingthatcomplainantsappellantswerehiredonacontractualbasisandfor theRepublicwhoserightsmustbeprotected.xiii[13]Finally,thefirstmotionfor
adefiniteperiod.Theiremploymentisthusgovernedbythecontractstheysigneachtimethey reconsiderationhasalreadybeendeniedwithfinalitybythisCourtanditisabouttimethatthe
arerehiredandisterminatedattheexpirationofthecontractperiod.vi[6] Courtshouldwritefinistothiscase.

Undaunted,thepetitionerselevatedtheircasetothisCourtvii[7]andsuccessfullyobtainedthe Theprivaterespondents,ontheotherhand,contendthat:(a)therulingholdingpetitionersas
favorableaction,whichisnowvehementlybeingassailed. regularemployeeswasnotinaccordwiththedecisioninCoyocav.NLRC,243SCRA190;
(b)Art.280isnotapplicableaswhatappliesisthePOEARulesandRegulationsGoverning
OverseasEmployment;(c)seafarersarenotregularemployeesbasedoninternational
AtthehearingonNovember15,2000,theCourtdefinedtheissuesforresolutioninthiscase,
maritimepractice;(d)graveconsequenceswouldresultonthefutureofseafarersandmanning
namely:
agenciesiftherulingisnotreconsidered;(e)therewasnodismissalcommitted;(f)a Significantly,theOfficeoftheSolicitorGeneral,inadeparturefromitsoriginalpositionin
dismissedseafarerisnotentitledtobackwagesandreinstatement,thatbeingnotallowed thiscase,hasnowtakentheoppositeview.Ithasexpresseditsapprehensioninsustainingour
underthePOEArulesandtheMigrantWorkersAct;and,(g)petitionersarenotentitledto decisionandhascalledforareexaminationofourruling.xvi[16]
claimthetotalamountcreditedtotheiraccountundertheCEIP.xiv[14]
Consideringalltheargumentspresentedbytheprivaterespondents,theIntervenorFAMEand
Meanwhile,IntervenorFilipinoAssociationofMarinersEmployment(FAME)aversthatour theOSG,weagreethatthereisaneedtoreconsiderourpositionwithrespecttothestatusof
decision,ifnotreconsidered,willhavenegativeconsequencesintheemploymentofFilipino seafarerswhichweconsideredasregularemployeesunderArticle280oftheLaborCode.We,
Seafarersoverseaswhich,inturn,mightleadtothedemiseofthemanningindustryinthe therefore,partiallygrantthesecondmotionforreconsideration.
Philippines.AsintervenorFAMEputsit:
InBrentSchoolInc.v.Zamora,xvii[17]theSupremeCourtstatedthatArticle280oftheLabor
xxx Codedoesnotapplytooverseasemployment.

7.1Foreignprincipalswillstartlookingforalternativesourcesforseafarerstomantheirships. InthelightoftheforegoingdescriptionofthedevelopmentoftheprovisionsoftheLabor
ASreportedbytheBIMCO/ISFstudy,thereisanexpectancythattherewillbeanincreasing Codebearingontermorfixedperiodemploymentthatthequestionposedintheopening
demandfor(andsupplyof)Chineseseafarers,withsomecommentatorssuggestingthatthis paragraphofthisopinionshouldnowbeaddressed.Isitthenthelegislativeintentiontooutlaw
maybealongtermalternativetothePhilippines.Moreover,thepoliticalchangeswithinthe stipulationsinemploymentcontractslayingdownadefiniteperiodtherefor?Aresuch
formerEasternBlochavemadenewsourcesofsupplyavailabletotheinternationalmarket. stipulationsinessencecontrarytopublicpolicyandshouldnotonthisaccountbeaccorded
Intervenorsrecentsurveyamongitsmembersshowsthat50Philippinemanningcompanies legitimacy?
hadalreadylostsome6,300slotstootherAsian,EastEuropeandChinesecompetitionforthe
lasttwoyears; Ontheotherhand,thereisthegradualandprogressiveeliminationofreferencestotermor
fixedperiodemploymentintheLaborCode,andthespecificstatementoftherulethat:
7.2ThePhilippinestandstoloseanannualforeignincomeestimatedatU.S.DOLLARSTWO
HUNDREDSEVENTYFOURMILLIONFIVEHUNDREDFORTYNINETHOUSAND RegularandCasualEmploymentTheprovisionsofwrittenagreementtothecontrary
(US$274,549,000.00)fromthemanningindustryandanotherUSDOLLARSFOUR notwithstandingandregardlessoftheoralagreementoftheparties,anemploymentshallbe
BILLIONSIXHUNDREDFIFTYMILLIONSEVENHUNDREDSIXTHOUSAND(US$ deemedtoberegularwheretheemployeehasbeenengagedtoperformactivitieswhichare
4,650,760,000.00)fromthelandbasedsectorifseafarersandequallysituatedlandbased usuallynecessaryordesirableintheusualbusinessortradeoftheemployerexceptwherethe
contractworkerswillbedeclaredregularemployees; employmenthasbeenfixedforaspecificprojectorundertakingthecompletionortermination
ofwhichhasbeendeterminedatthetimeoftheengagementoftheemployeeorwherethe
7.3Some195,917(asof1998)deployedoverseasFilipinoseafarerswillberenderedjobless workorservicetobeemployeeisseasonalinnatureandtheemploymentisforthedurationof
shouldwelosethemarket; theseason.

7.4Some360manningagencies(asof30June2000)whoseprincipalsmaynolongerbe Anemploymentshallbedeemedtobecasualifitisnotcoveredbytheprecedingparagraph;
doingbusinesswiththemwillclosetheirshops; providedthat,anyemployeewhohasrenderedatleastoneyearofservice,whethersuch
serviceiscontinuousorbroken,shallbeconsideredaregularemployeewithrespecttothe
7.5ThecontributiontotheOverseasWorkersWelfareAdministrationbythesector,whichis activityinwhichheisemployedandhisemploymentshallcontinuewhilesuchactuallyexists.
USD25.00percontractandtranslatestoUSDOLLARSFOURMILLION(US$
4,000,000.00)annually,willbedrasticallyreduced.Thisisnottomentiontheprocessingfees Thereis,ontheotherhand,theCivilCode,whichhasalwaysrecognized,andcontinuesto
paidtoPOEA,PhilippineRegulatoryCommission(PRC),DepartmentofForeignAffairs recognize,thevalidityandproprietyofcontractsandobligationswithafixedordefinite
(DFA)andMaritimeIndustryAuthority(MARINA)forthedocumentationoftheseseafarers; period,andimposesnorestraintsonthefreedomofthepartiestofixthedurationofacontract,
whateveritsobject,beitspecific,goodsorservices,exceptthegeneraladmonitionagainst
7.6Worst,some195,917(asof1998)familieswillsuffersociallyandeconomically,astheir stipulationscontrarytolaw,morals,goodcustoms,publicorderorpublicpolicy.Underthe
breadwinnerswillberenderedjobless;and Civilcode,therefore,andasageneralproposition,fixedtermemploymentcontractsarenot
limited,astheyareunderthepresentLaborCode,tothosebynaturalseasonalorforspecific
projectswithpredetermineddatesofcompletion;theyalsoincludethosetowhichtheparties
7.7Itwillconsiderablyslowdownthegovernmentsprogramofemploymentgeneration,
byfreechoicehaveassignedaspecificdateoftermination.
consideringthat,asexpectedforeignemployerswillnowavoidhiringFilipinooverseas
contractworkersastheywillbecomeregularemployeeswithallitsconcomitanteffects.xv[15]
Somefamiliarexamplesmaybecitedofemploymentcontractwhichmaybeneitherfor ofJusticeLaurelareparticularlyapt.Thus:theappellantswouldleadtoanabsurdityis
seasonalworknorforspecificprojects,buttowhichafixedtermisanessentialand anotherargumentforrejectingit.
naturalappurtenance:overseasemploymentcontracts,forone,towhich,whateverthe
natureoftheengagement,theconceptofregularemploymentwithallthatitimpliesdoes XxxWehave,here,thenacasewherethetrueintentofthelawisclearthatcallsforthe
notappearevertohavebeenapplied.Article280oftheLaborCodenotwithstandingalso applicationofthecardinalruleofstatutoryconstructionthatsuchintentofspiritmustprevail
appointmentstothepositionsofdean,assistantdean,collegesecretary,principal,andother overtheletterthereof,forwhateveriswithinthespiritofastatuteiswithinthestatute,since
administrativeofficesineducationalinstitutions,whicharebypracticeortraditionrotated adherencetotheletterwouldresultinabsurdity,injusticeandcontradictionsandwoulddefeat
amongthefacultymembers,andwherefixedtermsareanecessitywithoutwhichno theplainandvitalpurposeofthestatute.
reasonablerotationwouldbepossible.Similarly,despitetheprovisionsofArticle280,Policy
Instructions.No.8oftheMinisterofLaborimplicitlyrecognizethatcertaincompanyofficials Accordingly,andsincetheentirepurposebehindthedevelopmentoflegislation
maybeelectedforwhatwouldamounttofixperiods,attheexpirationofwhichtheywould culminatinginthepresentArticle280oftheLaborcodeclearlyappearstohavebeen,as
havetostanddown,inprovidingthattheseofficials,xxxmaylosetheirjobsaspresident, alreadyobserved,topreventcircumventionoftheemployeesrighttobesecureinhis
executivevicepresidentorvicepresident,etc.becausethestockholdersortheboardof
tenure,theclauseinsaidarticleindiscriminatelyandcompletelyrulingoutallwrittenor
directorsforonereasonoranotherdidnotreelectthem.
oralagreementsconflictingwiththeconceptofregularemploymentasdefinedtherein
shouldbeconstruedtorefertothesubstantiveevilthattheCodeitselfhassingledout;
Therecanofcoursebenoquarrelwiththepropositionthatwherefromthecircumstancesitis agreementsenteredintopreciselytocircumventsecurityoftenure.Itshouldhaveno
apparentthatperiodshavebeenimposedtoprecludeacquisitionoftenurialsecuritybythe
applicationtoinstanceswhereafixedperiodofemploymentwasagreeduponknowingly
employee,theyshouldbestruckdownordisregardascontrarytopublicpolicy,morals,etc.
andvoluntarilybytheparties,withoutanyforce,duressorimproperpressurebeing
Butwherenosuchintenttocircumventthelawisshown,orstatedotherwise,wherethe
reasonforthelawdoesnotexists,e.g.,whereitisindeedtheemployeehimselfwhoinsists broughttobearupontheemployeeandabsentanyothercircumstancesvitiatinghis
uponaperiodorwherethenatureoftheengagementissuchthat,withoutbeingseasonalor consent,orwhereitsatisfactorilyappearsthattheemployerandemployeedealtwith
foraspecificproject,adefinitedateofterminationisasinequanon,wouldanagreement eachotheronmoreorlessequaltermswithnomoraldominancewhateverbeing
fixingaperiodbeessentiallyevilorillicit,thereforeanathema?Wouldsuchanagreement exercisedbytheformeroverthelatter.Unlessthuslimitedinitspurview,thelawwouldbe
comewithinthescopeofArticle280whichadmittedlywasenactedtopreventthe madetoapplytopurposesotherthanthoseexplicitlystatedbyitsframers;itthusbecomes
circumventionoftherightoftheemployeetobesecuredinxxxhisemployment pointlessandarbitrary,unjustinitseffectsandapttoleadtoabsurdandunintended
consequences.
AsitisevidentfromevenonlythethreeexamplesalreadygiventhatArticle280oftheLabor
Code,underanarrowandliteralinterpretation,notonlyfailstoexhaustthegamutof Again,inPabloCoyocav.NLRC,xviii[18]theCourtalsoheldthataseafarerisnotaregular
employmentcontractstowhichthelackofafixedperiodwouldbeananomaly,butwould employeeandisnotentitledtoseparationpay.HisemploymentisgovernedbythePOEA
alsoappeartorestrict,withoutreasonabledistinctions,therightofanemployeetofreely StandardEmploymentContractforFilipinoSeamen.
stipulatewithinhisemployerthedurationofhisengagement,itlogicallyfollowsthatsucha
literalinterpretationshouldbeeschewedoravoided.Thelawmustbegivenareasonable XXX. Inthisconnection,itisimportanttonotethatneitherdoesthePOEAstandard
interpretation,toprecludeabsurdityinitsapplication.Outlawingthewholeconceptofterm employmentcontractforFilipinoseamenprovideforsuchbenefits.
employmentandsubvertingtoboottheprincipleoffreedomofcontracttoremedytheevilof
employersusingitasameanstopreventtheiremployeesfromobtainingsecurityoftenureis
AsaFilipinoseaman,petitionerisgovernedbytheRulesandRegulationsGoverning
likecuttingoffthenosetospitethefaceor,morerelevantly,curingaheadachebyloppingof
thehead. OverseasEmploymentandthesaidRulesdonotprovideforseparationortermination
pay.Whatisembodiedinpetitionerscontractisthepaymentofcompensationarisingfrom
permanentpartialdisabilityduringtheperiodofemployment.Wefindthatprivaterespondent
Itisasalutaryprincipleinstatutoryconstructionthatthereexistsavalidpresumptionthat
compliedwiththetermsofcontractwhenitpaidpetitionerP42,315.00which,inouropinion,
undesirableconsequenceswereneverintendedbyalegislativemeasure,andthata
isareasonableamount,ascompensationforhisillness.
constructionofwhichthestatuteisfairlysusceptibleisfavored,whichwillavoidall
objectionable,mischievous,indefensible,wrongful,evil,andinjuriousconsequences.
Lastly,petitionerclaimsthatheeventuallybecamearegularemployeeofprivaterespondent
andthusfallswithinthepurviewofArticles284and95oftheLaborCode.Insupportofthis
Nothingisbettersettledthanthatcourtsarenottogivewordsameaningwhichwouldleadto
contention,petitionercitesthecaseofWorthShippingService,Inc.,etal.v.NLRC,etal.,
absurdorunreasonableconsequences.ThatisaprinciplethatgoesbacktoInreAllendecided
whereinweheldthatthecrewmembersoftheshippingcompanyhadattainedregularstatus
onOctober27,1902,whereitwasheldthataliteralinterpretationistoberejectedifitwould
andthus,wereentitledtoseparationpay.However,thefactsofsaidcasedifferfromthe
beunjustorleadtoabsurdresults.Thatisastrongargumentagainstitsadoption.Thewords
present.InWorth,weheldthattheprincipalandagenthadoperationalcontroland
managementovertheMVOrientCarrierandthus,weretheactualemployersoftheircrew years).Bysuchcircumstancetheyclaimtohaveacquiredregularstatuswithalltherightsand
members. benefitsappurtenanttoit.

Fromtheforegoingcases,itisclearthatseafarersareconsideredcontractualemployees.They Suchcontentionisuntenable.Undeniably,thiscircumstanceofcontinuousrehiringwas
cannotbeconsideredasregularemployeesunderArticle280oftheLaborCode.Their dictatedbypracticalconsiderationsthatexperiencedcrewmembersaremorepreferred.
employmentisgovernedbythecontractstheysigneverytimetheyarerehiredandtheir Petitionerswereonlygivenpriorityorpreferencebecauseoftheirexperienceand
employmentisterminatedwhenthecontractexpires.Theiremploymentiscontractuallyfixed qualificationsbutthisdoesnotdetractthefactthathereinpetitionersarecontractual
foracertainperiodoftime.TheyfallundertheexceptionofArticle280whoseemployment employees.Theycannotbeconsideredregularemployees.Wequotewithfavorthe
hasbeenfixedforaspecificprojectorundertakingthecompletionorterminationofwhichhas explanationoftheNLRCinthiswise:
beendeterminedatthetimeofengagementoftheemployeeorwheretheworkorservicesto
beperformedisseasonalinnatureandtheemploymentisforthedurationoftheseason.xix[19] XxxThereferencetopermanentandprobationarymastersandemployeesinthesepapersisa
WeneednotdepartfromtherulingsoftheCourtinthetwoaforementionedcaseswhich misnomeranddoesnotalterthefactthatthecontractsforenlistmentbetweencomplainants
indeedconstitutestaredecisiswithrespecttotheemploymentstatusofseafarers. appellantsandrespondentappelleeEssoInternationalwereforadefiniteperiodsoftime,
rangingfrom8to12months.Althoughtheuseofthetermspermanentandprobationaryis
Petitionersinsistthattheyshouldbeconsideredregularemployees,sincetheyhaverendered unfortunate,whatisreallymeantiseligibleforrehire.Thisistheonlylogicalconclusion
serviceswhichareusuallynecessaryanddesirabletothebusinessoftheiremployer,andthat possiblebecausethepartiescannotandshouldnotviolatePOEAsrequirementthatacontract
theyhaverenderedmorethantwenty(20)yearsofservice.Whilethismaybetrue,theBrent ofenlistmentshallbeforalimitedperiodonly;notexceedingtwelve(12)months.xxiii[23]
casehas,however,heldthattherearecertainformsofemploymentwhichalsorequirethe
performanceofusualanddesirablefunctionsandwhichexceedoneyearbutdonot Fromalltheforegoing,weherebystatethatpetitionersarenotconsideredregularor
necessarilyattainregularemploymentstatusunderArticle280.xx[20]Overseasworkers permanentemployeesunderArticle280oftheLaborCode.Petitionersemploymenthave
includingseafarersfallunderthistypeofemploymentwhicharegovernedbythemutual automaticallyceasedupontheexpirationoftheircontractsofenlistment(COE).Sincethere
agreementsoftheparties. wasnodismissaltospeakof,itfollowsthatpetitionersarenotentitledtoreinstatementor
paymentofseparationpayorbackwages,asprovidedbylaw.
InthisjurisdictionandasclearlystatedintheCoyocacase,Filipinoseamenaregovernedby
theRulesandRegulationsofthePOEA.TheStandardEmploymentContractgoverningthe WithrespecttothebenefitsundertheConsecutiveEnlistmentIncentivePlan(CEIP),wehold
employmentofAllFilipinoseamenonBoardOceanGoingVesselsofthePOEA,particularly thatthepetitionersarestillentitledtoreceive100%ofthetotalamountcreditedtohimunder
inPartI,Sec.Cspecificallyprovidesthatthecontractofseamenshallbeforafixedperiod. theCEIP.Consideringthatwehavedeclaredthatpetitionersarecontractualemployees,their
Andinnocaseshouldthecontractofseamenbelongerthan12months.Itreads: compensationandbenefitsarecoveredbythecontractstheysignedandtheCEIPispartand
parcelofthecontract.
SectionC.DurationofContract
TheCEIPwasformulatedtoenticeseamentostaylonginthecompany.Asthenameimplies,
Theperiodofemploymentshallbeforafixedperiodbutinnocasetoexceed12monthsand theprogramservesasanincentivefortheemployeestorenewtheircontractswiththesame
shallbestatedintheCrewContract.AnyextensionoftheContractperiodshallbesubjectto companyforaslongastheirserviceswereneeded.Forthosewhoremainedloyaltothem,
themutualconsentoftheparties. theyweredulyrewardedwiththisadditionalremunerationundertheCEIP,ifeligible.While
thisisanactofbenevolenceonthepartoftheemployer,itcannot,however,bedeniedthat
Moreover,itisanacceptedmaritimeindustrypracticethatemploymentofseafarersarefora thisispartofthebenefitsaccordedtotheemployeesforservicesrendered.Suchrighttothe
fixedperiodonly.Constrainedbythenatureoftheiremploymentwhichisquitepeculiarand benefitsisvesteduponthemupontheireligibilitytotheprogram.
uniqueinitself,itisforthemutualinterestofboththeseafarerandtheemployerwhythe
employmentstatusmustbecontractualonlyorforacertainperiodoftime.Seafarersspend TheCEIPprovidesthatanemployeebecomescoveredunderthePlanwhenhecompletes
mostoftheirtimeatseaandunderstandably,theycannotstayforalongandanindefinite thirtysix(36)monthsoranequivalentofthree(3)yearsofcreditedservicewithrespectto
periodoftimeatsea.xxi[21]Limitedaccesstoshoresocietyduringtheemploymentwillhave employmentafterJune30,1973.xxiv[24]Uponeligibility,anamountshallbecreditedtohis
anadverseimpactontheseafarer.Thenational,culturalandlingualdiversityamongthecrew accountasitprovides,amongothers:
duringtheCOEisarealitythatnecessitatesthelimitationofitsperiod.xxii[22]
III. DistributionofBenefits
Petitionersmakemuchofthefactthattheyhavebeencontinuallyrehiredortheircontracts
renewedbeforethecontractsexpired(whichhasadmittedlybeengoingonfortwenty(20) A. Retirement,DeathandDisability
Whentheemploymentofanemployeeterminatesbecauseofhisretirement, 60 100%
deathorpermanentandtotaldisability,apercentageofthetotalamount
creditedtohisaccountwillbedistributedtohim(orhiseligiblesurvivor(s) Whentheemploymentofanemployeeisterminatedduetohispoor
inaccordancewiththefollowing: performance,misconduct,unavailability,etc.,orifemployeeisnotoffered
reengagementforsimilarreasons,nodistributionofanyportionof
ReasonforTermination


