Republic of the Philippines does not magnify the contributions of overseas Filipino workers (OFWs) to national

SUPREME COURT development, but exacerbates the hardships borne by them by unduly limiting their
Manila entitlement in case of illegal dismissal to their lump-sum salary either for the
unexpired portion of their employment contract "or for three months for every year of
EN BANC the unexpired term, whichever is less" (subject clause). Petitioner claims that the last
clause violates the OFWs' constitutional rights in that it impairs the terms of their
contract, deprives them of equal protection and denies them due process.
G.R. No. 167614 March 24, 2009
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails
ANTONIO M. SERRANO, Petitioner, the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of
vs. Appeals (CA), which applied the subject clause, entreating this Court to declare the
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., subject clause unconstitutional.
INC., Respondents.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co.,
DECISION Ltd. (respondents) under a Philippine Overseas Employment Administration (POEA)-
approved Contract of Employment with the following terms and conditions:
AUSTRIA-MARTINEZ, J.:
Duration of contract 12 months
For decades, the toil of solitary migrants has helped lift entire families and
communities out of poverty. Their earnings have built houses, provided health care, Position Chief Officer
equipped schools and planted the seeds of businesses. They have woven together the
world by transmitting ideas and knowledge from country to country. They have Basic monthly salary US$1,400.00
provided the dynamic human link between cultures, societies and economies. Yet,
Hours of work 48.0 hours per week
only recently have we begun to understand not only how much international migration
impacts development, but how smart public policies can magnify this effect. Overtime US$700.00 per month

United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th
paragraph of Section 10, Republic Act (R.A.) No. 8042, 2 to wit:
Vacation leave with pay 7.00 days per month5
On March 19, 1998, the date of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second Officer with a monthly
salary of US$1,000.00, upon the assurance and representation of respondents that he
would be made Chief Officer by the end of April 1998.6

Sec. 10. Money Claims. - x x x In case of termination of overseas employment without
just, valid or authorized cause as defined by law or contract, the workers shall be
entitled to the full reimbursement of his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is
less.
x x x x (Emphasis and underscoring supplied)
Respondents did not deliver on their promise to make petitioner Chief
Officer.7 Hence, petitioner refused to stay on as Second Officer and was repatriated
to the Philippines on May 26, 1998.8
Petitioner's employment contract was for a period of 12 months or from March 19,
1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he
had served only two (2) months and seven (7) days of his contract, leaving an
unexpired portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for WHEREFORE, premises considered, judgment is hereby rendered
constructive dismissal and for payment of his money claims in the total amount of declaring that the dismissal of the complainant (petitioner) by the
US$26,442.73, broken down as follows: respondents in the above-entitled case was illegal and the respondents are
hereby ordered to pay the complainant [petitioner], jointly and severally, in
Philippine Currency, based on the rate of exchange prevailing at the time of
May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90 payment, the amount of EIGHT THOUSAND SEVEN HUNDRED
June 01/30, 1998 2,590.00 SEVENTY U.S. DOLLARS (US $8,770.00), representing the
complainant’s salary for three (3) months of the unexpired portion of the
July 01/31, 1998 2,590.00 aforesaid contract of employment.1avvphi1
August 01/31, 1998 2,590.00
The respondents are likewise ordered to pay the complainant [petitioner],
Sept. 01/30, 1998 2,590.00 jointly and severally, in Philippine Currency, based on the rate of exchange
Oct. 01/31, 1998 2,590.00 prevailing at the time of payment, the amount of FORTY FIVE U.S.
DOLLARS (US$ 45.00),12 representing the complainant’s claim for a salary
Nov. 01/30, 1998 2,590.00 differential. In addition, the respondents are hereby ordered to pay the
Dec. 01/31, 1998 2,590.00 complainant, jointly and severally, in Philippine Currency, at the exchange
rate prevailing at the time of payment, the complainant’s (petitioner's) claim
Jan. 01/31, 1999 2,590.00 for attorney’s fees equivalent to ten percent (10%) of the total amount
awarded to the aforesaid employee under this Decision.
Feb. 01/28, 1999 2,590.00
Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00 The claims of the complainant for moral and exemplary damages are hereby
------------------------- DISMISSED for lack of merit.
-------------------------
------------------------- All other claims are hereby DISMISSED.
-----
25,382.23 SO ORDERED.13 (Emphasis supplied)

Amount adjusted to chief mate's salary

(March 19/31, 1998 to April 1/30, 1998) +
TOTAL CLAIM
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
1,060.5010 computation on the salary period of three months only -- rather than the
entire unexpired portion of nine months and 23 days of petitioner's
------------------------- employment contract - applying the subject clause. However, the LA
------------------------- applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic
------------------------- salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, +
------------------- US$490.00/month, vacation leave pay = US$2,590.00/compensation per
US$ 26,442.7311 month."14

Respondents appealed15 to the National Labor Relations Commission

as well as moral and exemplary damages and attorney's fees.
(NLRC) to question the finding of the LA that petitioner was illegally
dismissed.
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of
petitioner illegal and awarding him monetary benefits, to wit:
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred
in not applying the ruling of the Court in Triple Integrated Services, Inc. v.
 National Labor Relations Commission17 that in case of illegal dismissal, In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the
OFWs are entitled to their salaries for the unexpired portion of their reduction of the applicable salary rate; however, the CA skirted the constitutional
contracts.18 issue raised by petitioner.25

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings
wit: his cause to this Court on the following grounds:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. I

