UP Law F2021 024 Sameer Overseas Placement Agency v.

Cabiles
Labor 1 Sec. 10, RA 8042; RA 10022 2014 Leonen, J.

SUMMARY: Joy Cabiles contracted with Sameer Overseas Placement Agency for a one-year contract in Taiwan,
where she started working for Wacoal. Barely 3 weeks into her work, she was summarily terminated and repatriated
on the same day. She thus filed a complaint for illegal dismissal with the NLRC. While the Labor Arbiter initially
dismissed her complaint, the NLRC reversed and held that her dismissal was illegal, awarding her 3 months’ worth of
salary, which the CA upheld. The SC affirmed the NLRC’s ruling, but modified it by holding that Cabiles is entitled to
her salary for the entire unexpired portion of her contract, applying the ruling in Serrano v. Gallant Maritime Services.
The Court also emphasized that Sameer is not without recourse, as it may go after Wacoal, since the law had made
the local agency and foreign employer solidarily liable for OFWs’ money claims.
FACTS1
 Joy Cabiles (“Cabiles”) was contracted by Sameer Overseas Placement Agency, Inc. (“Sameer”), with
whom she signed a one-year employment contract for a monthly salary of New Taiwan Dollar (NT$)
15,360.00. Cabiles also alleged that she was required to pay a placement fee of P70,000 upon signing.
 She started working for Taiwan Wacoal (“Wacoal”) on June 26, 1997. Whereas she alleged that she
agreed to work as quality control for one year, she was instead asked to work as a cutter.
 On July 14, 1997, or barely a month into her work, a certain Mr. Huwang from Wacoal, without prior
notice, terminated her contract. She was asked to immediately report to their office to gather her salary
and passport, and to prepare for immediate repatriation.
 From June 26, 1997 to July 14, 1997, Cabiles alleged that she received only NT$9,000 and that Wacoal
deducted NT$3,000 to cover her plane ticket to Manila.
 On October 15, 1997, Cabiles filed a Complaint for Illegal Dismissal with the National Labor Relations
Commission (“NLRC”) against Sameer and Wacoal. She asked for (a) the return of her placement fee
[P70,000], (b) the amount withheld for her plane ticket [NT$3,000], (c) payment for her salary for 23
months, and (d) moral and exemplary damages. She identified Wacoal as Sameer’s foreign principal.
 For its part, Sameer contended that Cabiles was terminated due to her (a) inefficiency, (b) negligence in
her duties, and (c) failure to comply with the work requirements of Wacoal. Sameer also denied asking
for a placement fee by showing an Official Receipt dated June 10,1997 bearing the amount P20,360. In
addition, Sameer claimed that Wacoal’s accreditation with it (Sameer) was already transferred to Pacific
Manpower & Management Services, Inc. (“Pacific”); thus, as Sameer claimed, it has already been
substituted by Pacific.
 Pacific moved for the dismissal of Cabiles’s complaint against it, alleging the absence of an employer-
employee relationship between them, thereby making the claims outside the Labor Arbiter’s jurisdiction.
 LABOR ARBITER: On July 29, 1998, Acting Executive Labor Arbiter Pedro Ramos (“Ramos”) dismissed
Cabiles’s complaint, ruling that her complaint was based on mere allegations and that there was no
excess payment of placement fees. Cabiles thus appealed to the NLRC.
 NLRC: On March 31, 2004, the NLRC reversed and ruled that Cabiles was illegally dismissed,
reiterating the rule that the burden of proof to show that the dismissal was based on a just or valid cause
rests on the employer. The NLRC found that there was no sufficient proof that Cabiles was inefficient or
non-compliant with company requirements. In addition, the NLRC found that Sameer violated procedural
due process in terminating Cabiles.
 The NLRC awarded Cabiles (a) 3 months worth of salary or NT$46,080, (b) the reimbursement of the
withheld NT$3,000, and (c) attorney’s fees of NT$300. NLRC denied Sameer’s Motion for
Reconsideration, prompting the latter to petition for certiorari with the Court of Appeals.
 COURT OF APPEALS: On June 27, 2005, the CA affirmed the NLRC’s decision with respect to the (a)
finding of illegal dismissal, (b) award of 3 months’ worth of salary or NT$46,080, (c) reimbursement of
the NT$3,000 repatriation expense, and (d) attorney’s fees of NT$300. Still, the CA remanded the case to
the NLRC for the sole purpose of addressing the validity of Sameer’s third-party complaint against Pacific.
Nevertheless, Sameer filed a petition for review on certiorari with the Supreme Court.
1
Please note that I underlined each of the characters’ names at the first instance that each appeared in the facts; meanwhile, dates, periods,
and article numbers (along with some emphasized facts) are in bold letters.
 RATIO
[NOT RELEVANT] W/N there was just cause for the termination of Joy Cabiles
NO. Sameer failed to present any just cause for Cabiles’s dismissal. The employer, Wacoal, also failed to observe
due process of law.