Percentage employeesaccountwilleverbemadetohim(orhiseligiblesurvivor[s]).

a)Attainmentofmandatoryretire 100% ItmustberecalledthatonJune21,1989,Millareswrotealettertohisemployerinforminghis


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

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

B. VoluntaryTermination Theabsenceofpetitionerswasjustifiedbythefactthattheysecuredtheapprovalofprivate
respondentstotakealeaveofabsenceaftertheterminationoftheirlastcontractsof
Whenanemployeevoluntaryterminateshisemploymentwithatleast36monthsofcredited enlistment.Subsequently,petitionerssoughtforextensionsoftheirrespectiveleavesof
servicewithoutanymisconductonhispart,18percentofthetotalamountcreditedtohis absence.Grantingarguendothattheirsubsequentrequestsforextensionswerenotapproved,it
account,plusanadditionalofonepercentforeachmonth(uptoamaximumof164monthsof cannotbesaidthatpetitionerswereunavailableorhadabandonedtheirworkwhentheyfailed
creditedserviceinexcessof36,willbedistributedtohimprovided(1)theemployeehas toreportbackforassignmentastheywerestillquestioningthedenialofprivaterespondents
completedhislastContractofEnlistmentand(2)employeeadvisesthecompanyinwriting, oftheirdesiretoavailoftheoptionalearlyretirementpolicy,whichtheybelievedingood
within30days,fromhislastdisembarkationdate,ofhisintentiontoterminatehis faithtoexist.xxvi[26]
employment.(ToadvisetheCompanyinwritingmeansthattheoriginallettermustbesentto
theCompanysagentinthePhilippines,acopysenttotheCompanyinNewYork).
Neithercanweconsiderpetitionersguiltyofpoorperformanceormisconductsincetheywere
recipientsofMeritPayAwardsfortheirexemplaryperformancesinthecompany.
xxx
AnentthelettersdatedJune21,1989(forMillares)andJune26,1989(forLagda)which
C. OtherTerminations privaterespondentconsideredasbelatedwrittennoticesoftermination,wefindsuchassertion
specious.Notwithstanding,wecouldconvenientlyconsiderthepetitionerseligibleunder
WhentheemploymentofanemployeeisterminatedbytheCompanyfora SectionIIIBoftheCEIP(VoluntaryTermination),butthiswould,however,awardthemonly
reasonotherthanoneinAandBabove,withoutanymisconductonhis ameaslyamountofbenefitswhichtoourmind,thepetitionersdonotrightfullydeserveunder
part,apercentageofthetotalamountcreditedtohisaccountwillbe thefactsandcircumstancesofthecase.AstheCEIPprovides:
distributedtohiminaccordancewiththefollowing.
III.DistributionofBenefits
CreditedService Percentage
xxx
36months 50%
48 E.DistributionofAccounts
75%
Whenanemployeeterminatesunderconditionsthatwouldqualifyforadistributionofmore On17November1995privaterespondentCajerasfiledacomplaintforillegaldismissal
thanonespecifiedinA,BorCabove,thelargestsingleamount,only,willbedistributed. againstpetitionerswiththeNLRCNationalCapitalRegionArbitrationBranchallegingthathe
wasdismissedillegally,denyingthathisrepatriationwasbymutualconsent,andaskingfor
SincepetitionersterminationofemploymentundertheCEIPdonotfallunderSectionIIIA hisunpaidwages,overtimepay,damages,andattorneysfees.xxvii[1]Cajerasallegedthathe
(Retirement,DeathandDisability)orSectionIIIB(VoluntaryTermination),norcouldthey wasassignednotonlyasChiefCookStewardbutalsoasassistantcookandmessmanin
beconsideredunderthesecondparagraphofSectionIIIC,asearlierdiscussed;itfollowsthat additiontoperformingvariousinventoryandrequisitionjobs.Becauseofhisadditional
theirterminationfallsunderthefirstparagraphofSectionIIICforwhichtheyareentitledto assignmentshebegantofeelsickjustalittleoveramonthonthejobconstraininghimto
100%ofthetotalamountcreditedtotheiraccounts.Theprivaterespondentscannotnow requestformedicalattention.HewasrefusedatfirstbyCapt.KouvakasAlekos,masterofthe
renegeontheircommitmentundertheCEIPtorewarddeservingandloyalemployeesasthe MVPrigipos,whojustorderedhimtocontinueworking.Howeveradayaftertheshipsarrival
petitionersinthiscase. attheportofRotterdam,Holland,on26September1995Capt.Alekosrelentedandhadhim
examinedattheMedicalCenterforSeamen.However,theexaminingphysician,Dr.Wden
Hoed,neitherapprisedprivaterespondentaboutthediagnosisnorissuedtherequested
IntakingcognizanceofprivaterespondentsSecondMotionforReconsideration,theCourt
medicalcertificateallegedlybecausehehimselfwouldforwardtheresultstoprivate
herebysuspendstherulestomakethemconformabletolawandjusticeandtosubservean
respondentssuperiors.Uponreturningtothevessel,privaterespondentwasunceremoniously
overridingpublicinterest.
orderedtoprepareforimmediaterepatriationthefollowingdayashewassaidtobesuffering
fromadiseaseofunknownorigin.
INVIEWOFTHEFOREGOING,THECOURTResolvedtoPartiallyGRANTPrivate
RespondentsSecondMotionforReconsiderationandIntervenorFAMESMotionfor On28September1995hewashandedhisSeaman'sServiceRecordBookwiththefollowing
ReconsiderationinIntervention.TheDecisionoftheNationalLaborRelationsCommission entry:"CauseofdischargeMutualConsent."xxviii[2]Privaterespondentpromptlyobjectedto
datedJune1,1993isherebyREINSTATEDwithMODIFICATION.ThePrivate theentrybutwasnotabletodoanythingmoreashewasimmediatelyusheredtoawaiting
Respondents,TransGlobalMaritimeAgency,Inc.andEssoInternationalShippingCo.,Ltd. taxiwhichtransportedhimtotheAmsterdamAirportforthereturnflighttoManila.Afterhis
areherebyjointlyandseverallyORDEREDtopaypetitionersOneHundredPercent(100%) arrivalinManilaon29September1995CajerascomplainedtoMARSAMANbuttono
oftheirtotalcreditedcontributionsasprovidedundertheConsecutiveEnlistmentIncentive avail.xxix[3]
Plan(CEIP).
MARSAMANandDIAMANTIDES,ontheotherhand,deniedtheimputationofillegal
SOORDERED. dismissal.TheyallegedthatCajerasapproachedCapt.Alekoson26September1995and
informedthelatterthathecouldnotsleepatnightbecausehefeltsomethingcrawlingoverhis
MARSAMANMANNINGAGENCY,INC.andDIAMANTIDESMARITIME,INC., body.Furthermore,Cajerasreportedlydeclaredthathecouldnolongerperformhisdutiesand
petitioners,vs.NATIONALLABORRELATIONSCOMMISSIONandWILFREDOT. requestedforrepatriation.Thefollowingparagraphinthevessel'sDeckLogwasallegedly
CAJERAS,respondents. enteredbyCapt.Alekos,towit:

DECISION Cajerasapproachedmeandhetoldmethathecannotsleepatnightandthathefeels
somethingcrawlingonhisbodyandhedeclaredthathecannolongerperformhisdutiesand
BELLOSILLO,J.: hemustberepatriated.xxx[4]

MARSAMANMANNINGAGENCY,INC.(MARSAMAN)anditsforeignprincipal PrivaterespondentwasthensenttotheMedicalCenterforSeamenatRotterdamwherehe
DIAMANTIDESMARITIME,INC.(DIAMANTIDES)assailtheDecisionofpublic wasexaminedbyDr.WdenHoedwhosediagnosisappearedinaMedicalReportasparanoia
respondentNationalLaborRelationsCommissiondated16September1996aswellasits andothermentalproblems.xxxi[5]Consequently,uponDr.Hoedsrecommendation,Cajeras
Resolutiondated12November1996affirmingtheLaborArbiter'sdecisionfindingthem wasrepatriatedtothePhilippineson28September1995.
guiltyofillegaldismissalandorderingthemtopayrespondentWilfredoT.Cajerassalaries
correspondingtotheunexpiredportionofhisemploymentcontract,plusattorney'sfees. On29January1996LaborArbiterErnestoS.Dinopolresolvedthedisputeinfavorofprivate
respondentCajerasrulingthatthelatter'sdischargefromtheMVPrigiposallegedlybymutual
PrivaterespondentWilfredoT.CajeraswashiredbypetitionerMARSAMAN,thelocal consentwasnotprovedbyconvincingevidence.TheentrymadebyCapt.AlekosintheDeck
manningagentofpetitionerDIAMANTIDES,asChiefCookStewardontheMVPrigipos, Logwasdismissedasoflittleprobativevaluebecauseitwasamereunilateralactunsupported
ownedandoperatedbyDIAMANTIDES,foracontractperiodoften(10)monthswitha byanydocumentshowingmutualconsentofCapt.Alekos,asmasteroftheMVPrigipos,and
monthlysalaryofUS$600.00,evidencedbyacontractbetweenthepartiesdated15June CajerastotheprematureterminationoftheoverseasemploymentcontractasrequiredbySec.
1995.Cajerasstartedworkon8August1995butlessthantwo(2)monthslater,oron28 HoftheStandardEmploymentContractGoverningtheEmploymentofallFilipinoSeamen
September1995,hewasrepatriatedtothePhilippinesallegedlybymutualconsent. onBoardOceanGoingVessels.Dr.Hoedsdiagnosisthatprivaterespondentwassuffering
fromparanoiaandothermentalproblemswaslikewisedismissedasbeingoflittleevidentiary Clearly,undertheforegoing,theemploymentofaFilipinoseamanmaybeterminatedpriorto
valuebecauseitwasnotsupportedbyevidenceonhowtheparanoiawascontracted,inwhat theexpirationofthestipulatedperiodprovidedthatthemasterandtheseaman(a)mutually
stageitwas,andhowitaffectedrespondent'sfunctionsasChiefCookStewardwhich,onthe consenttheretoand(b)reducetheirconsentinwriting.
contrary,wasevenratedVeryGoodinrespondent'sServiceRecordBook.Thus,theLabor
Arbiterdisposedofthecaseasfollows: Intheinstantcase,petitionersdonotdenythefactthattheyhavefallenshortofthe
requirement.NodocumentexistswherebyCapt.Alekosandprivaterespondentreducedto
WHEREFORE,judgmentisherebyrendereddeclaringtherepatriationanddismissalof writingtheirallegedmutualconsenttotheterminationoftheiremploymentcontract.Instead,
complaintWilfredoT.CajerasasillegalandorderingrespondentsMarsamanManning petitionerspresentedthevessel'sDeckLogwhereinanentryunilaterallymadebyCapt.
Agency,Inc.andDiamantidesMaritime,Inc.tojointlyandseverallypaycomplainantthesum Alekospurportedtoshowthatprivaterespondenthimselfaskedforhisrepatriation.However,
ofUSD5,100.00oritspesoequivalentatthetimeofpaymentplusUSD510.00as10% theNLRCcorrectlydismisseditsevidentiaryvalue.Foronething,itisaunilateralactwhich
attorneysfeesitappearingthatcomplainanthadtoengagetheserviceofcounseltoprotecthis isvehementlydeniedbyprivaterespondent.Secondly,theentryinnowaysatisfiesthe
interestintheprosecutionofthiscase. requirementofabilateraldocumentationtoproveearlyterminationofanoverseas
employmentcontractbymutualconsentrequiredbytheStandardEmploymentContract.
Theclaimsfornonpaymentofwagesandovertimepayaredismissedforhavingbeen Hence,sincethelattersetstheminimumtermsandconditionsofemploymentforthe
withdrawn(Minutes,December18,1995).Theclaimsfordamagesarelikewisedismissedfor protectionofFilipinoseamensubjectonlytotheadoptionofbettertermsandconditionsover
lackofmerit,sincenoevidencewaspresentedtoshowthatbadfaithcharacterizedthe andabovetheminimumstandards,xl[14]theNLRCcouldnotbeaccusedofgraveabuseof
dismissal.xxxii[6] discretioninnotacceptinganythingless.