Respondents are hereby ordered to pay complainant, jointly and severally,
in Philippine currency, at the prevailing rate of exchange at the time of The Court of Appeals and the labor tribunals have decided the case in a way not in
payment the following: accord with applicable decision of the Supreme Court involving similar issue of
granting unto the migrant worker back wages equal to the unexpired portion of his
contract of employment instead of limiting it to three (3) months
1. Three (3) months salary
$1,400 x 3 US$4,200.00 II
2. Salary differential 45.00
In the alternative that the Court of Appeals and the Labor Tribunals were merely
US$4,245.00 applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted
that the Court of Appeals gravely erred in law when it failed to discharge its judicial
3. 10% Attorney’s fees 424.50 duty to decide questions of substance not theretofore determined by the Honorable
TOTAL US$4,669.50 Supreme Court, particularly, the constitutional issues raised by the petitioner on the
constitutionality of said law, which unreasonably, unfairly and arbitrarily limits
payment of the award for back wages of overseas workers to three (3) months.
The other findings are affirmed.
III
SO ORDERED.19
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act
The NLRC corrected the LA's computation of the lump-sum salary awarded to No. 8042, the Court of Appeals gravely erred in law in excluding from petitioner’s
petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 award the overtime pay and vacation pay provided in his contract since under the
because R.A. No. 8042 "does not provide for the award of overtime pay, which should contract they form part of his salary.28
be proven to have been actually performed, and for vacation leave pay."20
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the already old and sickly, and he intends to make use of the monetary award for his
constitutionality of the subject clause.21 The NLRC denied the motion.22 medical treatment and medication.29 Required to comment, counsel for petitioner filed
a motion, urging the court to allow partial execution of the undisputed monetary award
and, at the same time, praying that the constitutional question be resolved. 30
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional
challenge against the subject clause.24 After initially dismissing the petition on a
technicality, the CA eventually gave due course to it, as directed by this Court in its Considering that the parties have filed their respective memoranda, the Court now
Resolution dated August 7, 2003 which granted the petition for certiorari, docketed takes up the full merit of the petition mindful of the extreme importance of the
as G.R. No. 151833, filed by petitioner. constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was
illegal is not disputed. Likewise not disputed is the salary differential of US$45.00
awarded to petitioner in all three fora. What remains disputed is only the computation
of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
petitioner at the monthly rate of US$1,400.00 covering the period of three months out
of the unexpired portion of nine months and 23 days of his employment contract or a
total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in
addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to
US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire
nine months and 23 days left of his employment contract, computed at the monthly
rate of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly
impairs the freedom of OFWs to negotiate for and stipulate in their overseas
employment contracts a determinate employment period and a fixed salary
package.32 It also impinges on the equal protection clause, for it treats OFWs
differently from local Filipino workers (local workers) by putting a cap on the amount
of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while
setting no limit to the same monetary award for local workers when their dismissal is
declared illegal; that the disparate treatment is not reasonable as there is no substantial
distinction between the two groups;33and that it defeats Section 18,34 Article II of the
Constitution which guarantees the protection of the rights and welfare of all Filipino
workers, whether deployed locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are
not in line with existing jurisprudence on the issue of money claims of illegally
dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the
Court to sort them out for the guidance of affected OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No.
8042 serves no other purpose but to benefit local placement agencies. He marks the
statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of
money claims in the event that jurisdiction over the foreign employer is not acquired
by the court or if the foreign employer reneges on its obligation. Hence, placement
agencies that are in good faith and which fulfill their obligations are unnecessarily
penalized for the acts of the foreign employer. To protect them and to promote their
continued helpful contribution in deploying Filipino migrant workers, liability for
money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the
subject clause sacrifices the well-being of OFWs. Not only that, the provision makes
foreign employers better off than local employers because in cases involving the
illegal dismissal of employees, foreign employers are liable for salaries covering a
maximum of only three months of the unexpired employment contract while local
employers are liable for the full lump-sum salaries of their employees. As petitioner
puts it:
In terms of practical application, the local employers are not limited to the amount of
backwages they have to give their employees they have illegally dismissed, following
well-entrenched and unequivocal jurisprudence on the matter. On the other hand,
foreign employers will only be limited to giving the illegally dismissed migrant
workers the maximum of three (3) months unpaid salaries notwithstanding the
unexpired term of the contract that can be more than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it
deprives him of the salaries and other emoluments he is entitled to under his fixed-
period employment contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue
should not be entertained, for this was belatedly interposed by petitioner in his appeal
before the CA, and not at the earliest opportunity, which was when he filed an appeal
before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July
15, 1995, its provisions could not have impaired petitioner's 1998 employment
contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions
thereof are deemed part of the minimum terms of petitioner's employment, especially
on the matter of money claims, as this was not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the
nature of their employment, such that their rights to monetary benefits must
necessarily be treated differently. The OSG enumerates the essential elements that
distinguish OFWs from local workers: first, while local workers perform their jobs
within Philippine territory, OFWs perform their jobs for foreign employers, over
whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost
impossible to enforce judgment; and second, as held in Coyoca v. National Labor
Relations Commission43 and Millares v. National Labor Relations
Commission,44 OFWs are contractual employees who can never acquire regular
employment status, unlike local workers who are or can become regular employees.
Hence, the OSG posits that there are rights and privileges exclusive to local workers,
but not available to OFWs; that these peculiarities make for a reasonable and valid
basis for the differentiated treatment under the subject clause of the money claims of
OFWs who are illegally dismissed. Thus, the provision does not violate the equal
protection clause nor Section 18, Article II of the Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power
measure adopted to mitigate the solidary liability of placement agencies for this
"redounds to the benefit of the migrant workers whose welfare the government seeks
to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under
decent and humane conditions."46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of
its co-equals, such as the Congress, it does so only when these conditions obtain: (1)
that there is an actual case or controversy involving a conflict of rights susceptible of
judicial determination;47 (2) that the constitutional question is raised by a proper
party48 and at the earliest opportunity;49 and (3) that the constitutional question is the
very lis mota of the case,50otherwise the Court will dismiss the case or decide the same
on some other ground.51
Without a doubt, there exists in this case an actual controversy directly involving
petitioner who is personally aggrieved that the labor tribunals and the CA computed
his monetary award based on the salary period of three months only as provided under
the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity entails the
interposition of the issue in the pleadings before a competent court, such that, if the
issue is not raised in the pleadings before that competent court, it cannot be considered
at the trial and, if not considered in the trial, it cannot be considered on
appeal.52 Records disclose that the issue on the constitutionality of the subject clause
was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial
Reconsideration with said labor tribunal,53 and reiterated in his Petition
for Certiorari before the CA.54Nonetheless, the issue is deemed seasonably raised
because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-
judicial function – its function in the present case is limited to determining questions
of fact to which the legislative policy of R.A. No. 8042 is to be applied and to
resolving such questions in accordance with the standards laid down by the law
itself;55 thus, its foremost function is to administer and enforce R.A. No. 8042, and
not to inquire into the validity of its provisions. The CA, on the other hand, is vested
with the power of judicial review or the power to declare unconstitutional a law or a
provision thereof, such as the subject clause.56 Petitioner's interposition of the
constitutional issue before the CA was undoubtedly seasonable. The CA was therefore
remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case
likewise obtains because the monetary claim of petitioner to his lump-sum salary for
the entire unexpired portion of his 12-month employment contract, and not just for a
period of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject
clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his
contract on the term of his employment and the fixed salary package he will
receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have
only a prospective operation,58and cannot affect acts or contracts already
perfected;59 however, as to laws already in existence, their provisions are read into
contracts and deemed a part thereof.60 Thus, the non-impairment clause under Section
10, Article II is limited in application to laws about to be enacted that would in any
way derogate from existing acts or contracts by enlarging, abridging or in any manner
changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the
execution of the employment contract between petitioner and respondents in 1998.
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause,
impaired the employment contract of the parties. Rather, when the parties executed
their 1998 employment contract, they were deemed to have incorporated into it all the
provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be
declared unconstitutional on the ground that it impinges on the impairment clause, for
the law was enacted in the exercise of the police power of the State to regulate a
business, profession or calling, particularly the recruitment and deployment of OFWs,
with the noble end in view of ensuring respect for the dignity and well-being of OFWs
wherever they may be employed.61Police power legislations adopted by the State to
promote the health, morals, peace, education, good order, safety, and general welfare
of the people are generally applicable not only to future contracts but even to those
already in existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to promote public welfare.62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor
shall any person be denied the equal protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor
sector, without distinction as to place of deployment, full protection of their rights and
welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional
provisions translate to economic security and parity: all monetary benefits should be
equally enjoyed by workers of similar category, while all monetary obligations should
be borne by them in equal degree; none should be denied the protection of the laws
which is enjoyed by, or spared the burden imposed on, others in like circumstances.65
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation; however, to
be valid, the classification must comply with these requirements: 1) it is based on
substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited
to existing conditions only; and 4) it applies equally to all members of the class. 66
There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which
the challenged classification needs only be shown to be rationally related to serving a
legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state
interest and that the classification is at least substantially related to serving that
interest;68 and c) strict judicial scrutiny69 in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right70 or operates to the
peculiar disadvantage of a suspect class71 is presumed unconstitutional, and the
burden is upon the government to prove that the classification is necessary to achieve
a compelling state interest and that it is the least restrictive means to protect such
interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications73 based on race74 or gender75 but not when the classification is drawn
along income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng
Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, 77 the
constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas(BSP),
a government financial institution (GFI), was challenged for maintaining its rank-and-
file employees under the Salary Standardization Law (SSL), even when the rank-and-
file employees of other GFIs had been exempted from the SSL by their respective
charters. Finding that the disputed provision contained a suspect classification based
on salary grade, the Court deliberately employed the standard of strict judicial scrutiny
in its review of the constitutionality of said provision. More significantly, it was in
this case that the Court revealed the broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its
policies should be accorded recognition and respect by the courts of justice except
when they run afoul of the Constitution. The deference stops where the classification
violates a fundamental right, or prejudices persons accorded special protection by
the Constitution. When these violations arise, this Court must discharge its primary
role as the vanguard of constitutional guaranties, and require a stricter and more
exacting adherence to constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the
Constitution requires a stricter judicial scrutiny finds no support in American or
English jurisprudence. Nevertheless, these foreign decisions and authorities are not
per se controlling in this jurisdiction. At best, they are persuasive and have been used
to support many of our decisions. We should not place undue and fawning reliance
upon them and regard them as indispensable mental crutches without which we cannot
come to our own decisions through the employment of our own endowments. We live
in a different ambience and must decide our own problems in the light of our own
interests and needs, and of our qualities and even idiosyncrasies as a people, and
always with our own concept of law and justice. Our laws must be construed in
accordance with the intention of our own lawmakers and such intent may be deduced
from the language of each law and the context of other local legislation related thereto.
More importantly, they must be construed to serve our own public interest which is
the be-all and the end-all of all our laws. And it need not be stressed that our public
interest is distinct and different from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution.
The Preamble proclaims "equality" as an ideal precisely in protest against crushing
inequities in Philippine society. The command to promote social justice in Article II,
Section 10, in "all phases of national development," further explicitated in Article
XIII, are clear commands to the State to take affirmative action in the direction of
greater equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal
support for a more vigorous state effort towards achieving a reasonable measure of
equality.
Our present Constitution has gone further in guaranteeing vital social and economic
rights to marginalized groups of society, including labor. Under the policy of social
justice, the law bends over backward to accommodate the interests of the working
class on the humane justification that those with less privilege in life should have more
in law. And the obligation to afford protection to labor is incumbent not only on the
legislative and executive branches but also on the judiciary to translate this pledge
into a living reality. Social justice calls for the humanization of laws and the
equalization of social and economic forces by the State so that justice in its rational
and objectively secular conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding
questions of constitutionality, recognizing the broad discretion given to Congress in
exercising its legislative power. Judicial scrutiny would be based on the "rational
basis" test, and the legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right,
or the perpetuation of prejudice against persons favored by the Constitution with
special protection, judicial scrutiny ought to be more strict. A weak and watered
down view would call for the abdication of this Court’s solemn duty to strike down
any law repugnant to the Constitution and the rights it enshrines. This is true whether
the actor committing the unconstitutional act is a private person or the government
itself or one of its instrumentalities. Oppressive acts will be struck down regardless of
the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or
officer-employee status. It is akin to a distinction based on economic class and status,
with the higher grades as recipients of a benefit specifically withheld from the lower
grades. Officers of the BSP now receive higher compensation packages that are
competitive with the industry, while the poorer, low-salaried employees are limited to
the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-
file employees are paid the strictly regimented rates of the SSL while employees
higher in rank - possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to stay.
Considering that majority, if not all, the rank-and-file employees consist of people
whose status and rank in life are less and limited, especially in terms of job
marketability, it is they - and not the officers - who have the real economic and
financial need for the adjustment . This is in accord with the policy of the Constitution
"to free the people from poverty, provide adequate social services, extend to them a
decent standard of living, and improve the quality of life for all." Any act of Congress
that runs counter to this constitutional desideratum deserves strict scrutiny by this
Court before it can pass muster. (Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in
the present case also employs the standard of strict judicial scrutiny, for it perceives
in the subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on, OFWs at two levels:
 First, OFWs with employment contracts of less than one year vis-à-vis Court reduced the award to SR3,600.00 equivalent to his three months’ salary, this
OFWs with employment contracts of one year or more; being the lesser value, to wit:

Second, among OFWs with employment contracts of more than one year; Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment
and without just, valid or authorized cause is entitled to his salary for the unexpired portion
of his employment contract or for three (3) months for every year of the unexpired
Third, OFWs vis-à-vis local workers with fixed-period employment; term, whichever is less.