Employers have the prerogative to impose productivity and quality standards at work and impose reasonable
rules to ensure compliance with such standards. They cannot be compelled to retain the services of employees
who are guilty of acts inimical to the employer’s interests. However, this prerogative must not be abused and
must be tempered with the employee’s right to security of tenure (guaranteed by Article XIII, Section 3 of the
1987 Constitution); employees may not be terminated without a valid or just cause (substantive due process)
and without observing proper procedure (procedural due process).

Meanwhile, the Court emphasized that employees have the right to security of tenure even though they move to
work at a different jurisdiction, following the principle of lex loci contractus (law of the land where the contract
is made), as cited in Triple Eight Integrated Services v. NLRC2 and PCL Shipping Philippines v. NLRC3. Thus, since
the contract of employment of Cabiles was perfected in the Philippines, the Labor Code, its IRR, other labor laws,
and most especially the constitutional guarantee of security of tenure all apply, both with respect to substantive
and procedural rights.

Under the Labor Code therefore, Sameer’s contention that Cabiles was inefficient and negligent in her duties
may constitute a just cause under Article 282(b) thereof [gross and habitual neglect by the employee of his
duties], but only if Sameer was able to prove it, since the burden of proof is on the employer.

Thus, to show that dismissal resulting from inefficiency in work is valid, the following requisites must concur:
1. The employer has set standards of conduct and workmanship against which the employee will be judged;
2. The standards of conduct and workmanship must have been communicated to the employee; and,
3. The communication was made at a reasonable time prior to the employee's performance assessment.

In this case, Sameer failed to present evidence to prove that Cabiles fell short of Wacoal’s work requirements.
Moreover, Sameer never specified which requirements or standards Cabiles failed to meet or what acts
constituted inefficiency. Neither was there any showing that Cabiles was sufficiently informed of the standards
of efficiency and performance of Wacoal. The fact that there was conflict as to what Cabiles’s position was
showed that even that basic matter was unclear.

Since there is no proof that Cabiles was terminated under a just cause, her termination is thus illegal, as
violative of substantive due process.

[NOT RELEVANT] W/N procedural due process was observed in Joy Cabiles’s termination
NO. The dismissal of Cabiles failed to observe the requirements of twin notice and hearing.

Coupled with just cause, a valid termination must also adhere to the requirements of procedural due process as
follows: (1) The employer must give a written notice to the employee informing her of the particular acts that
may cause her dismissal; (2) The employee must then be given an opportunity to be heard; and (3) The second
notice must inform the employee of the employer’s ultimate decision.

In this case, however, Cabiles was terminated barely a month into her contract and was repatriated on the very
same day. Clearly, Sameer failed to properly notify Cabiles and accord her an opportunity to be heard.

The termination of Cabiles is thus illegal also because her constitutional right to procedural due process was
violated.

2
359 Phil. 955 (1998)
3
540 Phil. 65 (2006)
[RELEVANT ] W/N Joy Cabiles is entitled to her salary for the unexpired portion of her contract or only
for 3 months’ worth
UNEXPIRED PORTION. Along with the (1) reimbursement of the withheld NT$3,0004 and (2) entitlement to
NT$300 or 10% of the amount withheld wages as attorney’s fees5, Joy Cabiles is additionally entitled not only to
a sum equivalent to three months’ worth of salary but to the (3) amount equivalent to the unexpired term of
her employment contract.

In Serrano v. Gallant Maritime Services6 (promulgated in 2009), the SC ruled that the phrase “or for 3 months for
every year of the unexpired term, whichever is less” found in the 5th paragraph of Section 10 of RA 8042 is
unconstitutional for being violative of substantive due process and the equal protection clause.

Intriguingly, the same phrase was reinstated in RA 8042 by Section 7 of RA 10022, promulgated in March 8,
2010. However, because Cabiles was terminated in 1997, it is RA 80427, before it was amended by RA 10022,
which governs in this case.

Thus, the SC’s ruling that Cabiles is entitled to her salary for the unexpired portion of her contract, and not
merely 3 months, is simply in accordance with RA 8042 and Serrano v. Gallant Maritime Services, before the
amendatory law RA 10022. [In other words, RA 10022 has nothing to do with Cabiles’s case.]