PetitionersappealedtotheNLRC.xxxiii[7]On16September1996theNLRCaffirmedthe Howeverpetitionerscontendthattheentryshouldbeconsideredprimafacieevidencethat
appealedfindingsandconclusionsoftheLaborArbiter.xxxiv[8]TheNLRCsubscribedtothe respondenthimselfrequestedhisrepatriationconformablywiththerulingsinHaverton
viewthatCajerasrepatriationbyallegedmutualconsentwasnotprovedbypetitioners, ShippingLtd.v.NLRCxli[15]andAbacastShippingandManagementAgency,Inc.v.NLRC.xlii
especiallyafternotingthatprivaterespondentdidnotactuallysignhisSeamansService [16]Indeed,Havertonsaysthatavesselslogbookisprimafacieevidenceofthefactsstated
RecordBooktosignifyhisassenttotherepatriationasallegedbypetitioners.Theentrymade thereinastheyareofficialentriesmadebyapersonintheperformanceofadutyrequiredby
byCapt.AlekosintheDeckLogwasnotconsideredreliableproofthatprivaterespondent law.However,thisjurisprudentialprincipledoesnotapplytowinthecaseforpetitioners.In
agreedtohisrepatriationbecausenoopportunitywasgiventhelattertocontesttheentry WallemMaritimeServices,Inc.v.NLRCxliii[17]theHavertonrulingwasnotgivenunqualified
whichwasagainsthisinterest.Similarly,theMedicalReportissuedbyDr.HoedofHolland applicationbecausethelogbookpresentedthereinwasameretypewrittencollationof
wasdismissedasbeingofdubiousvaluesinceitcontainedonlyasweepingstatementofthe excerptsfromwhatcouldbethelogbook.xliv[18]TheCourtreasonedthatsincethelogbook
supposedailmentofCajeraswithoutanyelaborationonthefactualbasisthereof. wastheonlypieceofevidencepresentedtoprovejustcausefortheterminationofrespondent
therein,thelogbookhadtobedulyidentifiedandauthenticatedlestaninjusticewouldresult
fromablindadoptionofitscontentswhichwerebutprimafacieevidenceoftheincidents
Petitioners'motionforreconsiderationwasdeniedbytheNLRCinitsResolutiondated12
statedtherein.
November1996.xxxv[9]Hence,thispetitioncontendingthattheNLRCcommittedgraveabuse
ofdiscretion:(a)innotaccordingfullfaithandcredittotheofficialentrybyCapt.Alekosin
thevesselsDeckLogconformablywiththerulingsinHavertonShippingLtd.v.NLRCxxxvi[10] Intheinstantcase,thedisputedentryintheDeckLogwasneitherauthenticatednorsupported
andWallemMaritimeServices,Inc.v.NLRC;xxxvii[11](b)innotappreciatingtheMedical bycredibleevidence.AlthoughpetitionersclaimthatCajerassignedhisSeamansService
ReportissuedbyDr.WdenHoedasconclusiveevidencethatrespondentCajeraswas RecordBooktosignifyhisconformitytotherepatriation,theNLRCfoundtheallegationtobe
sufferingfromparanoiaandothermentalproblems;(c)inaffirmingtheawardofattorneys actuallyuntruesincenosignatureofprivaterespondentappearedintheRecordBook.
feesdespitethefactthatCajeras'claimforexemplarydamageswasdeniedforlackofmerit;
and,(d)inorderingamonetaryawardbeyondthemaximumofthree(3)monthssalaryfor NeithercouldtheMedicalReportpreparedbyDr.Hoedbeconsideredcorroborativeand
everyyearofservicesetbyRA8042. conclusiveevidencethatprivaterespondentwassufferingfromparanoiaandothermental
problems,supposedlyjustcausesforhisrepatriation.Firstly,absolutelynoevidence,noteven
Wedenythepetition.IntheContractofEmploymentxxxviii[12]enteredintowithprivate anallegation,wasofferedtoenlightentheNLRCorthisCourtastoDr.Hoed'squalifications
respondent,petitionersconvenantedstrictandfaithfulcompliancewiththetermsand todiagnosementalillnesses.Itisamatterofjudicialnoticethattherearevarious
conditionsoftheStandardEmploymentContractapprovedbythePOEA/DOLExxxix[13]which specializationsinmedicalscienceandthatageneralpractitionerisnotcompetenttodiagnose
provides: anyandallkindsofillnessesanddiseases.Hence,thefindingsofdoctorswhoarenotproven
expertsarenotbindingonthisCourt.xlv[19]Secondly,theMedicalReportpreparedbyDr.
Hoedcontainedonlyageneralstatementthatprivaterespondentwassufferingfromparanoia
1.Theemploymentoftheseamanshallceaseuponexpirationofthecontractperiodindicated
andothermentalproblemswithoutprovidingthedetailsonhowthediagnosiswasarrivedat
intheCrewContractunlesstheMasterandtheSeaman,bymutualconsent,inwriting,agree
orinwhatstagetheillnesswas.IfDr.Hoedindeedcompetentlyexaminedprivaterespondent
toanearlyterminationxxxx(underscoringours).
thenhewouldhavebeenabletodiscussatlengththecircumstancesandprecedentsofhis monetaryawardtoprivaterespondent,i.e.,salariesforthree(3)monthsonlypursuanttothe
diagnosis.Petitionerscannotrelyonthepresumptionofregularityintheperformanceof lastportionofSec.10asopposedtothesalariesfor8.6monthsawardedbytheLaborArbiter
officialdutiestomaketheMedicalReportacceptablebecausethepresumptionappliesonlyto andaffirmedbytheNLRC.
publicofficersfromthehighesttothelowestintheserviceoftheGovernment,departments,
bureaus,offices,and/oritspoliticalsubdivisions,xlvi[20]whichDr.WdenHoedwasnotshown WeagreewithpetitionersthatSec.10,RA8042,appliesinthecaseofprivaterespondentand
tobe.Furthermore,neitherdidpetitionersprovethatprivaterespondentwasincompetentor toalloverseascontractworkersdismissedonorafteritseffectivityon15July1995inthe
continuouslyincapacitatedforthedutiesforwhichhewasemployedbyreasonofhisalleged samewaythatSec.34,liv[28]RA6715,lv[29]ismadeapplicabletolocallyemployedworkers
mentalstate.OnthecontraryhisabilityasChiefCookSteward,uptotheverymomentofhis dismissedonorafter21March1989.lvi[30]However,wecannotsubscribetotheviewthat
repatriation,wasratedVeryGoodinhisSeamansServiceRecordBookascorrectlyobserved privaterespondentisentitledtothree(3)monthssalaryonly.AplainreadingofSec.10
bypublicrespondent. clearlyrevealsthatthechoiceofwhichamounttoawardanillegallydismissedoverseas
contractworker,i.e.,whetherhissalariesfortheunexpiredportionofhisemploymentcontract
Consideringalltheforegoingwecannotascribegraveabuseofdiscretiononthepartofthe orthree(3)monthssalaryforeveryyearoftheunexpiredterm,whicheverisless,comesinto
NLRCinrulingthatpetitionersfailedtoprovejustcausefortheterminationofprivate playonlywhentheemploymentcontractconcernedhasatermofatleastone(1)yearormore.
respondent'soverseasemployment.Graveabuseofdiscretioniscommittedonlywhenthe Thisisevidentfromthewordsforeveryyearoftheunexpiredtermwhichfollowsthewords
judgmentisrenderedinacapricious,whimsical,arbitraryordespoticmanner,whichisnot salariesxxxforthreemonths.Tofollowpetitionersthinkingthatprivaterespondentis
trueinthepresentcase.xlvii[21] entitledtothree(3)monthssalaryonlysimplybecauseitisthelesseramountistocompletely
disregardandoverlooksomewordsusedinthestatutewhilegivingeffecttosome.Thisis
Withrespecttoattorneysfees,sufficeittosaythatinactionsforrecoveryofwagesorwhere contrarytothewellestablishedruleinlegalhermeneuticsthatininterpretingastatute,care
anemployeewasforcedtolitigateandthusincurredexpensestoprotecthisrightsand shouldbetakenthateverypartorwordthereofbegiveneffectlvii[31]sincethelawmaking
interests,amaximumawardoftenpercent(10%)ofthemonetaryawardbywayofattorneys bodyispresumedtoknowthemeaningofthewordsemployedinthestatueandtohaveused
feesislegallyandmorallyjustifiableunderArt.111oftheLaborCode,xlviii[22]Sec.8,Rule themadvisedly.lviii[32]Utresmagisvaleatquampereat.lix[33]
VIII,BookIIIofitsImplementingRules,xlix[23]andpar.7,Art.2208l[24]oftheCivilCode.li
[25]ThecaseofAlbensonEnterprisesCorporationv.CourtofAppealslii[26]citedby WHEREFORE,thequestionedDecisionandResolutiondated16September1996and12
petitionersinarguingagainsttheawardofattorneysfeesisclearlynotapplicable,beingacivil November1996,respectively,ofpublicrespondentNationalLaborRelationsCommissionare
actionfordamageswhichdealswithonlyoneoftheeleven(11)instanceswhenattorneysfees AFFIRMED.PetitionersMARSAMANMANNINGAGENCY,INC.,andDIAMANTIDES
couldberecoveredunderArt.2208oftheCivilCode. MARITIME,INC.,areordered,jointlyandseverally,topayprivaterespondentWILFREDO
T.CAJERAShissalariesfortheunexpiredportionofhisemploymentcontractor
Lastly,ontheamountofsalariesdueprivaterespondent,therulehasalwaysbeenthatan USD$5,100.00,reimbursethelatter'splacementfeewithtwelvepercent(12%)interestper
illegallydismissedworkerwhoseemploymentisforafixedperiodisentitledtopaymentof annumconformablywithSec.10ofRA8042,aswellasattorney'sfeesoftenpercent(10%)
hissalariescorrespondingtotheunexpiredportionofhisemployment.liii[27]Howeveron15 ofthetotalmonetaryaward.Costsagainstpetitioners.
July1995,RA8042otherwiseknownastheMigrantWorkersandOverseasFilipinosActof
1995tookeffect,Sec.10ofwhichprovides: SOORDERED.

Sec.10.Incaseofterminationofoverseasemploymentwithoutjust,validorauthorizedcause ANTONIOM.SERRANO,Petitioner,
asdefinedbylaworcontract,theworkershallbeentitledtothefullreimbursementofhis vs.
placementfeewithinterestattwelvepercent(12%)perannum,plushissalariesforthe GallantMARITIMESERVICES,INC.andMARLOWNAVIGATIONCO.,INC.,
unexpiredportionoftheemploymentcontractorforthree(3)monthsforeveryyearofthe Respondents.
unexpiredtermwhicheverisless(underscoringours).
DECISION
TheLaborArbiter,rationalizingthattheaforesaidlawdidnotapplysinceitbecameeffective
onlyone(1)monthafterrespondent'soverseasemploymentcontractwasenteredintoon15
AUSTRIAMARTINEZ,J.:
June1995,simplyawardedprivaterespondenthissalariescorrespondingtotheunexpired
portionofhisemploymentcontract,i.e.,for8.6months.TheNLRCaffirmedtheawardand
theOfficeoftheSolicitorGeneral(OSG)fullyagreed.ButpetitionersnowinsistthatSec.10, Fordecades,thetoilofsolitarymigrantshashelpedliftentirefamiliesandcommunitiesoutof
RA8042isapplicablebecausealthoughprivaterespondentscontractofemploymentwas poverty.Theirearningshavebuilthouses,providedhealthcare,equippedschoolsandplanted
enteredintobeforethelawbecameeffectivehisallegedcauseofaction,i.e.,hisrepatriation theseedsofbusinesses.Theyhavewoventogethertheworldbytransmittingideasand
on28September1995withoutjust,validorauthorizedcause,occurredwhenthelawwas knowledgefromcountrytocountry.Theyhaveprovidedthedynamichumanlinkbetween
alreadyineffect.Petitioners'purposeinsoarguingistoinvokethelawinjustifyingalesser cultures,societiesandeconomies.Yet,onlyrecentlyhavewebeguntounderstandnotonly
howmuchinternationalmigrationimpactsdevelopment,buthowsmartpublicpoliciescan OnMarch19,1998,thedateofhisdeparture,petitionerwasconstrainedtoaccepta
magnifythiseffect. downgradedemploymentcontractforthepositionofSecondOfficerwithamonthlysalaryof
US$1,000.00,upontheassuranceandrepresentationofrespondentsthathewouldbemade
UnitedNationsSecretaryGeneralBanKiMoon ChiefOfficerbytheendofApril1998.6
GlobalForumonMigrationandDevelopment
Brussels,July10,20071 RespondentsdidnotdeliverontheirpromisetomakepetitionerChiefOfficer.7Hence,
petitionerrefusedtostayonasSecondOfficerandwasrepatriatedtothePhilippinesonMay
ForAntonioSerrano(petitioner),aFilipinoseafarer,thelastclauseinthe5thparagraphof 26,1998.8
Section10,RepublicAct(R.A.)No.8042,2towit:
Petitioner'semploymentcontractwasforaperiodof12monthsorfromMarch19,1998upto
Sec.10.MoneyClaims.xxxIncaseofterminationofoverseasemploymentwithoutjust, March19,1999,butatthetimeofhisrepatriationonMay26,1998,hehadservedonlytwo
validorauthorizedcauseasdefinedbylaworcontract,theworkersshallbeentitledtothefull (2)monthsandseven(7)daysofhiscontract,leavinganunexpiredportionofnine(9)months
reimbursementofhisplacementfeewithinterestoftwelvepercent(12%)perannum,plushis andtwentythree(23)days.
salariesfortheunexpiredportionofhisemploymentcontractorforthree(3)monthsfor
everyyearoftheunexpiredterm,whicheverisless. PetitionerfiledwiththeLaborArbiter(LA)aComplaint9againstrespondentsforconstructive
dismissalandforpaymentofhismoneyclaimsinthetotalamountofUS$26,442.73,broken
downasfollows:
xxxx(Emphasisandunderscoringsupplied)

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
Respondentsappealed15totheNationalLaborRelationsCommission(NLRC)to
(March19/31,1998toApril1/30,1998) 1,060.5010
questionthefindingoftheLAthatpetitionerwasillegallydismissed.
+

Petitioneralsoappealed16totheNLRConthesoleissuethattheLAerredinnot

applyingtherulingoftheCourtinTripleIntegratedServices,Inc.v.NationalLabor
TOTALCLAIM US$26,442.7311 RelationsCommission17thatincaseofillegaldismissal,OFWsareentitledtotheir
salariesfortheunexpiredportionoftheircontracts.18

aswellasmoralandexemplarydamagesandattorney'sfees.
InaDecisiondatedJune15,2000,theNLRCmodifiedtheLADecision,towit:

TheLArenderedaDecisiondatedJuly15,1999,declaringthedismissalof
WHEREFORE,theDecisiondated15July1999isMODIFIED.Respondentsare
petitionerillegalandawardinghimmonetarybenefits,towit:
herebyorderedtopaycomplainant,jointlyandseverally,inPhilippinecurrency,at
theprevailingrateofexchangeatthetimeofpaymentthefollowing:
WHEREFORE,premisesconsidered,judgmentisherebyrendereddeclaringthatthe
dismissalofthecomplainant(petitioner)bytherespondentsintheaboveentitled
casewasillegalandtherespondentsareherebyorderedtopaythecomplainant 1.Three(3)monthssalary
[petitioner],jointlyandseverally,inPhilippineCurrency,basedontherateof
exchangeprevailingatthetimeofpayment,theamountofEIGHTTHOUSAND $1,400x3 US$4,200.00
SEVENHUNDREDSEVENTYU.S.DOLLARS(US$8,770.00),representingthe
complainantssalaryforthree(3)monthsoftheunexpiredportionofthe 2.Salarydifferential 45.00
aforesaidcontractofemployment.1avvphi1
US$4,245.00

Therespondentsarelikewiseorderedtopaythecomplainant[petitioner],jointlyand 3.10%Attorneysfees 424.50


severally,inPhilippineCurrency,basedontherateofexchangeprevailingatthe
timeofpayment,theamountofFORTYFIVEU.S.DOLLARS(US$45.00),12 TOTAL US$4,669.50
representingthecomplainantsclaimforasalarydifferential.Inaddition,the
respondentsareherebyorderedtopaythecomplainant,jointlyandseverally,in
PhilippineCurrency,attheexchangerateprevailingatthetimeofpayment,the Theotherfindingsareaffirmed.
complainants(petitioner's)claimforattorneysfeesequivalenttotenpercent(10%)
ofthetotalamountawardedtotheaforesaidemployeeunderthisDecision. SOORDERED.19

Theclaimsofthecomplainantformoralandexemplarydamagesarehereby TheNLRCcorrectedtheLA'scomputationofthelumpsumsalaryawardedtopetitionerby
DISMISSEDforlackofmerit. reducingtheapplicablesalaryratefromUS$2,590.00toUS$1,400.00becauseR.A.No.8042
"doesnotprovidefortheawardofovertimepay,whichshouldbeproventohavebeen
AllotherclaimsareherebyDISMISSED. actuallyperformed,andforvacationleavepay."20

SOORDERED.13(Emphasissupplied) PetitionerfiledaMotionforPartialReconsideration,butthistimehequestionedthe
constitutionalityofthesubjectclause.21TheNLRCdeniedthemotion.22
InawardingpetitioneralumpsumsalaryofUS$8,770.00,theLAbasedhis
computationonthesalaryperiodofthreemonthsonlyratherthantheentire PetitionerfiledaPetitionforCertiorari23withtheCA,reiteratingtheconstitutionalchallenge
unexpiredportionofninemonthsand23daysofpetitioner'semploymentcontract againstthesubjectclause.24Afterinitiallydismissingthepetitiononatechnicality,theCA
applyingthesubjectclause.However,theLAappliedthesalaryrateof eventuallygaveduecoursetoit,asdirectedbythisCourtinitsResolutiondatedAugust7,
US$2,590.00,consistingofpetitioner's"[b]asicsalary,US$1,400.00/month+ 2003whichgrantedthepetitionforcertiorari,docketedasG.R.No.151833,filedby
US$700.00/month,fixedovertimepay,+US$490.00/month,vacationleavepay= petitioner.
US$2,590.00/compensationpermonth."14
InaDecisiondatedDecember8,2004,theCAaffirmedtheNLRCrulingonthereductionof petitionerinallthreefora.Whatremainsdisputedisonlythecomputationofthelumpsum
theapplicablesalaryrate;however,theCAskirtedtheconstitutionalissueraisedby salarytobeawardedtopetitionerbyreasonofhisillegaldismissal.
petitioner.25
Applyingthesubjectclause,theNLRCandtheCAcomputedthelumpsumsalaryof
HisMotionforReconsideration26havingbeendeniedbytheCA,27petitionerbringshiscause petitioneratthemonthlyrateofUS$1,400.00coveringtheperiodofthreemonthsoutofthe
tothisCourtonthefollowinggrounds: unexpiredportionofninemonthsand23daysofhisemploymentcontractoratotalof
US$4,200.00.
I
Impugningtheconstitutionalityofthesubjectclause,petitionercontendsthat,inadditionto
TheCourtofAppealsandthelabortribunalshavedecidedthecaseinawaynotinaccordwith theUS$4,200.00awardedbytheNLRCandtheCA,heisentitledtoUS$21,182.23moreora
applicabledecisionoftheSupremeCourtinvolvingsimilarissueofgrantinguntothemigrant totalofUS$25,382.23,equivalenttohissalariesfortheentireninemonthsand23daysleftof
workerbackwagesequaltotheunexpiredportionofhiscontractofemploymentinsteadof hisemploymentcontract,computedatthemonthlyrateofUS$2,590.00.31
limitingittothree(3)months
TheArgumentsofPetitioner
II
Petitionercontendsthatthesubjectclauseisunconstitutionalbecauseitundulyimpairsthe
InthealternativethattheCourtofAppealsandtheLaborTribunalsweremerelyapplying freedomofOFWstonegotiateforandstipulateintheiroverseasemploymentcontractsa
theirinterpretationofSection10ofRepublicActNo.8042,itissubmittedthattheCourtof determinateemploymentperiodandafixedsalarypackage.32Italsoimpingesontheequal
Appealsgravelyerredinlawwhenitfailedtodischargeitsjudicialdutytodecidequestionsof protectionclause,forittreatsOFWsdifferentlyfromlocalFilipinoworkers(localworkers)by
substancenottheretoforedeterminedbytheHonorableSupremeCourt,particularly,the puttingacapontheamountoflumpsumsalarytowhichOFWsareentitledincaseofillegal
constitutionalissuesraisedbythepetitionerontheconstitutionalityofsaidlaw,which dismissal,whilesettingnolimittothesamemonetaryawardforlocalworkerswhentheir
unreasonably,unfairlyandarbitrarilylimitspaymentoftheawardforbackwagesofoverseas dismissalisdeclaredillegal;thatthedisparatetreatmentisnotreasonableasthereisno
workerstothree(3)months. substantialdistinctionbetweenthetwogroups;33andthatitdefeatsSection18,34ArticleIIof
theConstitutionwhichguaranteestheprotectionoftherightsandwelfareofallFilipino
workers,whetherdeployedlocallyoroverseas.35
III