OFWs with employment contracts of less than one year vis-à-vis OFWs with In the case at bar, the unexpired portion of private respondent’s employment contract
employment contracts of one year or more is eight (8) months. Private respondent should therefore be paid his basic salary
corresponding to three (3) months or a total of SR3,600.82
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National
Labor Relations Commission79(Second Division, 1999) that the Court laid down the Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
following rules on the application of the periods prescribed under Section 10(5) of Commission (Third Division, December 1998),83 which involved an OFW (therein
R.A. No. 804, to wit: respondent Erlinda Osdana) who was originally granted a 12-month contract, which
was deemed renewed for another 12 months. After serving for one year and seven-
and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award her salaries for the entire unexpired portion of four and one-half months of her
an illegally dismissed overseas contract worker, i.e., whether his salaries for the contract.
unexpired portion of his employment contract or three (3) months’ salary for every
year of the unexpired term, whichever is less, comes into play only when the
employment contract concerned has a term of at least one (1) year or more. This is The Marsaman interpretation of Section 10(5) has since been adopted in the following
evident from the words "for every year of the unexpired term" which follows the cases:
words "salaries x x x for three months." To follow petitioners’ thinking that private
respondent is entitled to three (3) months salary only simply because it is the lesser
Case Title Contract Period Unexpired Period Applied
amount is to completely disregard and overlook some words used in the statute while
Period of Period in the
giving effect to some. This is contrary to the well-established rule in legal
Service Computation of
hermeneutics that in interpreting a statute, care should be taken that every part or word
the Monetary
thereof be given effect since the law-making body is presumed to know the meaning
Award
of the words employed in the statue and to have used them advisedly. Ut res magis
valeat quam pereat.80 (Emphasis supplied) Skippers v. 6 months 2 4 months 4 months
Maguad84 months
In Marsaman, the OFW involved was illegally dismissed two months into his 10-
Bahia 9 months 8 4 months 4 months
month contract, but was awarded his salaries for the remaining 8 months and 6 days
Shipping v. months
of his contract.
Reynaldo
Chua 85
Prior to Marsaman, however, there were two cases in which the Court made
conflicting rulings on Section 10(5). One was Asian Center for Career and Centennial 9 months 4 5 months 5 months
Employment System and Services v. National Labor Relations Commission (Second Transmarine months
Division, October 1998),81 which involved an OFW who was awarded a two-year v. dela Cruz
employment contract, but was dismissed after working for one year and two months. l86
The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum
salary covering eight months, the unexpired portion of his contract. On appeal, the
 The disparity in the treatment of these two groups cannot be discounted. In Skippers,
Talidano v. 12 months 3 9 months 3 months
the respondent OFW worked for only 2 months out of his 6-month contract, but was
Falcon87 months
awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs
Univan v. 12 months 3 9 months 3 months in Oriental and PCL who had also worked for about 2 months out of their 12-month
CA 88 months contracts were awarded their salaries for only 3 months of the unexpired portion of
their contracts. Even the OFWs involved in Talidano and Univan who had worked for
Oriental v. 12 months more 10 months 3 months a longer period of 3 months out of their 12-month contracts before being illegally
CA 89 than 2 dismissed were awarded their salaries for only 3 months.
months
PCL v. 12 months more more or less 3 months To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-
NLRC90 than 2 9 months A with an employment contract of 10 months at a monthly salary rate of US$1,000.00
months and a hypothetical OFW-B with an employment contract of 15 months with the same
monthly salary rate of US$1,000.00. Both commenced work on the same day and
Olarte v. 12 months 21 days 11 months 3 months under the same employer, and were illegally dismissed after one month of work.
Nayona91 and 9 days Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his
salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled
JSS v.Ferrer92 12 months 16 days 11 months 3 months to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion
and 24 days of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his
contract, as the US$3,000.00 is the lesser amount.
Pentagon v. 12 months 9 2 months 2 months and 23
Adelantar93 months and 23 days days
and 7 The disparity becomes more aggravating when the Court takes into account
days jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14,
1995,97 illegally dismissed OFWs, no matter how long the period of their employment
Phil. Employ 12 months 10 2 months Unexpired contracts, were entitled to their salaries for the entire unexpired portions of their
v. Paramio, et months portion contracts. The matrix below speaks for itself:
al.94
Flourish 2 years 26 days 23 months 6 months or 3 Case Title Contract Period Unexpired Period Applied
Maritime v. and 4 days months for each Period of Period in the
Almanzor 95 year of contract Service Computation of
the Monetary
Athenna 1 year, 10 1 month 1 year, 9 6 months or 3
Award
Manpower v. months months and months for each
Villanos 96 and 28 28 days year of contract ATCI v. CA, 2 years 2 22 months 22 months
days et al.98 months
Phil. 2 years 7 days 23 months 23 months and 23
As the foregoing matrix readily shows, the subject clause classifies OFWs into two Integrated v. and 23 days days
categories. The first category includes OFWs with fixed-period employment contracts NLRC99
of less than one year; in case of illegal dismissal, they are entitled to their salaries for
the entire unexpired portion of their contract. The second category consists of OFWs JGB v. 2 years 9 months 15 months 15 months
with fixed-period employment contracts of one year or more; in case of illegal NLC100
dismissal, they are entitled to monetary award equivalent to only 3 months of the
unexpired portion of their contracts. Agoy v. 2 years 2 months 22 months 22 months
NLRC101