[RELEVANT ] W/N the phrase “or for 3 months for every year of the unexpired term, whichever is less”
found in the 5th paragraph of Section 10 of RA 8042, which was declared unconstitutional by the SC in
Serrano v. Gallant Maritime Services is validly reinstated by Section 7 of RA 10022
NO. The clause remains to be unconstitutional.

As a general rule, before the courts may exercise its power of judicial review and rule upon the constitutionality
of a law, there must be an “actual case or controversy” involving adversarial positions.8 Thus, in this case, the
court could have simply refused to tackle the constitutionality of Section 7 of RA 10022 due to the lack of an
actual case or controversy.

However, the situation is “unique,” as the SC noted, in that RA 10022 incorporated the exact clause already
declared as unconstitutional. At the very least, RA 10022 may delay the execution of judgment in this and
subsequent cases and hinder the timely rectification of the wrong done to Cabiles and to others in the future.
Moreover, the SC highlighted that it cannot allow added expenses for further litigation that will reduce overseas
workers’ wages.9 Thus, the SC decided to rule on this constitutional issue.

In the hierarchy of laws, the Constitution is supreme. Thus, when a law or provision of law is declared invalid for
being contrary to the Constitution, the invalidity cannot be cured by reincorporation or reenactment of the same
or similar law or provision, unless such circumstances have so changed as to warrant a reverse conclusion.

Because the Constitution affords special protection to labor, and the classification “operates to the peculiar
disadvantage of a suspect class,” the Court decided to subject the clause to the “strict scrutiny” standard. The
effect of such a standard is that the presumption of validity of the law is abandoned and the burden shifts to
4
According to Section 15 of RA 8042. The said provision states that “repatriation of the worker and the transport of his personal belongings
shall be the primary responsibility of the agency which recruited or deployed the worker overseas” except when the termination is due
“solely to the fault of the worker” (which isn’t true for this case).
5
Article 111, Labor Code. Attorney’s Fees. – (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees
equivalent to ten percent of the amount of wages recovered.
6
GR No. 167614, March 24, 2009.
7
Took effect in 1995.
8
The three other requisites are (a) locus standi, (b) earliest opportunity, and (c) lis mota.
9
Truly, not all future cases of illegal termination of OFWs will reach the Supreme Court, due to expensive litigation costs. Thus, some OFWs
might have to settle with an award of 3 months’ salary instead of the unexpired portion of their contract. And while there might be some
who will be fortunate enough to have the Court of Appeals eventually strike down the provision as unconstitutional, it won’t be binding
precedent until it is the Supreme Court that pronounces the same in a subsequent case, clearly adding to expenses for litigation.
government to prove that it is not unconstitutional. However, in this case, neither Sameer nor the Solicitor
General showed the SC any compelling change in circumstances as to justify the reversal of Serrano (which
pronounced that such provision is a violation of both the equal protection and due process clauses of the
Constitution).

EQUAL PROTECTION: Congress, in creating laws, may make distinctions and classifications. The Court noted in
Serrano that the classifications made by the reinstated clause are as follows:
Classifications Different Treatment
A. (A1) Fixed-period OFWs vs. (A2) fixed-period Those in A1  money claims subjected to a cap of 3
local workers months (specifically those in class C1)
Those in A2  money claims do not have such cap
B. [Within class A1] (B1) OFWs with contracts of at Those in B1  granted a cap equivalent to 3 months
least 1 year vs. (B2) OFWs with contracts of less (specifically those in class C1)
than 1 year Those in B2  granted amounts equivalent to the
unexpired portion of their contract
C. [Within class B1] (C1) Those with at least 1 year Those in C1  granted a cap equivalent to 3 months
left in their contracts vs. (C2) those with less than Those in C2  granted amounts equivalent to the
1 year left when they were illegally dismissed unexpired portion of their contract

Meanwhile, the equal protection clause requires classifications to be reasonable and free from arbitrariness. For
a classification to be reasonable, it must satisfy the following 4 requisites:
1. The classification must rest on substantial distinctions;
2. It must be germane to the purpose of the law;
3. It must not be limited to existing conditions only; and,
4. It must apply equally to all members of the same class.

In this case, as in Serrano, the SC found that the reinstated clause failed to satisfy all these requisites:
1. No real or substantial distinctions justify the different treatments in terms of the calculation of money
claims arising from illegal termination. The right to security of tenure of a fixed-period local worker is
neither less than nor greater than that of a fixed-period OFW. The same is true for the 2nd and 3rd levels of
classification.
2. Neither are the classifications germane to the law’s purpose, which is to “establish a higher standard of
protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in
distress.” Putting a cap on the money claims of certain OFWs certainly does not increase the standard of
protection afforded to them. The SC also rejected the claim that reducing placement agencies’ liabilities
redounds to OFWs’ benefit (allegedly by encouraging deployment efforts), because their liability is
unjustifiably mitigated at the expense of OFWs’ rights.