Moreover,petitionerarguesthatthedecisionsoftheCAandthelabortribunalsarenotinline
Evenwithoutconsideringtheconstitutionallimitations[of]Sec.10ofRepublicActNo.8042,
withexistingjurisprudenceontheissueofmoneyclaimsofillegallydismissedOFWs.
theCourtofAppealsgravelyerredinlawinexcludingfrompetitionersawardtheovertime
Thoughthereareconflictingrulingsonthis,petitionerurgestheCourttosortthemoutforthe
payandvacationpayprovidedinhiscontractsinceunderthecontracttheyformpartofhis
guidanceofaffectedOFWs.36
salary.28

PetitionerfurtherunderscoresthattheinsertionofthesubjectclauseintoR.A.No.8042serves
OnFebruary26,2008,petitionerwrotetheCourttowithdrawhispetitionasheisalreadyold
nootherpurposebuttobenefitlocalplacementagencies.Hemarksthestatementmadebythe
andsickly,andheintendstomakeuseofthemonetaryawardforhismedicaltreatmentand
SolicitorGeneralinhisMemorandum,viz.:
medication.29Requiredtocomment,counselforpetitionerfiledamotion,urgingthecourtto
allowpartialexecutionoftheundisputedmonetaryawardand,atthesametime,prayingthat
theconstitutionalquestionberesolved.30 Often,placementagencies,theirliabilitybeingsolidary,shoulderthepaymentofmoney
claimsintheeventthatjurisdictionovertheforeignemployerisnotacquiredbythecourtorif
theforeignemployerrenegesonitsobligation.Hence,placementagenciesthatareingood
Consideringthatthepartieshavefiledtheirrespectivememoranda,theCourtnowtakesupthe
faithandwhichfulfilltheirobligationsareunnecessarilypenalizedfortheactsoftheforeign
fullmeritofthepetitionmindfuloftheextremeimportanceoftheconstitutionalquestion
employer.Toprotectthemandtopromotetheircontinuedhelpfulcontributionindeploying
raisedtherein.
Filipinomigrantworkers,liabilityformoneyclaimswasreducedunderSection10ofR.A.No.
8042.37(Emphasissupplied)
Onthefirstandsecondissues
Petitionerarguesthatinmitigatingthesolidaryliabilityofplacementagencies,thesubject
TheunanimousfindingoftheLA,NLRCandCAthatthedismissalofpetitionerwasillegalis clausesacrificesthewellbeingofOFWs.Notonlythat,theprovisionmakesforeign
notdisputed.LikewisenotdisputedisthesalarydifferentialofUS$45.00awardedto employersbetteroffthanlocalemployersbecauseincasesinvolvingtheillegaldismissalof
employees,foreignemployersareliableforsalariescoveringamaximumofonlythreemonths
oftheunexpiredemploymentcontractwhilelocalemployersareliableforthefulllumpsum oflegitimateplacementagencieshelps[assure]thegovernmentthatmigrantworkersare
salariesoftheiremployees.Aspetitionerputsit: properlydeployedandareemployedunderdecentandhumaneconditions."46

Intermsofpracticalapplication,thelocalemployersarenotlimitedtotheamountof TheCourt'sRuling
backwagestheyhavetogivetheiremployeestheyhaveillegallydismissed,followingwell
entrenchedandunequivocaljurisprudenceonthematter.Ontheotherhand,foreignemployers TheCourtsustainspetitioneronthefirstandsecondissues.
willonlybelimitedtogivingtheillegallydismissedmigrantworkersthemaximumofthree
(3)monthsunpaidsalariesnotwithstandingtheunexpiredtermofthecontractthatcanbemore
thanthree(3)months.38 WhentheCourtiscalledupontoexerciseitspowerofjudicialreviewoftheactsofitsco
equals,suchastheCongress,itdoessoonlywhentheseconditionsobtain:(1)thatthereisan
actualcaseorcontroversyinvolvingaconflictofrightssusceptibleofjudicialdetermination;47
Lastly,petitionerclaimsthatthesubjectclauseviolatesthedueprocessclause,foritdeprives (2)thattheconstitutionalquestionisraisedbyaproperparty48andattheearliest
himofthesalariesandotheremolumentsheisentitledtounderhisfixedperiodemployment opportunity;49and(3)thattheconstitutionalquestionistheverylismotaofthecase,50
contract.39 otherwisetheCourtwilldismissthecaseordecidethesameonsomeotherground.51

TheArgumentsofRespondents Withoutadoubt,thereexistsinthiscaseanactualcontroversydirectlyinvolvingpetitioner
whoispersonallyaggrievedthatthelabortribunalsandtheCAcomputedhismonetaryaward
IntheirCommentandMemorandum,respondentscontendthattheconstitutionalissueshould basedonthesalaryperiodofthreemonthsonlyasprovidedunderthesubjectclause.
notbeentertained,forthiswasbelatedlyinterposedbypetitionerinhisappealbeforetheCA,
andnotattheearliestopportunity,whichwaswhenhefiledanappealbeforetheNLRC.40 Theconstitutionalchallengeisalsotimely.Itshouldbeborneinmindthattherequirement
thataconstitutionalissueberaisedattheearliestopportunityentailstheinterpositionofthe
TheArgumentsoftheSolicitorGeneral issueinthepleadingsbeforeacompetentcourt,suchthat,iftheissueisnotraisedinthe
pleadingsbeforethatcompetentcourt,itcannotbeconsideredatthetrialand,ifnot
TheSolicitorGeneral(OSG)41pointsoutthatasR.A.No.8042tookeffectonJuly15,1995, consideredinthetrial,itcannotbeconsideredonappeal.52Recordsdisclosethattheissueon
itsprovisionscouldnothaveimpairedpetitioner's1998employmentcontract.Rather,R.A. theconstitutionalityofthesubjectclausewasfirstraised,notinpetitioner'sappealwiththe
No.8042havingprecededpetitioner'scontract,theprovisionsthereofaredeemedpartofthe NLRC,butinhisMotionforPartialReconsiderationwithsaidlabortribunal,53andreiterated
minimumtermsofpetitioner'semployment,especiallyonthematterofmoneyclaims,asthis inhisPetitionforCertioraribeforetheCA.54Nonetheless,theissueisdeemedseasonably
wasnotstipulateduponbytheparties.42 raisedbecauseitisnottheNLRCbuttheCAwhichhasthecompetencetoresolvethe
constitutionalissue.TheNLRCisalabortribunalthatmerelyperformsaquasijudicial
functionitsfunctioninthepresentcaseislimitedtodeterminingquestionsoffacttowhich
Moreover,theOSGemphasizesthatOFWsandlocalworkersdifferintermsofthenatureof thelegislativepolicyofR.A.No.8042istobeappliedandtoresolvingsuchquestionsin
theiremployment,suchthattheirrightstomonetarybenefitsmustnecessarilybetreated accordancewiththestandardslaiddownbythelawitself;55thus,itsforemostfunctionisto
differently.TheOSGenumeratestheessentialelementsthatdistinguishOFWsfromlocal administerandenforceR.A.No.8042,andnottoinquireintothevalidityofitsprovisions.
workers:first,whilelocalworkersperformtheirjobswithinPhilippineterritory,OFWs TheCA,ontheotherhand,isvestedwiththepowerofjudicialrevieworthepowertodeclare
performtheirjobsforforeignemployers,overwhomitisdifficultforourcourtstoacquire unconstitutionalalaworaprovisionthereof,suchasthesubjectclause.56Petitioner's
jurisdiction,oragainstwhomitisalmostimpossibletoenforcejudgment;andsecond,asheld interpositionoftheconstitutionalissuebeforetheCAwasundoubtedlyseasonable.TheCA
inCoyocav.NationalLaborRelationsCommission43andMillaresv.NationalLaborRelations wasthereforeremissinfailingtotakeuptheissueinitsdecision.
Commission,44OFWsarecontractualemployeeswhocanneveracquireregularemployment
status,unlikelocalworkerswhoareorcanbecomeregularemployees.Hence,theOSGposits
thattherearerightsandprivilegesexclusivetolocalworkers,butnotavailabletoOFWs;that Thethirdconditionthattheconstitutionalissuebecriticaltotheresolutionofthecaselikewise
thesepeculiaritiesmakeforareasonableandvalidbasisforthedifferentiatedtreatmentunder obtainsbecausethemonetaryclaimofpetitionertohislumpsumsalaryfortheentire
thesubjectclauseofthemoneyclaimsofOFWswhoareillegallydismissed.Thus,the unexpiredportionofhis12monthemploymentcontract,andnotjustforaperiodofthree
provisiondoesnotviolatetheequalprotectionclausenorSection18,ArticleIIofthe months,strikesattheverycoreofthesubjectclause.
Constitution.45
Thus,thestageisallsetforthedeterminationoftheconstitutionalityofthesubjectclause.
Lastly,theOSGdefendstherationalebehindthesubjectclauseasapolicepowermeasure
adoptedtomitigatethesolidaryliabilityofplacementagenciesforthis"redoundstothe DoesthesubjectclauseviolateSection10,
benefitofthemigrantworkerswhosewelfarethegovernmentseekstopromote.Thesurvival ArticleIIIoftheConstitutiononnonimpairment
ofcontracts?
Theanswerisinthenegative. ToFilipinoworkers,therightsguaranteedundertheforegoingconstitutionalprovisions
translatetoeconomicsecurityandparity:allmonetarybenefitsshouldbeequallyenjoyedby
Petitioner'sclaimthatthesubjectclauseundulyinterfereswiththestipulationsinhiscontract workersofsimilarcategory,whileallmonetaryobligationsshouldbebornebytheminequal
onthetermofhisemploymentandthefixedsalarypackagehewillreceive57isnottenable. degree;noneshouldbedeniedtheprotectionofthelawswhichisenjoyedby,orsparedthe
burdenimposedon,othersinlikecircumstances.65
Section10,ArticleIIIoftheConstitutionprovides:
SuchrightsarenotabsolutebutsubjecttotheinherentpowerofCongresstoincorporate,
whenitseesfit,asystemofclassificationintoitslegislation;however,tobevalid,the
Nolawimpairingtheobligationofcontractsshallbepassed.
classificationmustcomplywiththeserequirements:1)itisbasedonsubstantialdistinctions;
2)itisgermanetothepurposesofthelaw;3)itisnotlimitedtoexistingconditionsonly;and
Theprohibitionisalignedwiththegeneralprinciplethatlawsnewlyenactedhaveonlya 4)itappliesequallytoallmembersoftheclass.66
prospectiveoperation,58andcannotaffectactsorcontractsalreadyperfected;59however,asto
lawsalreadyinexistence,theirprovisionsarereadintocontractsanddeemedapartthereof.60 TherearethreelevelsofscrutinyatwhichtheCourtreviewstheconstitutionalityofa
Thus,thenonimpairmentclauseunderSection10,ArticleIIislimitedinapplicationtolaws
classificationembodiedinalaw:a)thedeferentialorrationalbasisscrutinyinwhichthe
abouttobeenactedthatwouldinanywayderogatefromexistingactsorcontractsby challengedclassificationneedsonlybeshowntoberationallyrelatedtoservingalegitimate
enlarging,abridgingorinanymannerchangingtheintentionofthepartiesthereto.
stateinterest;67b)themiddletierorintermediatescrutinyinwhichthegovernmentmustshow
thatthechallengedclassificationservesanimportantstateinterestandthattheclassificationis
AsaptlyobservedbytheOSG,theenactmentofR.A.No.8042in1995precededthe atleastsubstantiallyrelatedtoservingthatinterest;68andc)strictjudicialscrutiny69inwhicha
executionoftheemploymentcontractbetweenpetitionerandrespondentsin1998.Hence,it legislativeclassificationwhichimpermissiblyinterfereswiththeexerciseofafundamental
cannotbearguedthatR.A.No.8042,particularlythesubjectclause,impairedtheemployment right70oroperatestothepeculiardisadvantageofasuspectclass71ispresumed
contractoftheparties.Rather,whenthepartiesexecutedtheir1998employmentcontract,they unconstitutional,andtheburdenisuponthegovernmenttoprovethattheclassificationis
weredeemedtohaveincorporatedintoitalltheprovisionsofR.A.No.8042. necessarytoachieveacompellingstateinterestandthatitistheleastrestrictivemeansto
protectsuchinterest.72
ButeveniftheCourtweretodisregardthetimeline,thesubjectclausemaynotbedeclared
unconstitutionalonthegroundthatitimpingesontheimpairmentclause,forthelawwas UnderAmericanjurisprudence,strictjudicialscrutinyistriggeredbysuspectclassifications73
enactedintheexerciseofthepolicepoweroftheStatetoregulateabusiness,professionor basedonrace74orgender75butnotwhentheclassificationisdrawnalongincomecategories.76
calling,particularlytherecruitmentanddeploymentofOFWs,withthenobleendinviewof
ensuringrespectforthedignityandwellbeingofOFWswherevertheymaybeemployed.61
ItisdifferentinthePhilippinesetting.InCentralBank(nowBangkoSentralngPilipinas)
PolicepowerlegislationsadoptedbytheStatetopromotethehealth,morals,peace,education,
EmployeeAssociation,Inc.v.BangkoSentralngPilipinas,77theconstitutionalityofa
goodorder,safety,andgeneralwelfareofthepeoplearegenerallyapplicablenotonlyto
provisioninthecharteroftheBangkoSentralngPilipinas(BSP),agovernmentfinancial
futurecontractsbuteventothosealreadyinexistence,forallprivatecontractsmustyieldto
institution(GFI),waschallengedformaintainingitsrankandfileemployeesundertheSalary
thesuperiorandlegitimatemeasurestakenbytheStatetopromotepublicwelfare.62
StandardizationLaw(SSL),evenwhentherankandfileemployeesofotherGFIshadbeen
exemptedfromtheSSLbytheirrespectivecharters.Findingthatthedisputedprovision
DoesthesubjectclauseviolateSection1, containedasuspectclassificationbasedonsalarygrade,theCourtdeliberatelyemployedthe
ArticleIIIoftheConstitution,andSection18, standardofstrictjudicialscrutinyinitsreviewoftheconstitutionalityofsaidprovision.More
ArticleIIandSection3,ArticleXIIIonlabor significantly,itwasinthiscasethattheCourtrevealedthebroadoutlinesofitsjudicial
asaprotectedsector? philosophy,towit:

Theanswerisintheaffirmative. Congressretainsitswidediscretioninprovidingforavalidclassification,anditspolicies
shouldbeaccordedrecognitionandrespectbythecourtsofjusticeexceptwhentheyrunafoul
Section1,ArticleIIIoftheConstitutionguarantees: oftheConstitution.Thedeferencestopswheretheclassificationviolatesafundamentalright,
orprejudicespersonsaccordedspecialprotectionbytheConstitution.Whenthese
Nopersonshallbedeprivedoflife,liberty,orpropertywithoutdueprocessoflawnorshall violationsarise,thisCourtmustdischargeitsprimaryroleasthevanguardofconstitutional
anypersonbedeniedtheequalprotectionofthelaw. guaranties,andrequireastricterandmoreexactingadherencetoconstitutionallimitations.
Rationalbasisshouldnotsuffice.
Section18,63ArticleIIandSection3,64ArticleXIIIaccordallmembersofthelaborsector,
withoutdistinctionastoplaceofdeployment,fullprotectionoftheirrightsandwelfare.
Admittedly,theviewthatprejudicetopersonsaccordedspecialprotectionbytheConstitution callfortheabdicationofthisCourtssolemndutytostrikedownanylawrepugnanttothe
requiresastricterjudicialscrutinyfindsnosupportinAmericanorEnglishjurisprudence. Constitutionandtherightsitenshrines.Thisistruewhethertheactorcommittingthe
Nevertheless,theseforeigndecisionsandauthoritiesarenotpersecontrollinginthis unconstitutionalactisaprivatepersonorthegovernmentitselforoneofitsinstrumentalities.
jurisdiction.Atbest,theyarepersuasiveandhavebeenusedtosupportmanyofourdecisions. Oppressiveactswillbestruckdownregardlessofthecharacterornatureoftheactor.
Weshouldnotplaceundueandfawningrelianceuponthemandregardthemasindispensable
mentalcrutcheswithoutwhichwecannotcometoourowndecisionsthroughtheemployment xxxx
ofourownendowments.Weliveinadifferentambienceandmustdecideourownproblems
inthelightofourowninterestsandneeds,andofourqualitiesandevenidiosyncrasiesasa
Inthecaseatbar,thechallengedprovisooperatesonthebasisofthesalarygradeorofficer
people,andalwayswithourownconceptoflawandjustice.Ourlawsmustbeconstruedin
employeestatus.Itisakintoadistinctionbasedoneconomicclassandstatus,withthehigher
accordancewiththeintentionofourownlawmakersandsuchintentmaybededucedfromthe
gradesasrecipientsofabenefitspecificallywithheldfromthelowergrades.Officersofthe
languageofeachlawandthecontextofotherlocallegislationrelatedthereto.More
BSPnowreceivehighercompensationpackagesthatarecompetitivewiththeindustry,while
importantly,theymustbeconstruedtoserveourownpublicinterestwhichisthebealland
thepoorer,lowsalariedemployeesarelimitedtotheratesprescribedbytheSSL.The
theendallofallourlaws.Anditneednotbestressedthatourpublicinterestisdistinctand
implicationsarequitedisturbing:BSPrankandfileemployeesarepaidthestrictlyregimented
differentfromothers.
ratesoftheSSLwhileemployeeshigherinrankpossessinghigherandbettereducationand
opportunitiesforcareeradvancementaregivenhighercompensationpackagestoenticethem
xxxx tostay.Consideringthatmajority,ifnotall,therankandfileemployeesconsistofpeople
whosestatusandrankinlifearelessandlimited,especiallyintermsofjobmarketability,itis
Further,thequestforabetterandmore"equal"worldcallsfortheuseofequalprotectionasa theyandnottheofficerswhohavetherealeconomicandfinancialneedfortheadjustment.
toolofeffectivejudicialintervention. ThisisinaccordwiththepolicyoftheConstitution"tofreethepeoplefrompoverty,provide
adequatesocialservices,extendtothemadecentstandardofliving,andimprovethequality
EqualityisoneidealwhichcriesoutforboldattentionandactionintheConstitution.The oflifeforall."AnyactofCongressthatrunscountertothisconstitutionaldesideratum
Preambleproclaims"equality"asanidealpreciselyinprotestagainstcrushinginequitiesin deservesstrictscrutinybythisCourtbeforeitcanpassmuster.(Emphasissupplied)
Philippinesociety.ThecommandtopromotesocialjusticeinArticleII,Section10,in"all
phasesofnationaldevelopment,"furtherexplicitatedinArticleXIII,areclearcommandsto Imbuedwiththesamesenseof"obligationtoaffordprotectiontolabor,"theCourtinthe
theStatetotakeaffirmativeactioninthedirectionofgreaterequality.xxx[T]hereisthusin presentcasealsoemploysthestandardofstrictjudicialscrutiny,foritperceivesinthesubject
thePhilippineConstitutionnolackofdoctrinalsupportforamorevigorousstateeffort clauseasuspectclassificationprejudicialtoOFWs.
towardsachievingareasonablemeasureofequality.
Uponcursoryreading,thesubjectclauseappearsfaciallyneutral,foritappliestoallOFWs.
OurpresentConstitutionhasgonefurtheringuaranteeingvitalsocialandeconomicrightsto However,acloserexaminationrevealsthatthesubjectclausehasadiscriminatoryintent
marginalizedgroupsofsociety,includinglabor.Underthepolicyofsocialjustice,thelaw against,andaninvidiousimpacton,OFWsattwolevels:
bendsoverbackwardtoaccommodatetheinterestsoftheworkingclassonthehumane
justificationthatthosewithlessprivilegeinlifeshouldhavemoreinlaw.Andtheobligation First,OFWswithemploymentcontractsoflessthanoneyearvisvisOFWswith
toaffordprotectiontolaborisincumbentnotonlyonthelegislativeandexecutivebranches employmentcontractsofoneyearormore;
butalsoonthejudiciarytotranslatethispledgeintoalivingreality.Socialjusticecallsforthe
humanizationoflawsandtheequalizationofsocialandeconomicforcesbytheStatesothat
Second,amongOFWswithemploymentcontractsofmorethanoneyear;and
justiceinitsrationalandobjectivelysecularconceptionmayatleastbeapproximated.