EDI v. NLRC, 2 years 5 months 19 months 19 months
et al.102
Barros v. 12 4 months 8 months 8 months
NLRC, et months
al.103
Philippine 12 6 months 5 months 5 months and 18
Transmarine months and 22 and 18 days days
v. Carilla104 days
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a
uniform rule of computation: their basic salaries multiplied by the entire unexpired
portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule
of computation of the money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category whose contracts have
an unexpired portion of one year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their salaries for 3 months or
for the unexpired portion thereof, whichever is less, but all the while sparing the other
category from such prejudice, simply because the latter's unexpired contracts fall short
of one year.
Among OFWs With Employment Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court
now has misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the
unexpired term, whichever is less" contains the qualifying phrases "every year" and
"unexpired term." By its ordinary meaning, the word "term" means a limited or
definite extent of time.105 Corollarily, that "every year" is but part of an "unexpired
term" is significant in many ways: first, the unexpired term must be at least one
year, for if it were any shorter, there would be no occasion for such unexpired term to
be measured by every year; and second, the original term must be more than one year,
for otherwise, whatever would be the unexpired term thereof will not reach even a
year. Consequently, the more decisive factor in the determination of when the subject
clause "for three (3) months for every year of the unexpired term, whichever is less"
shall apply is not the length of the original contract period as held in Marsaman,106 but
the length of the unexpired portion of the contract period -- the subject clause applies
in cases when the unexpired portion of the contract period is at least one year, which
arithmetically requires that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their salaries
for the entire unexpired portion thereof, while those who are illegally dismissed with
one year or more remaining in their contracts shall be covered by the subject clause,
and their monetary benefits limited to their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the subject
clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-
month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally
dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there
is at least 12 months remaining in the contract period of OFW-C, the subject clause
applies to the computation of the latter's monetary benefits. Thus, OFW-C will be
entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired
portion of the contract, but to the lesser amount of US$3,000.00 or the latter's salaries
for 3 months out of the 12-month unexpired term of the contract. On the other hand,
OFW-D is spared from the effects of the subject clause, for there are only 11 months
left in the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00,
which is equivalent to his/her total salaries for the entire 11-month unexpired portion.
OFWs vis-à-vis Local Workers With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the
monetary awards of illegally dismissed OFWs was in place. This uniform system was
applicable even to local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article
299 of the Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and
employees should have been made of a fixed period, none of the contracting parties,
without the consent of the other, may withdraw from the fulfillment of said contract
until the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage
suffered, with the exception of the provisions contained in the following articles.
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to
determine the liability of a shipping company for the illegal discharge of its managers
prior to the expiration of their fixed-term employment. The Court therein held the
shipping company liable for the salaries of its managers for the remainder of their
fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code
of Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent
should be for a definite period or voyage, they cannot be discharged until the
fulfillment of their contracts, except for reasons of insubordination in serious matters,
robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo
by malice or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
which the Court held the shipping company liable for the salaries and subsistence
allowance of its illegally dismissed employees for the entire unexpired portion of their
employment contracts.
While Article 605 has remained good law up to the present,111 Article 299 of the Code
of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain
time and for a certain work cannot leave or be dismissed without sufficient cause,
before the fulfillment of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article
1586 as a conjunctive "and" so as to apply the provision to local workers who are
employed for a time certain although for no particular skill. This interpretation of
Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company. 113 And
in both Lemoine and Palomar, the Court adopted the general principle that in actions
for wrongful discharge founded on Article 1586, local workers are entitled to recover
damages to the extent of the amount stipulated to be paid to them by the terms of their
contract. On the computation of the amount of such damages, the Court in Aldaz v.
Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has been
brought to our attention to the contrary under Spanish jurisprudence, that when an
employee is wrongfully discharged it is his duty to seek other employment of the same
kind in the same community, for the purpose of reducing the damages resulting from
such wrongful discharge. However, while this is the general rule, the burden of
showing that he failed to make an effort to secure other employment of a like nature,
and that other employment of a like nature was obtainable, is upon the
defendant. When an employee is wrongfully discharged under a contract of
employment his prima facie damage is the amount which he would be entitled to had
he continued in such employment until the termination of the period. (Howard vs.
Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No.
2, 98 Mich., 43.)115(Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-
term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and
Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title
VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new
provisions of the Civil Code do not expressly provide for the remedies available to a
fixed-term worker who is illegally discharged. However, it is noted that in Mackay
Radio & Telegraph Co., Inc. v. Rich,117 the Court carried over the principles on the
payment of damages underlying Article 1586 of the Civil Code of 1889 and applied
the same to a case involving the illegal discharge of a local worker whose fixed-period
employment contract was entered into in 1952, when the new Civil Code was already
in effect.118
More significantly, the same principles were applied to cases involving overseas
Filipino workers whose fixed-term employment contracts were illegally terminated,
such as in First Asian Trans & Shipping Agency, Inc. v. Ople,119involving seafarers
who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National
Labor Relations Commission,120 an OFW who was illegally dismissed prior to the
expiration of her fixed-period employment contract as a baby sitter, was awarded
salaries corresponding to the unexpired portion of her contract. The Court arrived at
the same ruling in Anderson v. National Labor Relations Commission, 121 which
involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but
who was illegally dismissed after only nine months on the job -- the Court awarded
him salaries corresponding to 15 months, the unexpired portion of his contract. In Asia
World Recruitment, Inc. v. National Labor Relations Commission,122 a Filipino
working as a security officer in 1989 in Angola was awarded his salaries for the
remaining period of his 12-month contract after he was wrongfully discharged.
Finally, in Vinta Maritime Co., Inc. v. National Labor Relations Commission,123 an
OFW whose 12-month contract was illegally cut short in the second month was
declared entitled to his salaries for the remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment
who were illegally discharged were treated alike in terms of the computation of their
money claims: they were uniformly entitled to their salaries for the entire unexpired
portions of their contracts. But with the enactment of R.A. No. 8042, specifically the
adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of
one year or more in their employment contract have since been differently treated in
that their money claims are subject to a 3-month cap, whereas no such limitation is
imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in that,
in the computation of the monetary benefits of fixed-term employees who are
illegally discharged, it imposes a 3-month cap on the claim of OFWs with an
unexpired portion of one year or more in their contracts, but none on the claims of
other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive
means.
What constitutes compelling state interest is measured by the scale of rights and
powers arrayed in the Constitution and calibrated by history.124 It is akin to the
paramount interest of the state125 for which some individual liberties must give way,
such as the public interest in safeguarding health or maintaining medical
standards,126 or in maintaining access to information on matters of public concern. 127
In the present case, the Court dug deep into the records but found no compelling state
interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect
the employment of Filipino seafarers overseas x x x. By limiting the liability to three
months [sic], Filipino seafarers have better chance of getting hired by foreign
employers." The limitation also protects the interest of local placement agencies,
which otherwise may be made to shoulder millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of
money claims in the event that jurisdiction over the foreign employer is not acquired
by the court or if the foreign employer reneges on its obligation. Hence, placement
agencies that are in good faith and which fulfill their obligations are unnecessarily
penalized for the acts of the foreign employer. To protect them and to promote their
continued helpful contribution in deploying Filipino migrant workers, liability for
money are reduced under Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies helps
[assure] the government that migrant workers are properly deployed and are employed
under decent and humane conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of
its perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio
Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law
originated;130 but the speech makes no reference to the underlying reason for the
adoption of the subject clause. That is only natural for none of the 29 provisions in
HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money
claims, to wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of the complaint, the claim arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino workers
for overseas employment including claims for actual, moral, exemplary and other
forms of damages.
The liability of the principal and the recruitment/placement agency or any and all
claims under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims
exclusive of damages under this Section shall not be less than fifty percent (50%) of
such money claims: Provided, That any installment payments, if applicable, to satisfy
any such compromise or voluntary settlement shall not be more than two (2) months.
Any compromise/voluntary agreement in violation of this paragraph shall be null and
void.
Non-compliance with the mandatory period for resolutions of cases provided under
this Section shall subject the responsible officials to any or all of the following
penalties:
(1) The salary of any such official who fails to render his decision or
resolution within the prescribed period shall be, or caused to be, withheld
until the said official complies therewith;
 (2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive
public office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to
any liability which any such official may have incurred under other existing laws or
rules and regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the
computation of money claims.
A rule on the computation of money claims containing the subject clause was inserted
and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The
Court examined the rationale of the subject clause in the transcripts of the "Bicameral
Conference Committee (Conference Committee) Meetings on the Magna Carta on
OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)."
However, the Court finds no discernible state interest, let alone a compelling one, that
is sought to be protected or advanced by the adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of
a compelling state interest that would justify the perpetuation of the discrimination
against OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect
the employment of OFWs by mitigating the solidary liability of placement agencies,
such callous and cavalier rationale will have to be rejected. There can never be a
justification for any form of government action that alleviates the burden of one sector,
but imposes the same burden on another sector, especially when the favored sector is
composed of private businesses such as placement agencies, while the disadvantaged
sector is composed of OFWs whose protection no less than the Constitution
commands. The idea that private business interest can be elevated to the level of a
compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability
of placement agencies vis-a-vistheir foreign principals, there are mechanisms already
in place that can be employed to achieve that purpose without infringing on the
constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of
Land-Based Overseas Workers, dated February 4, 2002, imposes administrative
disciplinary measures on erring foreign employers who default on their contractual
obligations to migrant workers and/or their Philippine agents. These disciplinary
measures range from temporary disqualification to preventive suspension. The POEA
Rules and Regulations Governing the Recruitment and Employment of Seafarers,
dated May 23, 2003, contains similar administrative disciplinary measures against
erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of
aiding local placement agencies in enforcing the solidary liability of their foreign
principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is
violative of the right of petitioner and other OFWs to equal protection.1avvphi1
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause
directly violates state policy on labor under Section 3,131Article XIII of the
Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,132 there
are some which this Court has declared not judicially enforceable, Article XIII being
one,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v.
National Labor Relations Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be
deemed as self-executing in the sense that these are automatically acknowledged and
observed without need for any enabling legislation. However, to declare that the
constitutional provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed, would be
impractical, if not unrealistic. The espousal of such view presents the dangerous
tendency of being overbroad and exaggerated. The guarantees of "full protection to
labor" and "security of tenure", when examined in isolation, are facially unqualified,
and the broadest interpretation possible suggests a blanket shield in favor of labor
against any form of removal regardless of circumstance. This interpretation implies
an unimpeachable right to continued employment-a utopian notion, doubtless-but still
hardly within the contemplation of the framers. Subsequent legislation is still needed
to define the parameters of these guaranteed rights to ensure the protection and
promotion, not only the rights of the labor sector, but of the employers' as well.
Without specific and pertinent legislation, judicial bodies will be at a loss, formulating
their own conclusion to approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a
positive enforceable right to stave off the dismissal of an employee for just cause
owing to the failure to serve proper notice or hearing. As manifested by several
framers of the 1987 Constitution, the provisions on social justice require legislative
enactments for their enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct
enforceable rights, for the violation of which the questioned clause may be declared
unconstitutional. It may unwittingly risk opening the floodgates of litigation to every
worker or union over every conceivable violation of so broad a concept as social
justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working
class any actual enforceable right, but merely clothes it with the status of a sector for
whom the Constitution urges protection through executive or legislative action
and judicial recognition. Its utility is best limited to being an impetus not just for the
executive and legislative departments, but for the judiciary as well, to protect the
welfare of the working class. And it was in fact consistent with that constitutional
agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee
Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice
now Chief Justice Reynato S. Puno, formulated the judicial precept that when the
challenge to a statute is premised on the perpetuation of prejudice against persons
favored by the Constitution with special protection -- such as the working class or a
section thereof -- the Court may recognize the existence of a suspect classification and
subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny
formulated in Central Bank Employee Association exaggerate the significance of
Section 3, Article XIII is a groundless apprehension. Central Bank applied Article
XIII in conjunction with the equal protection clause. Article XIII, by itself, without
the application of the equal protection clause, has no life or force of its own as
elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause
violates petitioner's right to substantive due process, for it deprives him of property,
consisting of monetary benefits, without any existing valid governmental purpose. 136
The argument of the Solicitor General, that the actual purpose of the subject clause of
limiting the entitlement of OFWs to their three-month salary in case of illegal
dismissal, is to give them a better chance of getting hired by foreign employers. This
is plain speculation. As earlier discussed, there is nothing in the text of the law or the
records of the deliberations leading to its enactment or the pleadings of respondent
that would indicate that there is an existing governmental purpose for the subject
clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and
it is for that precise reason that the clause violates not just petitioner's right to equal
protection, but also her right to substantive due process under Section 1,137 Article III
of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the
entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis
in the computation of his monetary award, because these are fixed benefits that have
been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For
seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the
basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime
pay is compensation for all work "performed" in excess of the regular eight hours, and
holiday pay is compensation for any work "performed" on designated rest days and
holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of
overtime and holiday pay in the computation of petitioner's monetary award, unless
there is evidence that he performed work during those periods. As the Court held
in Centennial Transmarine, Inc. v. Dela Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of
our ruling in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was
actually performed are conditions to be satisfied before a seaman could be entitled to
overtime pay which should be computed on the basis of 30% of the basic monthly
salary. In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the
contract is unwarranted since the same is given during the actual service of the
seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three
months for every year of the unexpired term, whichever is less" in the 5th paragraph (see concurring opinion)
DIOSDADO M. PERALTA
of Section 10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; ARTURO D. BRION
Associate Justice
and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Associate Justice
Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for
the entire unexpired portion of his employment contract consisting of nine months and
23 days computed at the rate of US$1,400.00 per month. CERTIFICATION

No costs. Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court.
SO ORDERED.