DUE PROCESS: The clause also violates the due process clause because (even adjudged on its own) it arbitrarily
deprives OFWs of their monetary claims without any discernable valid purpose.

[NOT RELEVANT] W/N BSP Circular 799 (series of 2013) is applicable to Cabiles in the calculation of
interest on her money claims under RA 8042
YES. The Court pronounced in Nacar v. Gallery Frames10 that BSP Circular 799 applies only to (1) loans and
forbearance of money, goods, or credits, and (2) in judgments with no stipulated applicable interest rate,
wherein the judgment, in either case, must not have been final and executory before July 1, 2013. In this case,
the SC added that Circular 799 is inapplicable also when the law specifically provides for a certain interest rate.
Thus, in the case of Section 10 of RA 8042, an interest rate of 12% is provided on the reimbursement of the
illegally terminated OFW’s placement fees, notwithstanding the later promulgation of Circular 799 (which
cannot repeal laws).

10
GR No. 189871, August 13, 2013.
However, for the awards of salary for the unexpired portion of the employment contract under RA 8042, Circular
799 applies in the absence of a specific interest rate provided under that law. Thus, if (a) judgment did not
become final and executory before July 1, 2013 and (b) there was no contractually-stipulated interest rate
applicable, other money claims under Section 10 of RA 8042 shall be subject to an interest rate of 6%, as per
Circular 799.

Therefore, as per Circular 799, Cabiles is entitled to an interest rate of 6% per annum on her money claims
starting from the finality of this judgment.

[RELEVANT ] W/N Wacoal as the principal-employer may be made liable for the amounts awarded to
Cabiles
YES. Paragraph 2 of Section 10 of RA 8042 provides that the foreign employer and the local employment agency
shall be “jointly and severally” (or solidarily) liable for money claims under the said section. The fundamental
effect of solidary liability is that each of the obligors is liable for the entire obligation, such that a final
determination may be achieved even if only one of the obligors is impleaded in an action. The law recognizes the
physical (due to distance) and legal (possible conflicts of law or jurisdictional issues) difficulties for an OFW to
file an action against the foreign employer, and thus remedies them by establishing solidary liability to assure
the OFWs of immediate and sufficient payment of their claims.

Shifting the burden of going after the foreign employer to the local employment agency also affords OFWs
another layer of protection: Because local agencies, being businesses, will closely guard their reputation and
finances, they will serve as an additional lookout against foreign employers who tend to violate OFWs’ rights.

Thus, while there is no impediment to the full enforcement of Cabiles’s claims against Sameer, there is likewise
no impediment for Sameer to go after Wacoal (or Pacific), under Section 10 of RA 8042.
“While we sit, this court will ensure that our laws will reward our overseas workers with what they deserve:
their dignity. Inevitably, their dignity is ours as well.” –Justice Leonen’s concluding statements

DISPOSITIVE “WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED with
modification. Petitioner Sameer Overseas Placement Agency is ORDERED to pay respondent Joy C. Cabiles the
amount equivalent to her salary for the unexpired portion of her employment contract at an interest of 6% per
annum from the finality of this judgment. Petitioner is also ORDERED to reimburse respondent the withheld
NT$3,000.00 salary and pay respondent attorney's fees of NT$300.00 at an interest of 6% per annum from the
finality of this judgment. The clause, ‘or for three (3) months for every year of the unexpired term, whichever is
less’ in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042 is declared
unconstitutional and, therefore, null and void. SO ORDERED.” (emphases mine)

SEPARATE OPINION || BRION, J.: Justice Brion concurred with the conclusion that Cabiles was illegally
dismissed for being violative of due process and that the clause “or for 3 months for every year of the unexpired
term, whichever is less” is unconstitutional.

However, he reasoned that the clause is invalid because it violates Article XIII, Section 3 and substantive due
process under Article III, Section 1. He also disagreed with the finding that labor is a suspect class and the
application of the standard of strict scrutiny (which in effect abandons the presumed constitutionality of laws
and shifts to government the burden to prove otherwise), when in his opinion, the rational basis approach
would have achieved the same result.

Under the rational basis approach, the contentious clause must be shown to have (1) a lawful purpose and (2)
lawful means of achieving this purpose. In his opinion, providing incentives to local agencies to deploy OFWs (by
limiting their liability) is the valid purpose; however, the means is obviously unreasonable, as the incentive to
agencies is made at the expense of the OFWs themselves.