Third,OFWsvisvislocalworkerswithfixedperiodemployment;
xxxx

Undermostcircumstances,theCourtwillexercisejudicialrestraintindecidingquestionsof OFWswithemploymentcontractsoflessthanoneyearvisvisOFWswithemployment
constitutionality,recognizingthebroaddiscretiongiventoCongressinexercisingits contractsofoneyearormore
legislativepower.Judicialscrutinywouldbebasedonthe"rationalbasis"test,andthe
legislativediscretionwouldbegivendeferentialtreatment. Aspointedoutbypetitioner,78itwasinMarsamanManningAgency,Inc.v.NationalLabor
RelationsCommission79(SecondDivision,1999)thattheCourtlaiddownthefollowingrules
Butifthechallengetothestatuteispremisedonthedenialofafundamentalright,orthe ontheapplicationoftheperiodsprescribedunderSection10(5)ofR.A.No.804,towit:
perpetuationofprejudiceagainstpersonsfavoredbytheConstitutionwithspecial
protection,judicialscrutinyoughttobemorestrict.Aweakandwatereddownviewwould
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 adoptedthegeneralprinciplethatinactionsforwrongfuldischargefoundedonArticle1586,
awardsofillegallydismissedOFWswasinplace.Thisuniformsystemwasapplicableevento localworkersareentitledtorecoverdamagestotheextentoftheamountstipulatedtobepaid
localworkerswithfixedtermemployment.107 tothembythetermsoftheircontract.Onthecomputationoftheamountofsuchdamages,the
CourtinAldazv.Gay114held:
TheearliestruleprescribingauniformsystemofcomputationwasactuallyArticle299ofthe
CodeofCommerce(1888),108towit: ThedoctrineiswellestablishedinAmericanjurisprudence,andnothinghasbeenbroughtto
ourattentiontothecontraryunderSpanishjurisprudence,thatwhenanemployeeis
Article299.Ifthecontractsbetweenthemerchantsandtheirshopclerksandemployees wrongfullydischargeditishisdutytoseekotheremploymentofthesamekindinthesame
shouldhavebeenmadeofafixedperiod,noneofthecontractingparties,withouttheconsent community,forthepurposeofreducingthedamagesresultingfromsuchwrongfuldischarge.
oftheother,maywithdrawfromthefulfillmentofsaidcontractuntiltheterminationofthe However,whilethisisthegeneralrule,theburdenofshowingthathefailedtomakeaneffort
periodagreedupon. tosecureotheremploymentofalikenature,andthatotheremploymentofalikenaturewas
obtainable,isuponthedefendant.Whenanemployeeiswrongfullydischargedundera
contractofemploymenthisprimafaciedamageistheamountwhichhewouldbeentitledto
Personsviolatingthisclauseshallbesubjecttoindemnifythelossanddamagesuffered,with
hadhecontinuedinsuchemploymentuntiltheterminationoftheperiod.(Howardvs.Daly,
theexceptionoftheprovisionscontainedinthefollowingarticles.
61N.Y.,362;Allenvs.Whitlark,99Mich.,492;Farrellvs.SchoolDistrictNo.2,98Mich.,
43.)115(Emphasissupplied)
InReyesv.TheCompaiaMaritima,109theCourtappliedtheforegoingprovisiontodetermine
theliabilityofashippingcompanyfortheillegaldischargeofitsmanagerspriortothe
OnAugust30,1950,theNewCivilCodetookeffectwithnewprovisionsonfixedterm
expirationoftheirfixedtermemployment.TheCourtthereinheldtheshippingcompany
employment:Section2(ObligationswithaPeriod),Chapter3,TitleI,andSections2
liableforthesalariesofitsmanagersfortheremainderoftheirfixedtermemployment.
(ContractofLabor)and3(ContractforaPieceofWork),Chapter3,TitleVIII,BookIV.116
MuchlikeArticle1586oftheCivilCodeof1889,thenewprovisionsoftheCivilCodedonot
Thereisamorespecificruleasfarasseafarersareconcerned:Article605oftheCodeof expresslyprovidefortheremediesavailabletoafixedtermworkerwhoisillegally
Commercewhichprovides: discharged.However,itisnotedthatinMackayRadio&TelegraphCo.,Inc.v.Rich,117the
CourtcarriedovertheprinciplesonthepaymentofdamagesunderlyingArticle1586ofthe
Article605.Ifthecontractsofthecaptainandmembersofthecrewwiththeagentshouldbe CivilCodeof1889andappliedthesametoacaseinvolvingtheillegaldischargeofalocal
foradefiniteperiodorvoyage,theycannotbedischargeduntilthefulfillmentoftheir workerwhosefixedperiodemploymentcontractwasenteredintoin1952,whenthenewCivil
contracts,exceptforreasonsofinsubordinationinseriousmatters,robbery,theft,habitual Codewasalreadyineffect.118
drunkenness,anddamagecausedtothevesselortoitscargobymaliceormanifestorproven
negligence. Moresignificantly,thesameprincipleswereappliedtocasesinvolvingoverseasFilipino
workerswhosefixedtermemploymentcontractswereillegallyterminated,suchasinFirst
Article605wasappliedtoMadrigalShippingCompany,Inc.v.Ogilvie,110in AsianTrans&ShippingAgency,Inc.v.Ople,119involvingseafarerswhowereillegally
discharged.InTeknikaSkillsandTradeServices,Inc.v.NationalLaborRelations
Commission,120anOFWwhowasillegallydismissedpriortotheexpirationofherfixed
whichtheCourtheldtheshippingcompanyliableforthesalariesandsubsistenceallowanceof
periodemploymentcontractasababysitter,wasawardedsalariescorrespondingtothe
itsillegallydismissedemployeesfortheentireunexpiredportionoftheiremployment
unexpiredportionofhercontract.TheCourtarrivedatthesamerulinginAndersonv.
contracts.
NationalLaborRelationsCommission,121whichinvolvedaforemanhiredin1988inSaudi
Arabiaforafixedtermoftwoyears,butwhowasillegallydismissedafteronlyninemonths
WhileArticle605hasremainedgoodlawuptothepresent,111Article299oftheCodeof onthejobtheCourtawardedhimsalariescorrespondingto15months,theunexpired
CommercewasreplacedbyArt.1586oftheCivilCodeof1889,towit: portionofhiscontract.InAsiaWorldRecruitment,Inc.v.NationalLaborRelations
Commission,122aFilipinoworkingasasecurityofficerin1989inAngolawasawardedhis
Article1586.Fieldhands,mechanics,artisans,andotherlaborershiredforacertaintimeand salariesfortheremainingperiodofhis12monthcontractafterhewaswrongfullydischarged.
foracertainworkcannotleaveorbedismissedwithoutsufficientcause,beforethefulfillment Finally,inVintaMaritimeCo.,Inc.v.NationalLaborRelationsCommission,123anOFW
ofthecontract.(Emphasissupplied.) whose12monthcontractwasillegallycutshortinthesecondmonthwasdeclaredentitledto
hissalariesfortheremaining10monthsofhiscontract.
CitingManresa,theCourtinLemoinev.Alkan112readthedisjunctive"or"inArticle1586as
aconjunctive"and"soastoapplytheprovisiontolocalworkerswhoareemployedforatime Insum,priortoR.A.No.8042,OFWsandlocalworkerswithfixedtermemploymentwho
certainalthoughfornoparticularskill.ThisinterpretationofArticle1586wasreiteratedin wereillegallydischargedweretreatedalikeintermsofthecomputationoftheirmoney
GarciaPalomarv.HoteldeFranceCompany.113AndinbothLemoineandPalomar,theCourt claims:theywereuniformlyentitledtotheirsalariesfortheentireunexpiredportionsoftheir
contracts.ButwiththeenactmentofR.A.No.8042,specificallytheadoptionofthesubject However,nowhereintheCommentorMemorandumdoestheOSGcitethesourceofits
clause,illegallydismissedOFWswithanunexpiredportionofoneyearormoreintheir perceptionofthestateinterestsoughttobeservedbythesubjectclause.
employmentcontracthavesincebeendifferentlytreatedinthattheirmoneyclaimsaresubject
toa3monthcap,whereasnosuchlimitationisimposedonlocalworkerswithfixedterm TheOSGlocatesthepurposeofR.A.No.8042inthespeechofRep.BonifacioGallegoin
employment. sponsorshipofHouseBillNo.14314(HB14314),fromwhichthelaworiginated;130butthe
speechmakesnoreferencetotheunderlyingreasonfortheadoptionofthesubjectclause.
TheCourtconcludesthatthesubjectclausecontainsasuspectclassificationinthat,inthe Thatisonlynaturalfornoneofthe29provisionsinHB14314resemblesthesubjectclause.
computationofthemonetarybenefitsoffixedtermemployeeswhoareillegallydischarged,
itimposesa3monthcapontheclaimofOFWswithanunexpiredportionofoneyearor Ontheotherhand,SenateBillNo.2077(SB2077)containsaprovisiononmoneyclaims,to
moreintheircontracts,butnoneontheclaimsofotherOFWsorlocalworkerswithfixed wit:
termemployment.ThesubjectclausesinglesoutoneclassificationofOFWsandburdensit
withapeculiardisadvantage. Sec.10.MoneyClaims.Notwithstandinganyprovisionoflawtothecontrary,theLabor
ArbitersoftheNationalLaborRelationsCommission(NLRC)shallhavetheoriginaland
Therebeingasuspectclassificationinvolvingavulnerablesectorprotectedbythe exclusivejurisdictiontohearanddecide,withinninety(90)calendardaysafterthefilingof
Constitution,theCourtnowsubjectstheclassificationtoastrictjudicialscrutiny,and thecomplaint,theclaimsarisingoutofanemployeremployeerelationshiporbyvirtueofthe
determineswhetheritservesacompellingstateinterestthroughtheleastrestrictivemeans. complaint,theclaimarisingoutofanemployeremployeerelationshiporbyvirtueofanylaw
orcontractinvolvingFilipinoworkersforoverseasemploymentincludingclaimsforactual,
moral,exemplaryandotherformsofdamages.
Whatconstitutescompellingstateinterestismeasuredbythescaleofrightsandpowers
arrayedintheConstitutionandcalibratedbyhistory.124Itisakintotheparamountinterestof
thestate125forwhichsomeindividuallibertiesmustgiveway,suchasthepublicinterestin Theliabilityoftheprincipalandtherecruitment/placementagencyoranyandallclaimsunder
safeguardinghealthormaintainingmedicalstandards,126orinmaintainingaccessto thisSectionshallbejointandseveral.
informationonmattersofpublicconcern.127
Anycompromise/amicablesettlementorvoluntaryagreementonanymoneyclaimsexclusive
Inthepresentcase,theCourtdugdeepintotherecordsbutfoundnocompellingstateinterest ofdamagesunderthisSectionshallnotbelessthanfiftypercent(50%)ofsuchmoneyclaims:
thatthesubjectclausemaypossiblyserve. Provided,Thatanyinstallmentpayments,ifapplicable,tosatisfyanysuchcompromiseor
voluntarysettlementshallnotbemorethantwo(2)months.Anycompromise/voluntary
TheOSGdefendsthesubjectclauseasapolicepowermeasure"designedtoprotectthe agreementinviolationofthisparagraphshallbenullandvoid.
employmentofFilipinoseafarersoverseasxxx.Bylimitingtheliabilitytothreemonths[sic],
Filipinoseafarershavebetterchanceofgettinghiredbyforeignemployers."Thelimitation Noncompliancewiththemandatoryperiodforresolutionsofcasesprovidedunderthis
alsoprotectstheinterestoflocalplacementagencies,whichotherwisemaybemadeto Sectionshallsubjecttheresponsibleofficialstoanyorallofthefollowingpenalties:
shouldermillionsofpesosin"terminationpay."128
(1)Thesalaryofanysuchofficialwhofailstorenderhisdecisionorresolution
TheOSGexplainedfurther: withintheprescribedperiodshallbe,orcausedtobe,withhelduntilthesaidofficial
compliestherewith;
Often,placementagencies,theirliabilitybeingsolidary,shoulderthepaymentofmoney
claimsintheeventthatjurisdictionovertheforeignemployerisnotacquiredbythecourtorif (2)Suspensionfornotmorethanninety(90)days;or
theforeignemployerrenegesonitsobligation.Hence,placementagenciesthatareingood
faithandwhichfulfilltheirobligationsareunnecessarilypenalizedfortheactsoftheforeign (3)Dismissalfromtheservicewithdisqualificationtoholdanyappointivepublic
employer.Toprotectthemandtopromotetheircontinuedhelpfulcontributionindeploying officeforfive(5)years.
Filipinomigrantworkers,liabilityformoneyarereducedunderSection10ofRA8042.
Provided,however,Thatthepenaltieshereinprovidedshallbewithoutprejudicetoany
Thismeasureredoundstothebenefitofthemigrantworkerswhosewelfarethegovernment liabilitywhichanysuchofficialmayhaveincurredunderotherexistinglawsorrulesand
seekstopromote.Thesurvivaloflegitimateplacementagencieshelps[assure]thegovernment regulationsasaconsequenceofviolatingtheprovisionsofthisparagraph.
thatmigrantworkersareproperlydeployedandareemployedunderdecentandhumane
conditions.129(Emphasissupplied)
Butsignificantly,Section10ofSB2077doesnotprovideforanyruleonthecomputationof
moneyclaims.
Aruleonthecomputationofmoneyclaimscontainingthesubjectclausewasinsertedand particularlySection3thereof,thenatureofwhich,thisCourt,inAgabonv.NationalLabor
eventuallyadoptedasthe5thparagraphofSection10ofR.A.No.8042.TheCourtexamined RelationsCommission,134hasdescribedtobenotselfactuating:
therationaleofthesubjectclauseinthetranscriptsofthe"BicameralConferenceCommittee
(ConferenceCommittee)MeetingsontheMagnaCartaonOCWs(DisagreeingProvisionsof Thus,theconstitutionalmandatesofprotectiontolaborandsecurityoftenuremaybedeemed
SenateBillNo.2077andHouseBillNo.14314)."However,theCourtfindsnodiscernible asselfexecutinginthesensethattheseareautomaticallyacknowledgedandobservedwithout
stateinterest,letaloneacompellingone,thatissoughttobeprotectedoradvancedbythe needforanyenablinglegislation.However,todeclarethattheconstitutionalprovisionsare
adoptionofthesubjectclause. enoughtoguaranteethefullexerciseoftherightsembodiedtherein,andtherealizationof
idealsthereinexpressed,wouldbeimpractical,ifnotunrealistic.Theespousalofsuchview
Infine,theGovernmenthasfailedtodischargeitsburdenofprovingtheexistenceofa presentsthedangeroustendencyofbeingoverbroadandexaggerated.Theguaranteesof"full
compellingstateinterestthatwouldjustifytheperpetuationofthediscriminationagainst protectiontolabor"and"securityoftenure",whenexaminedinisolation,arefacially
OFWsunderthesubjectclause. unqualified,andthebroadestinterpretationpossiblesuggestsablanketshieldinfavoroflabor
againstanyformofremovalregardlessofcircumstance.Thisinterpretationimpliesan
Assumingthat,asadvancedbytheOSG,thepurposeofthesubjectclauseistoprotectthe unimpeachablerighttocontinuedemploymentautopiannotion,doubtlessbutstillhardly
employmentofOFWsbymitigatingthesolidaryliabilityofplacementagencies,suchcallous withinthecontemplationoftheframers.Subsequentlegislationisstillneededtodefinethe
andcavalierrationalewillhavetoberejected.Therecanneverbeajustificationforanyform parametersoftheseguaranteedrightstoensuretheprotectionandpromotion,notonlythe
ofgovernmentactionthatalleviatestheburdenofonesector,butimposesthesameburdenon rightsofthelaborsector,butoftheemployers'aswell.Withoutspecificandpertinent
anothersector,especiallywhenthefavoredsectoriscomposedofprivatebusinessessuchas legislation,judicialbodieswillbeataloss,formulatingtheirownconclusiontoapproximate
placementagencies,whilethedisadvantagedsectoriscomposedofOFWswhoseprotection atleasttheaimsoftheConstitution.
nolessthantheConstitutioncommands.Theideathatprivatebusinessinterestcanbeelevated
tothelevelofacompellingstateinterestisodious. Ultimately,therefore,Section3ofArticleXIIIcannot,onitsown,beasourceofapositive
enforceablerighttostaveoffthedismissalofanemployeeforjustcauseowingtothefailure
Moreover,evenifthepurposeofthesubjectclauseistolessenthesolidaryliabilityof toservepropernoticeorhearing.Asmanifestedbyseveralframersofthe1987Constitution,
placementagenciesvisavistheirforeignprincipals,therearemechanismsalreadyinplace theprovisionsonsocialjusticerequirelegislativeenactmentsfortheirenforceability.135
thatcanbeemployedtoachievethatpurposewithoutinfringingontheconstitutionalrightsof (Emphasisadded)
OFWs.
Thus,Section3,ArticleXIIIcannotbetreatedasaprincipalsourceofdirectenforceable
ThePOEARulesandRegulationsGoverningtheRecruitmentandEmploymentofLand rights,fortheviolationofwhichthequestionedclausemaybedeclaredunconstitutional.It
BasedOverseasWorkers,datedFebruary4,2002,imposesadministrativedisciplinary mayunwittinglyriskopeningthefloodgatesoflitigationtoeveryworkerorunionoverevery
measuresonerringforeignemployerswhodefaultontheircontractualobligationstomigrant conceivableviolationofsobroadaconceptassocialjusticeforlabor.
workersand/ortheirPhilippineagents.Thesedisciplinarymeasuresrangefromtemporary
disqualificationtopreventivesuspension.ThePOEARulesandRegulationsGoverningthe ItmustbestressedthatSection3,ArticleXIIIdoesnotdirectlybestowontheworkingclass
RecruitmentandEmploymentofSeafarers,datedMay23,2003,containssimilar anyactualenforceableright,butmerelyclothesitwiththestatusofasectorforwhomthe
administrativedisciplinarymeasuresagainsterringforeignemployers. Constitutionurgesprotectionthroughexecutiveorlegislativeactionandjudicialrecognition.
Itsutilityisbestlimitedtobeinganimpetusnotjustfortheexecutiveandlegislative
Resorttotheseadministrativemeasuresisundoubtedlythelessrestrictivemeansofaiding departments,butforthejudiciaryaswell,toprotectthewelfareoftheworkingclass.Andit
localplacementagenciesinenforcingthesolidaryliabilityoftheirforeignprincipals. wasinfactconsistentwiththatconstitutionalagendathattheCourtinCentralBank(now
BangkoSentralngPilipinas)EmployeeAssociation,Inc.v.BangkoSentralngPilipinas,
Thus,thesubjectclauseinthe5thparagraphofSection10ofR.A.No.8042isviolativeofthe pennedbythenAssociateJusticenowChiefJusticeReynatoS.Puno,formulatedthejudicial
rightofpetitionerandotherOFWstoequalprotection.1avvphi1 preceptthatwhenthechallengetoastatuteispremisedontheperpetuationofprejudice
againstpersonsfavoredbytheConstitutionwithspecialprotectionsuchastheworking
classorasectionthereoftheCourtmayrecognizetheexistenceofasuspectclassification
Further,therewouldbecertainmisgivingsifoneistoapproachthedeclarationofthe andsubjectthesametostrictjudicialscrutiny.
unconstitutionalityofthesubjectclausefromtheloneperspectivethattheclausedirectly
violatesstatepolicyonlaborunderSection3,131ArticleXIIIoftheConstitution.
Theviewthattheconceptsofsuspectclassificationandstrictjudicialscrutinyformulatedin
CentralBankEmployeeAssociationexaggeratethesignificanceofSection3,ArticleXIIIisa
Whilealltheprovisionsofthe1987Constitutionarepresumedselfexecuting, thereare
132
groundlessapprehension.CentralBankappliedArticleXIIIinconjunctionwiththeequal
somewhichthisCourthasdeclarednotjudiciallyenforceable,ArticleXIIIbeingone,133 protectionclause.ArticleXIII,byitself,withouttheapplicationoftheequalprotectionclause,
hasnolifeorforceofitsownaselucidatedinAgabon.
Alongthesamelineofreasoning,theCourtfurtherholdsthatthesubjectclauseviolates contractprovisionguaranteestherighttoovertimepaybuttheentitlementtosuchbenefitmust
petitioner'srighttosubstantivedueprocess,foritdepriveshimofproperty,consistingof firstbeestablished.
monetarybenefits,withoutanyexistingvalidgovernmentalpurpose.136
Inthesamevein,theclaimfortheday'sleavepayfortheunexpiredportionofthecontractis
TheargumentoftheSolicitorGeneral,thattheactualpurposeofthesubjectclauseoflimiting unwarrantedsincethesameisgivenduringtheactualserviceoftheseamen.
theentitlementofOFWstotheirthreemonthsalaryincaseofillegaldismissal,istogive
themabetterchanceofgettinghiredbyforeignemployers.Thisisplainspeculation.As WHEREFORE,theCourtGRANTSthePetition.Thesubjectclause"orforthreemonthsfor
earlierdiscussed,thereisnothinginthetextofthelawortherecordsofthedeliberations everyyearoftheunexpiredterm,whicheverisless"inthe5thparagraphofSection10of
leadingtoitsenactmentorthepleadingsofrespondentthatwouldindicatethatthereisan RepublicActNo.8042isDECLAREDUNCONSTITUTIONAL;andtheDecember8,2004
existinggovernmentalpurposeforthesubjectclause,orevenjustapretextofone.
DecisionandApril1,2005ResolutionoftheCourtofAppealsareMODIFIEDtotheeffect
thatpetitionerisAWARDEDhissalariesfortheentireunexpiredportionofhisemployment
Thesubjectclausedoesnotstateorimplyanydefinitivegovernmentalpurpose;anditisfor contractconsistingofninemonthsand23dayscomputedattherateofUS$1,400.00per
thatprecisereasonthattheclauseviolatesnotjustpetitioner'srighttoequalprotection,but month.
alsoherrighttosubstantivedueprocessunderSection1,137ArticleIIIoftheConstitution.
Nocosts.
Thesubjectclausebeingunconstitutional,petitionerisentitledtohissalariesfortheentire
unexpiredperiodofninemonthsand23daysofhisemploymentcontract,pursuanttolawand
jurisprudencepriortotheenactmentofR.A.No.8042. SOORDERED.