REYNATO S. PUNO
MA. ALICIA AUSTRIA-MARTINEZ Chief Justice
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice

LEONARDO A. CONSUELO YNARES-

QUISUMBING SANTIAGO
Associate Justice Associate Justice

ANTONIO T. CARPIO RENATO C. CORONA

Associate Justice Associate Justice

CONCHITA CARPIO
DANTE O. TINGA
MORALES
Associate Justice
Associate Justice

(On leave)
PRESBITERO J. VELASCO,
MINITA V. CHICO-
JR.
NAZARIO
Associate Justice
Associate Justice

ANTONIO EDUARDO B. TERESITA J. LEONARDO-

NACHURA DE CASTRO
Associate Justice Associate Justice

EN BANC
G.R. No. 170139, August 05, 2014
SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. JOY C.
CABILES, Respondent.
DECISION
LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our duty,
given the facts and the law, to approximate justice for her.
We are asked to decide a petition for review1 on certiorari assailing the Court of
Appeals’ decision2 dated June 27, 2005. This decision partially affirmed the
National Labor Relations Commission’s resolution dated March 31, 2004, 3 declaring
respondent’s dismissal illegal, directing petitioner to pay respondent’s three-month
salary equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering it to
reimburse the NT$3,000.00 withheld from respondent, and pay her NT$300.00
attorney’s fees.4cralawred
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement
agency.5Responding to an ad it published, respondent, Joy C. Cabiles, submitted her
application for a quality control job in Taiwan.6cralawred
Joy’s application was accepted.7 Joy was later asked to sign a one-year employment
contract for a monthly salary of NT$15,360.00.8 She alleged that Sameer Overseas
Agency required her to pay a placement fee of P70,000.00 when she signed the
employment contract.9cralawred
Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26,
1997.10 She alleged that in her employment contract, she agreed to work as quality
control for one year.11 In Taiwan, she was asked to work as a cutter.12cralawred
Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr.
Huwang from Wacoal informed Joy, without prior notice, that she was terminated
and that “she should immediately report to their office to get her salary and
passport.”13 She was asked to “prepare for immediate repatriation.”14cralawred
Joy claims that she was told that from June 26 to July 14, 1997, she only earned a
total of NT$9,000.15According to her, Wacoal deducted NT$3,000 to cover her
plane ticket to Manila.16cralawred
On October 15, 1997, Joy filed a complaint17 with the National Labor Relations
Commission against petitioner and Wacoal. She claimed that she was illegally
dismissed.18 She asked for the return of her placement fee, the withheld amount for
repatriation costs, payment of her salary for 23 months as well as moral and
exemplary damages.19 She identified Wacoal as Sameer Overseas Placement
Agency’s foreign principal.20cralawred
Sameer Overseas Placement Agency alleged that respondent's termination was due
to her inefficiency, negligence in her duties, and her “failure to comply with the
work requirements [of] her foreign [employer].”21 The agency also claimed that it
did not ask for a placement fee of ?70,000.00.22 As evidence, it showed Official
Receipt No. 14860 dated June 10, 1997, bearing the amount of
?20,360.00.23 Petitioner added that Wacoal's accreditation with petitioner had
already been transferred to the Pacific Manpower & Management Services, Inc.
(Pacific) as of August 6, 1997.24 Thus, petitioner asserts that it was already
substituted by Pacific Manpower.25cralawred
Pacific Manpower moved for the dismissal of petitioner’s claims against it.26 It
alleged that there was no employer-employee relationship between
them.27 Therefore, the claims against it were outside the jurisdiction of the Labor
Arbiter.28 Pacific Manpower argued that the employment contract should first be
presented so that the employer’s contractual obligations might be identified. 29 It
further denied that it assumed liability for petitioner’s illegal acts.30cralawred
On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint.31 Acting Executive
Labor Arbiter Pedro C. Ramos ruled that her complaint was based on mere
allegations.32 The Labor Arbiter found that there was no excess payment of
placement fees, based on the official receipt presented by petitioner.33 The Labor
Arbiter found unnecessary a discussion on petitioner’s transfer of obligations to
Pacific34 and considered the matter immaterial in view of the dismissal of
respondent’s complaint.35cralawred
Joy appealed36 to the National Labor Relations Commission.
In a resolution37 dated March 31, 2004, the National Labor Relations Commission
declared that Joy was illegally dismissed.38 It reiterated the doctrine that the burden
of proof to show that the dismissal was based on a just or valid cause belongs to the
employer.39 It found that Sameer Overseas Placement Agency failed to prove that thereon, but without prejudice to further hearings on its third party complaint against
there were just causes for termination.40 There was no sufficient proof to show that Pacific for reimbursement.
respondent was inefficient in her work and that she failed to comply with company
requirements.41 Furthermore, procedural due process was not observed in WHEREFORE, premises considered, the assailed Resolutions are hereby
terminating respondent.42cralawred partly AFFIRMEDin accordance with the foregoing discussion, but subject to the
caveat embodied in the last sentence. No costs.
The National Labor Relations Commission did not rule on the issue of
reimbursement of placement fees for lack of jurisdiction.43 It refused to entertain the SO ORDERED.53
issue of the alleged transfer of obligations to Pacific.44 It did not acquire jurisdiction
over that issue because Sameer Overseas Placement Agency failed to appeal the
Dissatisfied, Sameer Overseas Placement Agency filed this petition. 54cralawred
Labor Arbiter’s decision not to rule on the matter.45cralawred
We are asked to determine whether the Court of Appeals erred when it affirmed the
The National Labor Relations Commission awarded respondent only three (3)
ruling of the National Labor Relations Commission finding respondent illegally
months worth of salary in the amount of NT$46,080, the reimbursement of the
dismissed and awarding her three months’ worth of salary, the reimbursement of the
NT$3,000 withheld from her, and attorney’s fees of NT$300. 46cralawred
cost of her repatriation, and attorney’s fees despite the alleged existence of just
causes of termination.
The Commission denied the agency’s motion for reconsideration47 dated May 12,
2004 through a resolution48 dated July 2, 2004.
Petitioner reiterates that there was just cause for termination because there was a
finding of Wacoal that respondent was inefficient in her work.55 Therefore, it claims
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a
that respondent’s dismissal was valid.56cralawred
petition49 for certiorari with the Court of Appeals assailing the National Labor
Relations Commission’s resolutions dated March 31, 2004 and July 2, 2004.
Petitioner also reiterates that since Wacoal’s accreditation was validly transferred to
Pacific at the time respondent filed her complaint, it should be Pacific that should
The Court of Appeals50 affirmed the decision of the National Labor Relations
now assume responsibility for Wacoal’s contractual obligations to the workers
Commission with respect to the finding of illegal dismissal, Joy’s entitlement to the
originally recruited by petitioner.57cralawred
equivalent of three months worth of salary, reimbursement of withheld repatriation
expense, and attorney’s fees.51 The Court of Appeals remanded the case to the
Sameer Overseas Placement Agency’s petition is without merit. We find for
National Labor Relations Commission to address the validity of petitioner's
respondent.
allegations against Pacific.52 The Court of Appeals held,
thus:chanRoblesvirtualLawlibrary
I
Although the public respondent found the dismissal of the complainant-respondent
Sameer Overseas Placement Agency failed to show that there was just cause for
illegal, we should point out that the NLRC merely awarded her three (3) months
causing Joy’s dismissal. The employer, Wacoal, also failed to accord her due
backwages or the amount of NT$46,080.00, which was based upon its finding that
process of law.
she was dismissed without due process, a finding that we uphold, given petitioner’s
lack of worthwhile discussion upon the same in the proceedings below or before us.
Indeed, employers have the prerogative to impose productivity and quality standards
Likewise we sustain NLRC’s finding in regard to the reimbursement of her fare,
at work.58 They may also impose reasonable rules to ensure that the employees
which is squarely based on the law; as well as the award of attorney’s fees.
comply with these standards.59 Failure to comply may be a just cause for their
dismissal.60 Certainly, employers cannot be compelled to retain the services of an
But we do find it necessary to remand the instant case to the public respondent for
employee who is guilty of acts that are inimical to the interest of the
further proceedings, for the purpose of addressing the validity or propriety of
employer.61 While the law acknowledges the plight and vulnerability of workers, it
petitioner’s third-party complaint against the transferee agent or the Pacific
does not “authorize the oppression or self-destruction of the
Manpower & Management Services, Inc. and Lea G. Manabat. We should
employer.”62 Management prerogative is recognized in law and in our jurisprudence.
emphasize that as far as the decision of the NLRC on the claims of Joy Cabiles, is
concerned, the same is hereby affirmed with finality, and we hold petitioner liable
This prerogative, however, should not be abused. It is “tempered with the
employee’s right to security of tenure.”63 Workers are entitled to substantive and
procedural due process before termination. They may not be removed from
employment without a valid or just cause as determined by law and without going
through the proper procedure.
Security of tenure for labor is guaranteed by our Constitution. 64cralawred
Employees are not stripped of their security of tenure when they move to work in a
different jurisdiction. With respect to the rights of overseas Filipino workers, we
follow the principle of lex loci contractus.
Thus, in Triple Eight Integrated Services, Inc. v. NLRC,65 this court
noted:chanRoblesvirtualLawlibrary
Petitioner likewise attempts to sidestep the medical certificate requirement by
contending that since Osdana was working in Saudi Arabia, her employment was
subject to the laws of the host country. Apparently, petitioner hopes to make it
appear that the labor laws of Saudi Arabia do not require any certification by a
competent public health authority in the dismissal of employees due to illness.
Again, petitioner’s argument is without merit.
First, established is the rule that lex loci contractus (the law of the place where the
contract is made) governs in this jurisdiction. There is no question that the
contract of employment in this case was perfected here in the Philippines.
Therefore, the Labor Code, its implementing rules and regulations, and other laws
affecting labor apply in this case. Furthermore, settled is the rule that the courts of
the forum will not enforce any foreign claim obnoxious to the forum’s public policy.
Here in the Philippines, employment agreements are more than contractual in nature.
The Constitution itself, in Article XIII, Section 3, guarantees the special protection
of workers, to wit:chanRoblesvirtualLawlibrary
The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy and decision-
making processes affecting their rights and benefits as may be provided by law.
....
This public policy should be borne in mind in this case because to allow foreign
employers to determine for and by themselves whether an overseas contract worker
may be dismissed on the ground of illness would encourage illegal or arbitrary pre-
termination of employment contracts.66 (Emphasis supplied, citation omitted)
Even with respect to fundamental procedural rights, this court emphasized in PCL
Shipping Philippines, Inc. v. NLRC,67 to wit:chanRoblesvirtualLawlibrary