OntheThirdIssue EDISTAFFBUILDERSINTERNATIONAL,INC.,petitioner,
vs.
NATIONALLABORRELATIONSCOMMISSIONandELEAZARS.GRAN,
Petitionercontendsthathisovertimeandleavepayshouldformpartofthesalarybasisinthe
respondents.
computationofhismonetaryaward,becausethesearefixedbenefitsthathavebeenstipulated
intohiscontract.
DECISION
Petitionerismistaken.
VELASCO,JR.,J.:
ThewordsalariesinSection10(5)doesnotincludeovertimeandleavepay.Forseafarerslike
petitioner,DOLEDepartmentOrderNo.33,series1996,providesaStandardEmployment TheCase
ContractofSeafarers,inwhichsalaryisunderstoodasthebasicwage,exclusiveofovertime,
leavepayandotherbonuses;whereasovertimepayiscompensationforallwork"performed" ThisPetitionforReviewonCertiorari1seekstosetasidetheOctober18,2000Decision2ofthe
inexcessoftheregulareighthours,andholidaypayiscompensationforanywork CourtofAppeals(CA)inCAG.R.SPNo.56120whichaffirmedtheJanuary15,1999
"performed"ondesignatedrestdaysandholidays. Decision3andSeptember30,1999Resolution4renderedbytheNationalLaborRelations
Commission(NLRC)(ThirdDivision)inPOEAADJ(L)94062194,orderingExpertise
Bytheforegoingdefinitionalone,thereisnobasisfortheautomaticinclusionofovertimeand SearchInternational(ESI),EDIStaffbuildersInternational,Inc.(EDI),andOmarAhmedAli
holidaypayinthecomputationofpetitioner'smonetaryaward,unlessthereisevidencethathe BinBechrEst.(OAB)jointlyandseverallytopayEleazarS.Gran(Gran)theamountofUSD
performedworkduringthoseperiods.AstheCourtheldinCentennialTransmarine,Inc.v. 16,150.00asunpaidsalaries.
DelaCruz,138
TheFacts
However,thepaymentofovertimepayandleavepayshouldbedisallowedinlightofour
rulinginCagampanv.NationalLaborRelationsCommission,towit: PetitionerEDIisacorporationengagedinrecruitmentandplacementofOverseasFilipino
Workers(OFWs).5ESIisanotherrecruitmentagencywhichcollaboratedwithEDItoprocess
Therenditionofovertimeworkandthesubmissionofsufficientproofthatsaidwasactually thedocumentationanddeploymentofprivaterespondenttoSaudiArabia.
performedareconditionstobesatisfiedbeforeaseamancouldbeentitledtoovertimepay
whichshouldbecomputedonthebasisof30%ofthebasicmonthlysalary.Inshort,the PrivaterespondentGranwasanOFWrecruitedbyEDI,anddeployedbyESItoworkfor
OAB,inRiyadh,KingdomofSaudiArabia.6
ItappearsthatOABaskedEDIthroughitsOctober3,1993letterforcurriculavitaeof 600.00,andinhisConfirmationofAppointmentasComputerSpecialist,hismonthlybasic
qualifiedapplicantsforthepositionof"ComputerSpecialist."7Inafacsimiletransmission salarywasfixedatSR2,500.00,whichwasequivalenttoUSD600.00.
datedNovember29,1993,OABinformedEDIthat,fromtheapplicants'curriculavitae
submittedtoitforevaluation,itselectedGranforthepositionof"ComputerSpecialist."The ArbiterCadayalsocitedtheDeclarationexecutedbyGran,tojustifythatGranhadnoclaim
faxedletteralsostatedthatifGranagreestothetermsandconditionsofemployment forunpaidsalariesorwagesagainstOAB.
containedinit,oneofwhichwasamonthlysalaryofSR(SaudiRiyal)2,250.00(USD
600.00),EDImayarrangeforGran'simmediatedispatch.8
Withregardtotheissueofillegaldismissal,theLaborArbiterfoundthatGranfailedtorefute
EDI'sallegations;namely,(1)thatGrandidnotsubmitasingleactivityreportofhisdaily
AfteracceptingOAB'sofferofemployment,Gransignedanemploymentcontract9that activityasdictatedbycompanypolicy;(2)thathewasnotqualifiedforthejobascomputer
grantedhimamonthlysalaryofUSD850.00foraperiodoftwoyears.Granwasthen specialistduetohisinsufficientknowledgeinprogrammingandlackofknowledgeinACAD
deployedtoRiyadh,KingdomofSaudiArabiaonFebruary7,1994. system;(3)thatGranrefusedtofollowmanagement'sinstructionforhimtogainmore
knowledgeofthejobtoprovehisworthascomputerspecialist;(4)thatGran'semployment
UponarrivalinRiyadh,Granquestionedthediscrepancyinhismonthlysalaryhis contracthadneverbeensubstituted;(5)andthatGranwaspaidamonthlysalaryofUSD
employmentcontractstatedUSD850.00;whilehisPhilippineOverseasEmploymentAgency 850.00,andUSD350.00monthlyasfoodallowance.
(POEA)InformationSheetindicatedUSD600.00only.However,throughtheassistanceof
theEDIofficeinRiyadh,OABagreedtopayGranUSD850.00amonth.10 Accordingly,theLaborArbiterdecidedthatGranwasvalidlydismissedfromhisworkdueto
insubordination,disobedience,andhisfailuretosubmitdailyactivityreports.
AfterGranhadbeenworkingforaboutfivemonthsforOAB,hisemploymentwasterminated
throughOAB'sJuly9,1994letter,11onthefollowinggrounds: Thus,onFebruary10,1998,ArbiterCadaydismissedGran'scomplaintforlackofmerit.

1.Noncompliancetocontractrequirementsbytherecruitmentagencyprimarilyon Dissatisfied,GranfiledanAppeal15onApril6,1998withtheNLRC,ThirdDivision.
yoursalaryandcontractduration. However,itappearsfromtherecordsthatGranfailedtofurnishEDIwithacopyofhisAppeal
Memorandum.
2.Noncompliancetoprequalificationrequirementsbytherecruitmentagency[,]
videOABletterref.F575193,datedOctober3,1993.12 TheRulingoftheNLRC

3.InsubordinationordisobediencetoTopManagementOrderand/orinstructions TheNLRCheldthatEDI'sseeminglyharmlesstransferofGran'scontracttoESIisactually
(nonsubmittalofdailyactivityreportsdespiteseveralinstructions). "reprocessing,"whichisaprohibitedtransactionunderArticle34(b)oftheLaborCode.This
schemeconstitutedmisrepresentationthroughtheconspiracybetweenEDIandESIin
OnJuly11,1994,GranreceivedfromOABthetotalamountofSR2,948.00representinghis misleadingGranandevenPOEAoftheactualtermsandconditionsoftheOFW's
finalpay,andonthesameday,heexecutedaDeclaration13releasingOABfromanyfinancial employment.Inaddition,itwasfoundthatGrandidnotcommitanyactthatconstituteda
obligationorotherwise,towardshim. legalgroundfordismissal.Theallegednoncompliancewithcontractualstipulationsrelating
toGran'ssalaryandcontractduration,andtheabsenceofprequalificationrequirements
AfterhisarrivalinthePhilippines,Graninstitutedacomplaint,onJuly21,1994,against cannotbeattributedtoGranbuttoEDI,whichdealtdirectlywithOAB.Inaddition,the
ESI/EDI,OAB,CountryBankersInsuranceCorporation,andWesternGuarantyCorporation chargeofinsubordinationwasnotsubstantiated,andGranwasnotevenaffordedtherequired
withtheNLRC,NationalCapitalRegion,QuezonCity,whichwasdocketedasPOEAADJ noticeandinvestigationonhisallegedoffenses.
(L)94062194forunderpaymentofwages/salariesandillegaldismissal.
Thus,theNLRCreversedtheLaborArbiter'sDecisionandrenderedanewone,thedispositive
TheRulingoftheLaborArbiter portionofwhichreads:

InhisFebruary10,1998Decision,14LaborArbiterManuelR.Caday,towhomGran'scase WHEREFORE,theassaileddecisionisSETASIDE.RespondentsExpertiseSearch
wasassigned,ruledthattherewasneitherunderpaymentnorillegaldismissal. International,Inc.,EDIStaffbuildersInt'l.,Inc.andOmarAhmedAliBinBechrEst.
(OAB)areherebyorderedjointlyandseverallyliabletopaythecomplainant
EleazarGranthePhilippinepesoequivalentatthetimeofactualpaymentof
TheLaborArbiterreasonedthattherewasnounderpaymentofsalariessinceaccordingtothe SIXTEENTHOUSANDONEHUNDREDFIFTYUSDOLLARS(US$16,150.00)
POEAOverseasContractWorker(OCW)InformationSheet,Gran'smonthlysalarywasUSD representinghissalariesfortheunexpiredportionofhiscontract.
SOORDERED.16 TheCAalsoheldthatGranwasnotaffordeddueprocess,giventhatOABdidnotabidebythe
twinnoticerequirement.ThecourtfoundthatGranwasterminatedonthesamedayhe
GranthenfiledaMotionforExecutionofJudgment17onMarch29,1999withtheNLRCand receivedtheterminationletter,withouthavingbeenapprisedofthebasesofhisdismissalor
petitionerreceivingacopyofthismotiononthesamedate.18 affordedanopportunitytoexplainhisside.

Topreventtheexecution,petitionerfiledanOpposition19toGran'smotionarguingthatthe Finally,theCAheldthattheDeclarationsignedbyGrandidnotbarhimfromdemanding
WritofExecutioncannotissuebecauseitwasnotnotifiedoftheappellateproceedingsbefore benefitstowhichhewasentitled.TheappellatecourtfoundthattheDeclarationwasinthe
theNLRCandwasnotgivenacopyofthememorandumofappealnoranyopportunityto formofaquitclaim,andassuchisfrowneduponascontrarytopublicpolicyespeciallywhere
participateintheappeal. themonetaryconsiderationgivenintheDeclarationwasverymuchlessthanwhathewas
legallyentitledtohisbackwagesamountingtoUSD16,150.00.
SeeingthattheNLRCdidnotactonGran'smotionafterEDIhadfileditsOpposition,
petitionerfiled,onAugust26,1999,aMotionforReconsiderationoftheNLRCDecisionafter Asaresultofthesefindings,onOctober18,2000,theappellatecourtdeniedthepetitiontoset
receivingacopyoftheDecisiononAugust16,1999.20 asidetheNLRCDecision.

TheNLRCthenissuedaResolution21denyingpetitioner'sMotionforReconsideration, Hence,thisinstantpetitionisbeforetheCourt.
ratiocinatingthattheissuesandargumentsraisedinthemotion"hadalreadybeenamply
discussed,considered,andruledupon"intheDecision,andthattherewas"nocogentreason TheIssues
orpatentorpalpableerrorthatwarrantanydisturbancethereof."
Petitionerraisesthefollowingissuesforourconsideration:
UnconvincedoftheNLRC'sreasoning,EDIfiledaPetitionforCertioraribeforetheCA.
PetitionerclaimedinitspetitionthattheNLRCcommittedgraveabuseofdiscretioningiving I.WHETHERTHEFAILUREOFGRANTOFURNISHACOPYOFHIS
duecoursetotheappealdespiteGran'sfailuretoperfecttheappeal. APPEALMEMORANDUMTOPETITIONEREDIWOULDCONSTITUTEA
JURISDICTIONALDEFECTANDADEPRIVATIONOFPETITIONEREDI'S
TheRulingoftheCourtofAppeals RIGHTTODUEPROCESSASWOULDJUSTIFYTHEDISMISSALOF
GRAN'SAPPEAL.
TheCAsubsequentlyruledontheproceduralandsubstantiveissuesofEDI'spetition.
II.WHETHERPETITIONEREDIHASESTABLISHEDBYWAYOF
Ontheproceduralissue,theappellatecourtheldthat"Gran'sfailuretofurnishacopyofhis SUBSTANTIALEVIDENCETHATGRAN'STERMINATIONWAS
appealmemorandum[toEDIwas]amereformallapse,anexcusableneglectandnota JUSTIFIABLEBYREASONOFINCOMPETENCE.COROLLARYHERETO,
jurisdictionaldefectwhichwouldjustifythedismissalofhisappeal."22Thecourtalsoheldthat WHETHERTHEPRIETOVS.NLRCRULING,ASAPPLIEDBYTHECOURT
petitionerEDIfailedtoprovethatprivaterespondentwasterminatedforavalidcauseandin OFAPPEALS,ISAPPLICABLEINTHEINSTANTCASE.
accordancewithdueprocess;andthatGran'sDeclarationreleasingOABfromanymonetary
obligationhadnoforceandeffect.TheappellatecourtratiocinatedthatEDIhadtheburdenof III.WHETHERPETITIONERHASESTABLISHEDBYWAYOF
provingGran'sincompetence;however,otherthantheterminationletter,noevidencewas SUBSTANTIALEVIDENCETHATGRAN'STERMINATIONWAS
presentedtoshowhowandwhyGranwasconsideredtobeincompetent.Thecourtheldthat JUSTIFIABLEBYREASONOFINSUBORDINATIONANDDISOBEDIENCE.
sincethelawrequirestherecruitmentagenciestosubjectOFWstotradetestsbefore
deployment,Granmusthavebeencompetentandqualified;otherwise,hewouldnothave IV.WHETHERGRANWASAFFORDEDDUEPROCESSPRIORTO
beenhiredanddeployedabroad. TERMINATION.

AsforthechargeofinsubordinationanddisobedienceduetoGran'sfailuretosubmita"Daily V.WHETHERGRANISENTITLEDTOBACKWAGESFORTHEUNEXPIRED
ActivityReport,"theappellatecourtfoundthatEDIfailedtoshowthatthesubmissionofthe PORTIONOFHISCONTRACT.23
"DailyActivityReport"wasapartofGran'sdutyorthecompany'spolicy.Thecourtalsoheld
thatevenifGranwasguiltyofinsubordination,heshouldhavejustbeensuspendedor
reprimanded,butnotdismissed. TheCourt'sRuling

ThepetitionlacksmeritexceptwithrespecttoGran'sfailuretofurnishEDIwithhisAppeal
MemorandumfiledwiththeNLRC.
FirstIssue:NLRC'sDutyistoRequireRespondenttoProvidePetitioneraCopyofthe TherecordsrevealthattheNLRCdiscoveredthatGranfailedtofurnishEDIacopyofthe
Appeal AppealMemorandum.TheNLRCthenorderedGrantopresentproofofservice.In
compliancewiththeorder,GransubmittedacopyofCampCramePostOffice'slistof
mail/parcelssentonApril7,1998.30Thepostoffice'slistshowsthatprivaterespondentGran
PetitionerEDIclaimsthatGran'sfailuretofurnishitacopyoftheAppealMemorandum
senttwopiecesofmailonthesamedate:oneaddressedtoacertainDanO.deGuzmanof
constitutesajurisdictionaldefectandadeprivationofdueprocessthatwouldwarranta
LegaspiVillage,Makati;andtheotherappearstobeaddressedtoNeilB.Garcia(orGran),31
rejectionoftheappeal.
ofErmita,Manilabothofwhomarenotconnectedwithpetitioner.

Thispositionisdevoidofmerit.
Thismailinglist,however,isnotaconclusiveproofthatEDIindeedreceivedacopyofthe
AppealMemorandum.
Inacatenaofcases,itwasruledthatfailureofappellanttofurnishacopyoftheappealto
theadversepartyisnotfataltotheappeal.
Sec.5oftheNLRCRulesofProcedure(1990)providesfortheproofandcompletenessof
serviceinproceedingsbeforetheNLRC:
InEstradav.NationalLaborRelationsCommission,24thisCourtsetasidetheorderofthe
NLRCwhichdismissedanappealonthesolegroundthattheappellantdidnotfurnishthe Section5.32Proofandcompletenessofservice.Thereturnisprimafacieproofof
appelleeamemorandumofappealcontrarytotherequirementsofArticle223oftheNew
thefactsindicatedtherein.Servicebyregisteredmailiscompleteuponreceiptby
LaborCodeandSection9,RuleXIIIofitsImplementingRulesandRegulations.
theaddresseeorhisagent;butiftheaddresseefailstoclaimhismailfromthepost
officewithinfive(5)daysfromthedateoffirstnoticeofthepostmaster,service
Also,inJ.D.MagpayoCustomsBrokerageCorp.v.NLRC,theorderofdismissalofanappeal shalltakeeffectaftersuchtime.(Emphasissupplied.)
totheNLRCbasedonthegroundthat"thereisnoshowingwhatsoeverthatacopyofthe
appealwasservedbytheappellantontheappellee"25wasannulled.TheCourtratiocinatedas
Hence,iftheserviceisdonethroughregisteredmail,itisonlydeemedcompletewhenthe
follows:
addresseeorhisagentreceivedthemailorafterfive(5)daysfromthedateoffirstnoticeof
thepostmaster.However,theNLRCRulesdonotstatewhatwouldconstituteproperproofof
Thefailuretogiveacopyoftheappealtotheadversepartywasamereformal service.
lapse,anexcusableneglect.TimeandagainWehaveactedonpetitionstoreview
decisionsoftheCourtofAppealsevenintheabsenceofproofofserviceofacopy
Sec.13,Rule13oftheRulesofCourt,providesforproofsofservice:
thereoftotheCourtofAppealsasrequiredbySection1ofRule45,RulesofCourt.
Weactonthepetitionsandsimplyrequirethepetitionerstocomplywiththe
rule.26(Emphasissupplied.) Section13.Proofofservice.Proofofpersonalserviceshallconsistofawritten
admissionofthepartyservedortheofficialreturnoftheserver,ortheaffidavitof
thepartyserving,containingafullstatementofthedate,placeandmannerof
TheJ.D.MagpayorulingwasreiteratedinCarnationPhilippinesEmployeesLaborUnion service.Iftheserviceisbyordinarymail,proofthereofshallconsistofanaffidavit
FFWv.NationalLaborRelationsCommission,27Pagdonsalanv.NLRC,28andinSunrise ofthepersonmailingoffactsshowingcompliancewithsection7ofthisRule.If
ManningAgency,Inc.v.NLRC.29
serviceismadebyregisteredmail,proofshallbemadebysuchaffidavitand
registryreceiptissuedbythemailingoffice.Theregistryreturncardshallbe
Thus,thedoctrinethatevolvedfromthesecasesisthatfailuretofurnishtheadverseparty filedimmediatelyuponitsreceiptbythesender,orinlieuthereofthe
withacopyoftheappealistreatedonlyasaformallapse,anexcusableneglect,andhence,
unclaimedlettertogetherwiththecertifiedorsworncopyofthenoticegivenby
notajurisdictionaldefect.Accordingly,insuchasituation,theappealshouldnotbe
thepostmastertotheaddressee(emphasissupplied).
dismissed;however,itshouldnotbegivenduecourseeither.AsenunciatedinJ.D.Magpayo,
thedutythatisimposedontheNLRC,insuchacase,istorequiretheappellantto
complywiththerulethattheopposingpartyshouldbeprovidedwithacopyofthe Basedontheforegoingprovision,itisobviousthatthelistsubmittedbyGranisnot
appealmemorandum. conclusiveproofthathehadservedacopyofhisappealmemorandumtoEDI,norisit
conclusiveproofthatEDIreceiveditscopyoftheAppealMemorandum.Heshouldhave
submittedanaffidavitprovingthathemailedtheAppealMemorandumtogetherwiththe
WhileGran'sfailuretofurnishEDIwithacopyoftheAppealMemorandumisexcusable,the registryreceiptissuedbythepostoffice;afterwards,Granshouldhaveimmediatelyfiledthe
abjectfailureoftheNLRCtoorderGrantofurnishEDIwiththeAppealMemorandum registryreturncard.
constitutesgraveabuseofdiscretion.
Hence,afterseeingthatGranfailedtoattachtheproofofservice,theNLRCshouldnothave Unfortunatelyforpetitioner,itdidnotprovethepertinentSaudilawsonthematter;thus,the
simplyacceptedthepostoffice'slistofmailandparcelssent;butitshouldhaverequired InternationalLawdoctrineofpresumedidentityapproachorprocessualpresumptioncomes
GrantoproperlyfurnishtheopposingpartieswithcopiesofhisAppealMemorandumas intoplay.36Whereaforeignlawisnotpleadedor,evenifpleaded,isnotproved,the
prescribedinJ.D.Magpayoandtheothercases.TheNLRCshouldnothaveproceeded presumptionisthatforeignlawisthesameasours.37Thus,weapplyPhilippinelaborlawsin
withtheadjudicationofthecase,asthisconstitutesgraveabuseofdiscretion. determiningtheissuespresentedbeforeus.

TheglaringfailureofNLRCtoensurethatGranshouldhavefurnishedpetitionerEDIacopy PetitionerEDIclaimsthatithadproventhatGranwaslegallydismissedduetoincompetence
oftheAppealMemorandumbeforerenderingjudgmentreversingthedismissalofGran's andinsubordinationordisobedience.
complaintconstitutesanevasionofthepertinentNLRCRulesandestablishedjurisprudence.
Worse,thisfailuredeprivedEDIofproceduraldueprocessguaranteedbytheConstitution Thisclaimhasnomerit.
whichcanserveasbasisforthenullificationofproceedingsintheappealbeforetheNLRC.
OnecanonlysurmisetheshockanddismaythatOAB,EDI,andESIexperiencedwhenthey Inillegaldismissalcases,ithasbeenestablishedbyPhilippinelawandjurisprudencethatthe
thoughtthatthedismissalofGran'scomplaintbecamefinal,onlytoreceiveacopyofGran's employershouldprovethatthedismissalofemployeesorpersonnelislegalandjust.
MotionforExecutionofJudgmentwhichalsoinformedthemthatGranhadobtaineda
favorableNLRCDecision.Thisisnotlevelplayingfieldandabsolutelyunfairand
discriminatoryagainsttheemployerandthejobrecruiters.Therightsoftheemployersto Section33ofArticle277oftheLaborCode38statesthat:
proceduraldueprocesscannotbecavalierlydisregardedfortheytoohaverightsassuredunder
theConstitution. ART.277.MISCELLANEOUSPROVISIONS39

However,insteadofannullingthedispositionsoftheNLRCandremandingthecasefor (b)Subjecttotheconstitutionalrightofworkerstosecurityoftenureandtheirright
furtherproceedingswewillresolvethepetitionbasedontherecordsbeforeustoavoida tobeprotectedagainstdismissalexceptforajustandauthorizedcauseandwithout
protractedlitigation.33 prejudicetotherequirementofnoticeunderArticle283ofthisCode,theemployer
shallfurnishtheworkerwhoseemploymentissoughttobeterminatedawritten
ThesecondandthirdissueshaveacommonmatterwhethertherewasjustcauseforGran's noticecontainingastatementofthecausesforterminationandshallaffordthelatter
dismissalhence,theywillbediscussedjointly. ampleopportunitytobeheardandtodefendhimselfwiththeassistanceofhis
representativeifhesodesiresinaccordancewithcompanyrulesandregulations
promulgatedpursuanttoguidelinessetbytheDepartmentofLaborand
SecondandThirdIssues:WhetherGran'sdismissalisjustifiablebyreasonof Employment.Anydecisiontakenbytheemployershallbewithoutprejudicetothe
incompetence,insubordination,anddisobedience rightoftheworkerstocontestthevalidityorlegalityofhisdismissalbyfilinga
complaintwiththeregionalbranchoftheNationalLaborRelationsCommission.
IncasesinvolvingOFWs,therightsandobligationsamongandbetweentheOFW,thelocal Theburdenofprovingthattheterminationwasforavalidorauthorizedcause
recruiter/agent,andtheforeignemployer/principalaregovernedbytheemploymentcontract. shallrestontheemployer.xxx
Acontractfreelyenteredintoisconsideredlawbetweentheparties;andhence,shouldbe
respected.Informulatingthecontract,thepartiesmayestablishsuchstipulations,clauses, Inmanycases,ithasbeenheldthatinterminationdisputesorillegaldismissalcases,the
termsandconditionsastheymaydeemconvenient,providedtheyarenotcontrarytolaw, employerhastheburdenofprovingthatthedismissalisforjustandvalidcauses;andfailure
morals,goodcustoms,publicorder,orpublicpolicy.34 todosowouldnecessarilymeanthatthedismissalwasnotjustifiedandthereforeillegal.40
Takingintoaccountthecharacterofthechargesandthepenaltymetedtoanemployee,the
Inthepresentcase,theemploymentcontractsignedbyGranspecificallystatesthatSaudi employerisboundtoadduceclear,accurate,consistent,andconvincingevidencetoprovethat
LaborLawswillgovernmattersnotprovidedforinthecontract(e.g.specificcausesfor thedismissalisvalidandlegal.41Thisisconsistentwiththeprincipleofsecurityoftenureas
termination,terminationprocedures,etc.).Beingthelawintendedbytheparties(lexloci guaranteedbytheConstitutionandreinforcedbyArticle277(b)oftheLaborCodeofthe
intentiones)toapplytothecontract,SaudiLaborLawsshouldgovernallmattersrelatingto Philippines.42
theterminationoftheemploymentofGran.
Intheinstantcase,petitionerclaimsthatprivaterespondentGranwasvalidlydismissedfor
Ininternationallaw,thepartywhowantstohaveaforeignlawappliedtoadisputeorcasehas justcause,duetoincompetenceandinsubordinationordisobedience.Toproveitsallegations,
theburdenofprovingtheforeignlaw.Theforeignlawistreatedasaquestionoffacttobe EDIsubmittedtwolettersasevidence.ThefirstistheJuly9,1994terminationletter,43
properlypleadedandprovedasthejudgeorlaborarbitercannottakejudicialnoticeofa addressedtoGran,fromAndreaE.Nicolaou,ManagingDirectorofOAB.Thesecondisan
foreignlaw.Heispresumedtoknowonlydomesticorforumlaw.35 unsignedApril11,1995letter44fromOABaddressedtoEDIandESI,whichoutlinedthe
reasonswhyOABhadterminatedGran'semployment.
PetitionerclaimsthatGranwasincompetentfortheComputerSpecialistpositionbecausehe PetitioneralsoraisedtheissuethatPrietov.NLRC,49asusedbytheCAinitsDecision,isnot
had"insufficientknowledgeinprogrammingandzeroknowledgeof[the]ACADsystem."45 applicabletothepresentcase.
PetitioneralsoclaimsthatGranwasjustifiablydismissedduetoinsubordinationor
disobediencebecausehecontinuallyfailedtosubmittherequired"DailyActivityReports."46 InPrieto,thisCourtruledthat"[i]tispresumedthatbeforetheirdeployment,thepetitioners
However,otherthantheabovementionedletters,nootherevidencewaspresentedtoshow weresubjectedtotradetestsrequiredbylawtobeconductedbytherecruitingagencyto
howandwhyGranwasconsideredincompetent,insubordinate,ordisobedient.PetitionerEDI insureemploymentofonlytechnicallyqualifiedworkersfortheforeignprincipal."50TheCA,
hadclearlyfailedtoovercometheburdenofprovingthatGranwasvalidlydismissed. usingtherulinginthesaidcase,ruledthatGranmusthavepassedthetest;otherwise,he
wouldnothavebeenhired.Therefore,EDIwasatfaultwhenitdeployedGranwhowas
Petitioner'simputationofincompetenceonprivaterespondentduetohis"insufficient allegedly"incompetent"forthejob.
knowledgeinprogrammingandzeroknowledgeoftheACADsystem"basedonlyonthe
abovementionedletters,withoutanyotherevidence,cannotbegivencredence. Accordingtopetitioner,thePrietorulingisnotapplicablebecauseinthecaseathand,Gran
misrepresentedhimselfinhiscurriculumvitaeasaComputerSpecialist;thus,hewasnot
Anallegationofincompetenceshouldhaveafactualfoundation.Incompetencemaybeshown qualifiedforthejobforwhichhewashired.
byweighingitagainstastandard,benchmark,orcriterion.However,EDIfailedtoestablish
anysuchbasestoshowhowpetitionerfoundGranincompetent. Wedisagree.