Petitioners admit that they did not inform private respondent in writing of the
charges against him and that they failed to conduct a formal investigation to give
him opportunity to air his side. However, petitioners contend that the twin
requirements of notice and hearing applies strictly only when the employment is
within the Philippines and that these need not be strictly observed in cases of
international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the Labor
Code which afford protection to labor apply to Filipino employees whether
working within the Philippines or abroad. Moreover, the principle of lex loci
contractus (the law of the place where the contract is made) governs in this
jurisdiction. In the present case, it is not disputed that the Contract of Employment
entered into by and between petitioners and private respondent was executed here in
the Philippines with the approval of the Philippine Overseas Employment
Administration (POEA). Hence, the Labor Code together with its implementing
rules and regulations and other laws affecting labor apply in this case.68 (Emphasis
supplied, citations omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or
authorized cause and after compliance with procedural due process requirements.
Article 282 of the Labor Code enumerates the just causes of termination by the
employer. Thus:
Art. 282. Termination by employer. An employer may terminate an employment for
any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his with the due process requirements of notice and hearing, the employer may exercise
employer or any immediate member of his family or his duly authorized its management prerogative of terminating the employee found unqualified.
representatives; andChanRoblesVirtualawlibrary
The regular employee must constantly attempt to prove to his or her employer that
(e) Other causes analogous to the foregoing. he or she meets all the standards for employment. This time, however, the standards
to be met are set for the purpose of retaining employment or promotion. The
employee cannot be expected to meet any standard of character or workmanship if
Petitioner’s allegation that respondent was inefficient in her work and negligent in
such standards were not communicated to him or her. Courts should remain vigilant
her duties69 may, therefore, constitute a just cause for termination under Article
on allegations of the employer’s failure to communicate work standards that would
282(b), but only if petitioner was able to prove it.
govern one’s employment “if [these are] to discharge in good faith [their] duty to
adjudicate.”73cralawred
The burden of proving that there is just cause for termination is on the employer.
“The employer must affirmatively show rationally adequate evidence that the
In this case, petitioner merely alleged that respondent failed to comply with her
dismissal was for a justifiable cause.”70 Failure to show that there was valid or just
foreign employer’s work requirements and was inefficient in her work.74No evidence
cause for termination would necessarily mean that the dismissal was
was shown to support such allegations. Petitioner did not even bother to specify
illegal.71cralawred
what requirements were not met, what efficiency standards were violated, or what
particular acts of respondent constituted inefficiency.
To show that dismissal resulting from inefficiency in work is valid, it must be shown
that: 1) the employer has set standards of conduct and workmanship against which
There was also no showing that respondent was sufficiently informed of the
the employee will be judged; 2) the standards of conduct and workmanship must
standards against which her work efficiency and performance were judged. The
have been communicated to the employee; and 3) the communication was made at a
parties’ conflict as to the position held by respondent showed that even the matter
reasonable time prior to the employee’s performance assessment.
as basic as the job title was not clear.
This is similar to the law and jurisprudence on probationary employees, which allow
The bare allegations of petitioner are not sufficient to support a claim that there is
termination of the employee only when there is “just cause or when [the
just cause for termination. There is no proof that respondent was legally terminated.
probationary employee] fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of
Petitioner failed to comply with the due process requirements
his [or her] engagement.”72cralawred
Respondent’s dismissal less than one year from hiring and her repatriation on the
However, we do not see why the application of that ruling should be limited to
same day show not only failure on the part of petitioner to comply with the
probationary employment. That rule is basic to the idea of security of tenure and due
requirement of the existence of just cause for termination. They patently show that
process, which are guaranteed to all employees, whether their employment is
the employers did not comply with the due process requirement.
probationary or regular.
A valid dismissal requires both a valid cause and adherence to the valid procedure of
The pre-determined standards that the employer sets are the bases for determining
dismissal.75 The employer is required to give the charged employee at least two
the probationary employee’s fitness, propriety, efficiency, and qualifications as a
written notices before termination.76 One of the written notices must inform the
regular employee. Due process requires that the probationary employee be informed
employee of the particular acts that may cause his or her dismissal.77 The other
of such standards at the time of his or her engagement so he or she can adjust his or
notice must “[inform] the employee of the employer’s decision.”78 Aside from the
her character or workmanship accordingly. Proper adjustment to fit the standards
notice requirement, the employee must also be given “an opportunity to be
upon which the employee’s qualifications will be evaluated will increase one’s
heard.”79cralawred
chances of being positively assessed for regularization by his or her employer.
Petitioner failed to comply with the twin notices and hearing requirements.
Assessing an employee’s work performance does not stop after regularization. The
Respondent started working on June 26, 1997. She was told that she was terminated
employer, on a regular basis, determines if an employee is still qualified and
on July 14, 1997 effective on the same day and barely a month from her first
efficient, based on work standards. Based on that determination, and after complying
workday. She was also repatriated on the same day that she was informed of her
termination. The abruptness of the termination negated any finding that she was
properly notified and given the opportunity to be heard. Her constitutional right to
due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for
the unexpired portion of the employment contract that was violated together with
attorney’s fees and reimbursement of amounts withheld from her salary.
Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, states that overseas workers who were terminated
without just, valid, or authorized cause “shall be entitled to the full reimbursement of
his placement fee with interest of twelve (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.”
Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have
the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar
days after filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms
of damages.
The liability of the principal/employer and the recruitment/placement agency for any
and all claims under this section shall be joint and several. This provisions [sic] shall
be incorporated in the contract for overseas employment and shall be a condition
precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and solidarily
liable with the corporation or partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment
contract and shall not be affected by any substitution, amendment or modification
made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims
inclusive of damages under this section shall be paid within four (4) months from
the approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve (12%) per annum, plus
his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.
....
(Emphasis supplied)chanrobleslaw
Section 15 of Republic Act No. 8042 states that “repatriation of the worker and the
transport of his [or her] personal belongings shall be the primary responsibility of
the agency which recruited or deployed the worker overseas.” The exception is when
“termination of employment is due solely to the fault of the worker,”80 which as we
have established, is not the case. It reads:chanRoblesvirtualLawlibrary
SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION
FUND. – The repatriation of the worker and the transport of his personal belongings
shall be the primary responsibility of the agency which recruited or deployed the
worker overseas. All costs attendant to repatriation shall be borne by or charged to
the agency concerned and/or its principal. Likewise, the repatriation of remains and
transport of the personal belongings of a deceased worker and all costs attendant
thereto shall be borne by the principal and/or local agency. However, in cases where
the termination of employment is due solely to the fault of the worker, the
principal/employer or agency shall not in any manner be responsible for the
repatriation of the former and/or his belongings.
....
The Labor Code81 also entitles the employee to 10% of the amount of withheld
wages as attorney’s fees when the withholding is unlawful.
The Court of Appeals affirmed the National Labor Relations Commission’s decision
to award respondent NT$46,080.00 or the three-month equivalent of her salary,
attorney’s fees of NT$300.00, and the reimbursement of the withheld NT$3,000.00
salary, which answered for her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The award
of the three-month equivalent of respondent’s salary should, however, be
increased to the amount equivalent to the unexpired term of the employment
contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co.,
Inc.,82 this court ruled that the clause “or for three (3) months for every year of the
unexpired term, whichever is less”83 is unconstitutional for violating the equal
protection clause and substantive due process.84cralawred
A statute or provision which was declared unconstitutional is not a law. It “confers
no rights; it imposes no duties; it affords no protection; it creates no office; it is
inoperative as if it has not been passed at all.”85cralawred
We are aware that the clause “or for three (3) months for every year of the
unexpired term, whichever is less” was reinstated in Republic Act No. 8042 upon
promulgation of Republic Act No. 10022 in 2010. Section 7 of Republic Act No.
10022 provides:chanRoblesvirtualLawlibrary
Section 7. Section 10 of Republic Act No. 8042, as amended, is hereby amended to
read as follows:chanRoblesvirtualLawlibrary
SEC. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar
days after the filing of the complaint, the claims arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino workers
for overseas deployment including claims for actual, moral, exemplary and other
forms of damage. Consistent with this mandate, the NLRC shall endeavor to update
and keep abreast with the developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency for any
and all claims under this section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall be a condition
precedent for its approval. The performance bond to de [sic] filed by the
recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and solidarily
liable with the corporation or partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment
contract and shall not be affected by any substitution, amendment or modification
made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims
inclusive of damages under this section shall be paid within thirty (30) days from
approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, or any unauthorized deductions from the
migrant worker’s salary, the worker shall be entitled to the full reimbursement if
[sic] his placement fee and the deductions made with interest at twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is