Inaddition,theelementsthatmustconcurforthechargeofinsubordinationorwillful TheCAiscorrectinapplyingPrieto.Thepurposeoftherequiredtradetestistoweedout
disobediencetoprosperwerenotpresent. incompetentapplicantsfromthepoolofavailableworkers.Itissupposedtorevealapplicants
withfalseeducationalbackgrounds,andexposebogusqualifications.SinceEDIdeployed
InMicroSalesOperationNetworkv.NLRC,weheldthat: GrantoRiyadh,itcanbepresumedthatGranhadpassedtherequiredtradetestandthatGran
isqualifiedforthejob.EveniftherewasnoobjectivetradetestdonebyEDI,itwasstillEDI's
Forwillfuldisobediencetobeavalidcausefordismissal,thefollowingtwin responsibilitytosubjectGrantoatradetest;anditsfailuretodosoonlyweakeneditsposition
elementsmustconcur:(1)theemployee'sassailedconductmusthavebeenwillful, butshouldnotinanywayprejudiceGran.Inanycase,theissueisrenderedmootand
thatis,characterizedbyawrongfulandperverseattitude;and(2)theorderviolated academicbecauseGran'sincompetencyisunproved.
musthavebeenreasonable,lawful,madeknowntotheemployeeandmustpertain
tothedutieswhichhehadbeenengagedtodischarge.47 FourthIssue:GranwasnotAffordedDueProcess

EDIfailedtodischargetheburdenofprovingGran'sinsubordinationorwillfuldisobedience. Asdiscussedearlier,intheabsenceofproofofSaudilaws,PhilippineLaborlawsand
AsindicatedbythesecondrequirementprovidedforinMicroSalesOperationNetwork,in regulationsshallgoverntherelationshipbetweenGranandEDI.Thus,ourlawsandruleson
ordertojustifywillfuldisobedience,wemustdeterminewhethertheorderviolatedbythe therequisitesofdueprocessrelatingtoterminationofemploymentshallapply.
employeeisreasonable,lawful,madeknowntotheemployee,andpertainstothedutieswhich
hehadbeenengagedtodischarge.Inthecaseatbar,petitionerfailedtoshowthattheorderof PetitionerEDIclaimsthatprivaterespondentGranwasaffordeddueprocess,sincehewas
thecompanywhichwasviolatedthesubmissionof"DailyActivityReports"waspartof allowedtoworkandimprovehiscapabilitiesforfivemonthspriortohistermination.51EDI
Gran'sdutiesasaComputerSpecialist.BeforetheLaborArbiter,EDIshouldhaveprovideda alsoclaimsthattherequirementsofdueprocess,asenunciatedinSantos,Jr.v.NLRC,52and
copyofthecompanypolicy,Gran'sjobdescription,oranyotherdocumentthatwouldshow MalayaShippingServices,Inc.v.NLRC,53citedbytheCAinitsDecision,wereproperly
thatthe"DailyActivityReports"wererequiredforsubmissionbytheemployees,more observedinthepresentcase.
particularlybyaComputerSpecialist.

Thispositionisuntenable.
EventhoughEDIand/orESIweremerelythelocalemploymentorrecruitmentagenciesand
nottheforeignemployer,theyshouldhaveadducedadditionalevidencetoconvincinglyshow
thatGran'semploymentwasvalidlyandlegallyterminated.Theburdendevolvesnotonly InAgabonv.NLRC,54thisCourtheldthat:
upontheforeignbasedemployerbutalsoontheemploymentorrecruitmentagencyforthe
latterisnotonlyanagentoftheformer,butisalsosolidarilyliablewiththeforeignprincipal Procedurally,(1)ifthedismissalisbasedonajustcauseunderArticle282,the
foranyclaimsorliabilitiesarisingfromthedismissaloftheworker.48 employermustgivetheemployeetwowrittennoticesandahearingoropportunity
tobeheardifrequestedbytheemployeebeforeterminatingtheemployment:a
Thus,petitionerfailedtoprovethatGranwasjustifiablydismissedduetoincompetence, noticespecifyingthegroundsforwhichdismissalissoughtahearingoran
opportunitytobeheardandafterhearingoropportunitytobeheard,anoticeofthe
insubordination,orwillfuldisobedience.
decisiontodismiss;and(2)ifthedismissalisbasedonauthorizedcausesunder hence,hisemploymentcontractisuntilFebruary7,1996.Sincehewasillegallydismissedon
Articles283and284,theemployermustgivetheemployeeandtheDepartmentof July9,1994,beforetheeffectivityofR.A.No.8042,heisthereforeentitledtobackwages
LaborandEmploymentwrittennotices30dayspriortotheeffectivityofhis correspondingtotheunexpiredportionofhiscontract,whichwasequivalenttoUSD16,150.
separation.
PetitionerEDIquestionsthelegalityoftheawardofbackwagesandmainlyreliesonthe
Underthetwinnoticerequirement,theemployeesmustbegiventwo(2)noticesbeforetheir DeclarationwhichisclaimedtohavebeenfreelyandvoluntarilyexecutedbyGran.The
employmentcouldbeterminated:(1)afirstnoticetoapprisetheemployeesoftheirfault,and relevantportionsoftheDeclarationareasfollows:
(2)asecondnoticetocommunicatetotheemployeesthattheiremploymentisbeing
terminated.Inbetweenthefirstandsecondnotice,theemployeesshouldbegivenahearingor I,ELEAZARGRAN(COMPUTERSPECIALIST)AFTERRECEIVINGMY
opportunitytodefendthemselvespersonallyorbycounseloftheirchoice.55 FINALSETTLEMENTONTHISDATETHEAMOUNTOF:

Acarefulexaminationoftherecordsrevealedthat,indeed,OAB'smannerofdismissingGran S.R.2,948.00(SAUDIRIYALSTWOTHOUSANDNINE
fellshortofthetwonoticerequirement.WhileitfurnishedGranthewrittennoticeinforming
himofhisdismissal,itfailedtofurnishGranthewrittennoticeapprisinghimofthecharges
HUNDREDFORTYEIGHTONLY)
againsthim,asprescribedbytheLaborCode.56Consequently,hewasdeniedtheopportunity
torespondtosaidnotice.Inaddition,OABdidnotscheduleahearingorconferencewithGran
todefendhimselfandadduceevidenceinsupportofhisdefenses.Moreover,theJuly9,1994 REPRESENTINGCOMPLETEPAYMENT(COMPENSATION)FORTHE
terminationletterwaseffectiveonthesameday.ThisshowsthatOABhadalready SERVICESIRENDEREDTOOABESTABLISHMENT.
condemnedGrantodismissal,evenbeforeGranwasfurnishedtheterminationletter.Itshould
alsobepointedoutthatOABfailedtogiveGranthechancetobeheardandtodefendhimself IHEREBYDECLARETHATOABEST.HASNOFINANCIALOBLIGATION
withtheassistanceofarepresentativeinaccordancewithArticle277oftheLaborCode. INMYFAVOURAFTERRECEIVINGTHEABOVEMENTIONEDAMOUNT
Clearly,therewasnointentiontoprovideGranwithdueprocess.Summingup,Granwas INCASH.
notifiedandhisemploymentarbitrarilyterminatedonthesameday,throughthesameletter,
andforunjustifiedgrounds.Obviously,Granwasnotaffordeddueprocess.
ISTATEFURTHERTHATOABEST.HASNOOBLIGATIONTOWARDSME
INWHATEVERFORM.
PursuanttothedoctrinelaiddowninAgabon,57anemployerisliabletopaynominaldamages
asindemnityforviolatingtheemployee'srighttostatutorydueprocess.SinceOABwasin IATTESTTOTHETRUTHFULNESSOFTHISSTATEMENTBYAFFIXING
breachofthedueprocessrequirementsundertheLaborCodeanditsregulations,OAB,ESI, MYSIGNATUREVOLUNTARILY.
andEDI,jointlyandsolidarily,areliabletoGranintheamountofPhP30,000.00as
indemnity.
SIGNED.
ELEAZARGRAN
FifthandLastIssue:GranisEntitledtoBackwages
Courtsmustundertakeameticulousandrigorousreviewofquitclaimsorwaivers,more
Wereiteratetherulethatwithregardtoemployeeshiredforafixedperiodofemployment,in particularlythoseexecutedbyemployees.ThisrequirementwasclearlyarticulatedbyChief
casesarisingbeforetheeffectivityofR.A.No.804258(MigrantWorkersandOverseas JusticeArtemioV.PanganibaninLandandHousingDevelopmentCorporationv.Esquillo:
FilipinosAct)onAugust25,1995,thatwhenthecontractisforafixedtermandthe
employeesaredismissedwithoutjustcause,theyareentitledtothepaymentoftheirsalaries
Quitclaims,releasesandotherwaiversofbenefitsgrantedbylawsorcontractsin
correspondingtotheunexpiredportionoftheircontract.59Ontheotherhand,forcasesarising
favorofworkersshouldbestrictlyscrutinizedtoprotecttheweakandthe
aftertheeffectivityofR.A.No.8042,whentheterminationofemploymentiswithoutjust,
validorauthorizedcauseasdefinedbylaworcontract,theworkershallbeentitledtothefull disadvantaged.Thewaiversshouldbecarefullyexamined,inregardnotonlyto
reimbursementofhisplacementfeewithinterestoftwelvepercent(12%)perannum,plushis thewordsandtermsused,butalsothefactualcircumstancesunderwhichthey
salariesfortheunexpiredportionofhisemploymentcontractorforthree(3)monthsforevery havebeenexecuted.63(Emphasissupplied.)
yearoftheunexpiredtermwhicheverisless.60
ThisCourthadalsooutlinedinLandandHousingDevelopmentCorporation,citingPeriquet
Inthepresentcase,theemploymentcontractprovidesthattheemploymentcontractshallbe v.NLRC,64theparametersforvalidcompromiseagreements,waivers,andquitclaims:
validforaperiodoftwo(2)yearsfromthedatetheemployeestartstoworkwiththe
employer.61GranarrivedinRiyadh,SaudiArabiaandstartedtoworkonFebruary7,1994;62
Notallwaiversandquitclaimsareinvalidasagainstpublicpolicy.Iftheagreement e.OnJuly21,1994,GranfiledtheComplaintbeforetheNLRC.
wasvoluntarilyenteredintoandrepresentsareasonablesettlement,itisbindingon
thepartiesandmaynotlaterbedisownedsimplybecauseofachangeofmind.Itis TheforegoingeventsreadilyrevealthatGranwas"forced"tosigntheDeclarationand
onlywherethereisclearproofthatthewaiverwaswangledfromanunsuspectingor constrainedtoreceivetheamountofSR2,948.00evenifitwasagainsthiswillsincehewas
gullibleperson,orthetermsofsettlementareunconscionableonitsface,thatthe toldonJuly10,1994toleaveRiyadhonJuly12,1994.Hehadnootherchoicebuttosignthe
lawwillstepintoannulthequestionabletransaction.Butwhereitisshownthatthe DeclarationasheneededtheamountofSR2,948.00forthepaymentofhisticket.Hecould
personmakingthewaiverdidsovoluntarily,withfullunderstandingofwhat haveentertainedsomeapprehensionsastothestatusofhisstayorsafetyinSaudiArabiaifhe
hewasdoing,andtheconsiderationforthequitclaimiscredibleand wouldnotsignthequitclaim.
reasonable,thetransactionmustberecognizedasavalidandbindingundertaking.
(Emphasissupplied.) 4.ThecourtaquoiscorrectinitsfindingthattheDeclarationisacontractofadhesionwhich
shouldbeconstruedagainsttheemployer,OAB.Anadhesioncontractiscontrarytopublic
IsthewaiverandquitclaimlabeledaDeclarationvalid?Itisnot. policyasitleavestheweakerpartytheemployeeina"takeitorleaveit"situation.
Certainly,theemployerisbeingunjusttotheemployeeasthereisnomeaningfulchoiceon
TheCourtfindsthewaiverandquitclaimnullandvoidforthefollowingreasons: thepartoftheemployeewhilethetermsareunreasonablyfavorabletotheemployer.66

1.ThesalarypaidtoGranuponhistermination,intheamountofSR2,948.00,is Thus,theDeclarationpurportingtobeaquitclaimandwaiverisunenforceableunder
unreasonablylow.Ascorrectlypointedoutbythecourtaquo,thepaymentofSR2,948.00is PhilippinelawsintheabsenceofproofoftheapplicablelawofSaudiArabia.
evenlowerthanhismonthlysalaryofSR3,190.00(USD850.00).Inaddition,itisalsovery
muchlessthantheUSD16,150.00whichistheamountGranislegallyentitledtogetfrom Inordertopreventdisputesonthevalidityandenforceabilityofquitclaimsandwaiversof
petitionerEDIasbackwages. employeesunderPhilippinelaws,saidagreementsshouldcontainthefollowing:

2.TheDeclarationrevealsthatthepaymentofSR2,948.00isactuallythepaymentforGran's 1.Afixedamountasfullandfinalcompromisesettlement;
salaryfortheservicesherenderedtoOABasComputerSpecialist.IftheDeclarationisa
quitclaim,thentheconsiderationshouldbemuchmuchmorethanthemonthlysalaryofSR 2.Thebenefitsoftheemployeesifpossiblewiththecorrespondingamounts,whichthe
3,190.00(USD850.00)althoughpossiblylessthantheestimatedGran'ssalariesforthe employeesaregivingupinconsiderationofthefixedcompromiseamount;
remainingdurationofhiscontractandotherbenefitsasemployeeofOAB.Aquitclaimwill
understandablybelowerthanthesumtotaloftheamountsandbenefitsthatcanpossiblybe
awardedtoemployeesortobeearnedfortheremainderofthecontractperiodsinceitisa 3.AstatementthattheemployerhasclearlyexplainedtotheemployeeinEnglish,Filipino,or
compromisewheretheemployeeswillhavetoforfeitacertainportionoftheamountstheyare inthedialectknowntotheemployeesthatbysigningthewaiverorquitclaim,theyare
claiminginexchangefortheearlypaymentofacompromiseamount.Thecourtmayhowever forfeitingorrelinquishingtheirrighttoreceivethebenefitswhichareduethemunderthelaw;
stepinwhensuchamountisunconscionablyloworunreasonablealthoughtheemployee and
voluntarilyagreedtoit.InthecaseoftheDeclaration,theamountisunreasonablysmall
comparedtothefuturewagesofGran. 4.Astatementthattheemployeessignedandexecutedthedocumentvoluntarily,andhadfully
understoodthecontentsofthedocumentandthattheirconsentwasfreelygivenwithoutany
3.ThefactualcircumstancessurroundingtheexecutionoftheDeclarationwouldshowthat threat,violence,duress,intimidation,orundueinfluenceexertedontheirperson.
Grandidnotvoluntarilyandfreelyexecutethedocument.Considerthefollowingchronology
ofevents: ItisadvisablethatthestipulationsbemadeinEnglishandTagalogorinthedialectknownto
theemployee.Thereshouldbetwo(2)witnessestotheexecutionofthequitclaimwhomust
a.OnJuly9,1994,Granreceivedacopyofhisletteroftermination; alsosignthequitclaim.Thedocumentshouldbesubscribedandsworntounderoath
preferablybeforeanyadministeringofficialoftheDepartmentofLaborandEmploymentor
itsregionaloffice,theBureauofLaborRelations,theNLRCoralaborattachinaforeign
b.OnJuly10,1994,GranwasinstructedtodepartSaudiArabiaandrequiredtopay
country.Suchofficialshallassistthepartiesregardingtheexecutionofthequitclaimand
hisplaneticket;65
waiver.67ThiscompromisesettlementbecomesfinalandbindingunderArticle227ofthe
LaborCodewhichprovidesthat:
c.OnJuly11,1994,hesignedtheDeclaration;
[A]nycompromisesettlementvoluntarilyagreeduponwiththeassistanceofthe
d.OnJuly12,1994,GrandepartedfromRiyadh,SaudiArabia;and 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 3.Complainantcouldnotanymoreclaimnorentitledfortherefundofher24months
ofSunace,thefollowingamountsrepresentingincometaxandsavingswerededucted: savings as she already took back her saving already last year and the
employerdidnotdeductanymoneyfromhersalary,inaccordancewitha
FascimileMessagefromtherespondentSUNACEsemployer,JetCrown
InternationalCo.Ltd.,axerographiccopyofwhichisherewithattachedas
ANNEX2hereof;

COMPLAINANTISNOTENTITLED
TOREFUNDOFHER14MONTHSTAX
ANDPAYMENTOFATTORNEYSFEES
Year Deductionfor DeductionforSavings

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 President[19]

January14,2004,[18]Sunacefiledthepresentpetitionforreviewoncertiorari.

ThefindingoftheCourtofAppealssolelyonthebasisoftheabovequotedtelefax
message,thatSunacecontinuallycommunicatedwiththeforeignprincipal(sic)andtherefore
TheCourtofAppealsaffirmedtheLaborArbiterandNLRCsfindingthatSunace wasawareofandhadconsentedtotheexecutionoftheextensionofthecontractismisplaced.
knewofandimpliedlyconsentedtotheextensionofDivinas2yearcontract.Itwentonto ThemessagedoesnotprovideevidencethatSunacewasprivytothenewcontractexecuted
statethatItisundisputedthat[Sunace]wascontinuallycommunicatingwith[Divinas]foreign after the expiration on February 1, 1998 of the original contract. That Sunace and the
employer.Itthusconcludedthat[a]sagentoftheforeignprincipal,petitionercannotprofess Taiwanese broker communicated regarding Divinas allegedly withheld savings does not
ignoranceofsuchextensionasobviously,theactoftheprincipalextendingcomplainant(sic) necessarilymeanthatSunaceratifiedtheextensionofthecontract.AsSunacepointsoutinits
employmentcontractnecessarilyboundit. Reply[20]filedbeforetheCourtofAppeals,

ContrarytotheCourtofAppealsfinding,theallegedcontinuouscommunication Ascanbeseenfromthatlettercommunication,itwas
waswiththeTaiwanesebrokerWang,notwiththeforeignemployerXiong. 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]

The February21,2000 telefaxmessagefromtheTaiwanesebrokertoSunace,the
onlybasisofafindingofcontinuouscommunication,readsverbatim:

Parenthetically,sincethetelefaxmessageisdatedFebruary21,2000,itissafeto

assumethatitwassenttoenlightenSunacewhohadbeendirected,bySummonsissuedon
xxxx February15,2000,toappearonFebruary28,2000foramandatoryconferencefollowing

DivinasfilingofthecomplaintonFebruary14,2000.
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 RespectingtheCourtofAppealsfollowingdictum:
backforher.

As agent of its foreign principal, [Sunace] cannot profess
ignorance of such an extension as obviously, the act of its principal
Thankyouandbestregards. extending[Divinas]employmentcontractnecessarilyboundit,[22]
(sgd.)
EdmundWang
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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