less.
In case of a final and executory judgement against a foreign employer/principal, it
shall be automatically disqualified, without further proceedings, from participating
in the Philippine Overseas Employment Program and from recruiting and hiring
Filipino workers until and unless it fully satisfies the judgement award.
Noncompliance with the mandatory periods for resolutions of case provided under
this section shall subject the responsible officials to any or all of the following
penalties:cralawlawlibrary
(a) The salary of any such official who fails to render his decision or resolution
within the prescribed period shall be, or caused to be, withheld until the said official
complies therewith;chanroblesvirtuallawlibrary
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any appointive public
office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to
any liability which any such official may have incured [sic] under other existing
laws or rules and regulations as a consequence of violating the provisions of this
paragraph. (Emphasis supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This means that the
reinstatement of the clause in Republic Act No. 8042 was not yet in effect at the
time of respondent’s termination from work in 1997.86 Republic Act No. 8042
before it was amended by Republic Act No. 10022 governs this case.
When a law is passed, this court awaits an actual case that clearly raises adversarial
positions in their proper context before considering a prayer to declare it as
unconstitutional.
However, we are confronted with a unique situation. The law passed incorporates
the exact clause already declared as unconstitutional, without any perceived
substantial change in the circumstances.
This may cause confusion on the part of the National Labor Relations Commission
and the Court of Appeals. At minimum, the existence of Republic Act No. 10022
may delay the execution of the judgment in this case, further frustrating remedies to
assuage the wrong done to petitioner. Hence, there is a necessity to decide this
constitutional issue.
Moreover, this court is possessed with the constitutional duty to “[p]romulgate rules
concerning the protection and enforcement of constitutional rights.”87 When cases
become moot and academic, we do not hesitate to provide for guidance to bench and
bar in situations where the same violations are capable of repetition but will evade
review. This is analogous to cases where there are millions of Filipinos working
abroad who are bound to suffer from the lack of protection because of the restoration
of an identical clause in a provision previously declared as unconstitutional.
In the hierarchy of laws, the Constitution is supreme. No branch or office of the
government may exercise its powers in any manner inconsistent with the
Constitution, regardless of the existence of any law that supports such exercise. The
Constitution cannot be trumped by any other law. All laws must be read in light of
the Constitution. Any law that is inconsistent with it is a nullity.
Thus, when a law or a provision of law is null because it is inconsistent with the
Constitution, the nullity cannot be cured by reincorporation or reenactment of the
same or a similar law or provision. A law or provision of law that was already
declared unconstitutional remains as such unless circumstances have so changed as
to warrant a reverse conclusion.
We are not convinced by the pleadings submitted by the parties that the situation has
so changed so as to cause us to reverse binding precedent.
Likewise, there are special reasons of judicial efficiency and economy that attend to
these cases.
The new law puts our overseas workers in the same vulnerable position as they were
prior to Serrano. Failure to reiterate the very ratio decidendi of that case will result
in the same untold economic hardships that our reading of the Constitution intended
to avoid. Obviously, we cannot countenance added expenses for further litigation
that will reduce their hard-earned wages as well as add to the indignity of having
been deprived of the protection of our laws simply because our precedents have not
been followed. There is no constitutional doctrine that causes injustice in the face of
empty procedural niceties. Constitutional interpretation is complex, but it is never
unreasonable.
Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the Office
of the Solicitor General to comment on the constitutionality of the reinstated clause
in Republic Act No. 10022.
In its comment,89 petitioner argued that the clause was constitutional.90 The
legislators intended a balance between the employers’ and the employees’ rights by
not unduly burdening the local recruitment agency.91 Petitioner is also of the view
that the clause was already declared as constitutional in Serrano.92cralawred
The Office of the Solicitor General also argued that the clause was valid and
constitutional.93 However, since the parties never raised the issue of the
constitutionality of the clause as reinstated in Republic Act No. 10022, its contention
is that it is beyond judicial review.94cralawred
On the other hand, respondent argued that the clause was unconstitutional because it
infringed on workers’ right to contract.95cralawred
We observe that the reinstated clause, this time as provided in Republic Act. No.
10022, violates the constitutional rights to equal protection and due
process.96 Petitioner as well as the Solicitor General have failed to show any
compelling change in the circumstances that would warrant us to revisit the
precedent.
We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that
should be recovered by an illegally dismissed overseas worker to three months is
both a violation of due process and the equal protection clauses of the
Constitution.
Equal protection of the law is a guarantee that persons under like circumstances and
falling within the same class are treated alike, in terms of “privileges conferred and
liabilities enforced.”97 It is a guarantee against “undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of
inequality.”98cralawred
In creating laws, the legislature has the power “to make distinctions and
classifications.”99 In exercising such power, it has a wide discretion.100cralawred
The equal protection clause does not infringe on this legislative power.101 A law is
void on this basis, only if classifications are made arbitrarily.102 There is no violation
of the equal protection clause if the law applies equally to persons within the same
class and if there are reasonable grounds for distinguishing between those falling
within the class and those who do not fall within the class.103 A law that does not
violate the equal protection clause prescribes a reasonable classification. 104cralawred
A reasonable classification “(1) must rest on substantial distinctions; (2) must be
germane to the purposes of the law; (3) must not be limited to existing conditions
only; and (4) must apply equally to all members of the same class.” 105cralawred
The reinstated clause does not satisfy the requirement of reasonable classification.
In Serrano, we identified the classifications made by the reinstated clause. It
distinguished between fixed-period overseas workers and fixed-period local
workers.106 It also distinguished between overseas workers with employment
contracts of less than one year and overseas workers with employment contracts of
at least one year.107 Within the class of overseas workers with at least one-year
employment contracts, there was a distinction between those with at least a year left
in their contracts and those with less than a year left in their contracts when they
were illegally dismissed.108cralawred
The Congress’ classification may be subjected to judicial review. In Serrano, there is
a “legislative classification which impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar disadvantage of a suspect
class.”109cralawred
Under the Constitution, labor is afforded special protection. 110 Thus, this court
in Serrano, “[i]mbued with the same sense of ‘obligation to afford protection to
labor,’ . . . employ[ed] the standard of strict judicial scrutiny, for it perceive[d] in the
subject clause a suspect classification prejudicial to OFWs.”111cralawred
We also noted in Serrano that before the passage of Republic Act No. 8042, the
money claims of illegally terminated overseas and local workers with fixed-term
employment were computed in the same manner.112 Their money claims were
computed based on the “unexpired portions of their contracts.”113The adoption of the
reinstated clause in Republic Act No. 8042 subjected the money claims of illegally
dismissed overseas workers with an unexpired term of at least a year to a cap of
three months worth of their salary.114 There was no such limitation on the money
claims of illegally terminated local workers with fixed-term
employment.115cralawred
We observed that illegally dismissed overseas workers whose employment contracts
had a term of less than one year were granted the amount equivalent to the unexpired
portion of their employment contracts.116 Meanwhile, illegally dismissed overseas
workers with employment terms of at least a year were granted a cap equivalent to
three months of their salary for the unexpired portions of their contracts.117cralawred
Observing the terminologies used in the clause, we also found that “the subject
clause creates a sub-layer of discrimination among OFWs whose contract periods
are for more than one year: those who are illegally dismissed with less than one year
left in their contracts shall be entitled to their salaries for the entire unexpired
portion thereof, while those who are illegally dismissed with one year or more
remaining in their contracts shall be covered by the reinstated clause, and their
monetary benefits limited to their salaries for three months only.”118cralawred
We do not need strict scrutiny to conclude that these classifications do not rest on
any real or substantial distinctions that would justify different treatments in terms of
the computation of money claims resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to security of tenure,
at least for the period agreed upon in their contracts. This means that they cannot be
dismissed before the end of their contract terms without due process. If they were
illegally dismissed, the workers’ right to security of tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated are
neither greater than nor less than the rights violated when a fixed-period overseas
worker is illegally terminated. It is state policy to protect the rights of workers
without qualification as to the place of employment.119 In both cases, the workers are
deprived of their expected salary, which they could have earned had they not been
illegally dismissed. For both workers, this deprivation translates to economic
insecurity and disparity.120 The same is true for the distinctions between overseas
workers with an employment contract of less than one year and overseas workers
with at least one year of employment contract, and between overseas workers with at
least a year left in their contracts and overseas workers with less than a year left in
their contracts when they were illegally dismissed.
For this reason, we cannot subscribe to the argument that “[overseas workers] are
contractual employees who can never acquire regular employment status, unlike
local workers”121 because it already justifies differentiated treatment in terms of the
computation of money claims.122cralawred
Likewise, the jurisdictional and enforcement issues on overseas workers’ money
claims do not justify a differentiated treatment in the computation of their money
claims.123 If anything, these issues justify an equal, if not greater protection and
assistance to overseas workers who generally are more prone to exploitation given
their physical distance from our government.
We also find that the classifications are not relevant to the purpose of the law, which
is to “establish a higher standard of protection and promotion of the welfare of
migrant workers, their families and overseas Filipinos in distress, and for other
purposes.”124 Further, we find specious the argument that reducing the liability of
placement agencies “redounds to the benefit of the [overseas] workers.”125cralawred
Putting a cap on the money claims of certain overseas workers does not increase the
standard of protection afforded to them. On the other hand, foreign employers are
more incentivized by the reinstated clause to enter into contracts of at least a year
because it gives them more flexibility to violate our overseas workers’ rights. Their
liability for arbitrarily terminating overseas workers is decreased at the expense of
the workers whose rights they violated. Meanwhile, these overseas workers who are
impressed with an expectation of a stable job overseas for the longer contract period
disregard other opportunities only to be terminated earlier. They are left with claims
that are less than what others in the same situation would receive. The reinstated
clause, therefore, creates a situation where the law meant to protect them makes
violation of rights easier and simply benign to the violator.
As Justice Brion said in his concurring opinion in
Serrano:chanRoblesvirtualLawlibrary
Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact
provides a hidden twist affecting the principal/employer’s liability. While intended
as an incentive accruing to recruitment/manning agencies, the law, as worded,
simply limits the OFWs’ recovery in wrongful dismissal situations. Thus, it redounds
to the benefit of whoever may be liable, including the principal/employer – the direct
employer primarily liable for the wrongful dismissal. In this sense, Section 10 – read
as a grant of incentives to recruitment/manning agencies – oversteps what it aims to
do by effectively limiting what is otherwise the full liability of the foreign
principals/employers. Section 10, in short, really operates to benefit the wrong party
and allows that party, without justifiable reason, to mitigate its liability for wrongful
dismissals. Because of this hidden twist, the limitation of liability under Section 10
cannot be an “appropriate” incentive, to borrow the term that R.A. No. 8042 itself
uses to describe the incentive it envisions under its purpose clause.
What worsens the situation is the chosen mode of granting the incentive: instead of a
grant that, to encourage greater efforts at recruitment, is directly related to extra
efforts undertaken, the law simply limits their liability for the wrongful dismissals of
already deployed OFWs. This is effectively a legally-imposed partial condonation of
their liability to OFWs, justified solely by the law’s intent to encourage greater
deployment efforts. Thus, the incentive, from a more practical and realistic view, is
really part of a scheme to sell Filipino overseas labor at a bargain for purposes
solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the OFWs
— the benefits accruing to the recruitment/manning agencies and their principals
are taken from the pockets of the OFWs to whom the full salaries for the unexpired
portion of the contract rightfully belong. Thus, the principals/employers and the
recruitment/manning agencies even profit from their violation of the security of
tenure that an employment contract embodies. Conversely, lesser protection is
afforded the OFW, not only because of the lessened recovery afforded him or her by
operation of law, but also because this same lessened recovery renders a wrongful
dismissal easier and less onerous to undertake; the lesser cost of dismissing a
Filipino will always be a consideration a foreign employer will take into account in
termination of employment decisions. . . .126
Further, “[t]here can never be a justification for any form of government action that
alleviates the burden of one sector, but imposes the same burden on another sector,
especially when the favored sector is composed of private businesses such as
placement agencies, while the disadvantaged sector is composed of OFWs whose
protection no less than the Constitution commands. The idea that private business
interest can be elevated to the level of a compelling state interest is
odious.”127cralawred
Along the same line, we held that the reinstated clause violates due process rights. It
is arbitrary as it deprives overseas workers of their monetary claims without any
discernable valid purpose.128cralawred
Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her
contract, in accordance with Section 10 of Republic Act No. 8042. The award of the
three-month equivalence of respondent’s salary must be modified accordingly. Since
she started working on June 26, 1997 and was terminated on July 14, 1997,
respondent is entitled to her salary from July 15, 1997 to June 25, 1998. “To rule
otherwise would be iniquitous to petitioner and other OFWs, and would, in effect,
send a wrong signal that principals/employers and recruitment/manning agencies
may violate an OFW’s security of tenure which an employment contract embodies
and actually profit from such violation based on an unconstitutional provision of
law.”129cralawred
III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21,
2013, which revised the interest rate for loan or forbearance from 12% to 6% in the
absence of stipulation, applies in this case. The pertinent portions of Circular No.
799, Series of 2013, read:chanRoblesvirtualLawlibrary
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the
following revisions governing the rate of interest in the absence of stipulation in loan
contracts, thereby amending Section 2 of Circular No. 905, Series of
1982:cralawlawlibrary
Section 1. The rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of an express contract as to
such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations
for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations
for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines
in computing legal interest in Nacar v. Gallery Frames:130cralawred
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:chanRoblesvirtualLawlibrary
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance
of money, the interest due should be that which may
have been stipulated in writing. Furthermore, the
interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 6% per
annum to be computed from default, i.e., from judicial
or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until
the demand can be established with reasonable
certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially
or extrajudicially (Art. 1169, Civil Code), but when
such certainty cannot be so reasonably established at
the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is
made (at which time the quantification of damages
may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest
shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from such
finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of
credit.
And, in addition to the above, judgments that have become final and executory prior
to July 1, 2013, shall not be disturbed and shall continue to be implemented applying
the rate of interest fixed therein.131
Circular No. 799 is applicable only in loans and forbearance of money, goods, or
credits, and in judgments when there is no stipulation on the applicable interest rate.
Further, it is only applicable if the judgment did not become final and executory
before July 1, 2013.132cralawred
We add that Circular No. 799 is not applicable when there is a law that states
otherwise. While the Bangko Sentral ng Pilipinas has the power to set or limit
interest rates,133 these interest rates do not apply when the law provides that a
different interest rate shall be applied. “[A] Central Bank Circular cannot repeal a
law. Only a law can repeal another law.”134cralawred
For example, Section 10 of Republic Act No. 8042 provides that unlawfully
terminated overseas workers are entitled to the reimbursement of his or her
placement fee with an interest of 12% per annum. Since Bangko Sentral ng Pilipinas
circulars cannot repeal Republic Act No. 8042, the issuance of Circular No. 799
does not have the effect of changing the interest on awards for reimbursement of
placement fees from 12% to 6%. This is despite Section 1 of Circular No. 799,
which provides that the 6% interest rate applies even to judgments.
Moreover, laws are deemed incorporated in contracts. “The contracting parties need
not repeat them. They do not even have to be referred to. Every contract, thus,
contains not only what has been explicitly stipulated, but the statutory provisions
that have any bearing on the matter.”135 There is, therefore, an implied stipulation in
contracts between the placement agency and the overseas worker that in case the
overseas worker is adjudged as entitled to reimbursement of his or her placement
fees, the amount shall be subject to a 12% interest per annum. This implied
stipulation has the effect of removing awards for reimbursement of placement fees
from Circular No. 799’s coverage.
The same cannot be said for awards of salary for the unexpired portion of the
employment contract under Republic Act No. 8042. These awards are covered by
Circular No. 799 because the law does not provide for a specific interest rate that
should apply.
In sum, if judgment did not become final and executory before July 1, 2013 and
there was no stipulation in the contract providing for a different interest rate, other
money claims under Section 10 of Republic Act No. 8042 shall be subject to the 6%
interest per annum in accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum on her
money claims from the finality of this judgment.
IV
Finally, we clarify the liabilities of Wacoal as principal and petitioner as the
employment agency that facilitated respondent’s overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that
the foreign employer and the local employment agency are jointly and severally
liable for money claims including claims arising out of an employer-employee
relationship and/or damages. This section also provides that the performance bond
filed by the local agency shall be answerable for such money claims or damages if
they were awarded to the employee.
This provision is in line with the state’s policy of affording protection to labor and
alleviating workers’ plight.136cralawred
In overseas employment, the filing of money claims against the foreign employer is
attended by practical and legal complications. The distance of the foreign employer
alone makes it difficult for an overseas worker to reach it and make it liable for
violations of the Labor Code. There are also possible conflict of laws, jurisdictional
issues, and procedural rules that may be raised to frustrate an overseas worker’s
attempt to advance his or her claims.
It may be argued, for instance, that the foreign employer must be impleaded in the
complaint as an indispensable party without which no final determination can be had
of an action.137cralawred
The provision on joint and several liability in the Migrant Workers and Overseas
Filipinos Act of 1995 assures overseas workers that their rights will not be frustrated
with these complications.
The fundamental effect of joint and several liability is that “each of the debtors is
liable for the entire obligation.”138 A final determination may, therefore, be achieved
even if only one of the joint and several debtors are impleaded in an action. Hence,
in the case of overseas employment, either the local agency or the foreign employer
may be sued for all claims arising from the foreign employer’s labor law violations.
This way, the overseas workers are assured that someone — the foreign employer’s
local agent — may be made to answer for violations that the foreign employer may
have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas
workers have recourse in law despite the circumstances of their employment. By
providing that the liability of the foreign employer may be “enforced to the full
extent”139 against the local agent, the overseas worker is assured of immediate and
sufficient payment of what is due them.140cralawred
Corollary to the assurance of immediate recourse in law, the provision on joint and
several liability in the Migrant Workers and Overseas Filipinos Act of 1995 shifts
the burden of going after the foreign employer from the overseas worker to the local
employment agency. However, it must be emphasized that the local agency that is
held to answer for the overseas worker’s money claims is not left without remedy.
The law does not preclude it from going after the foreign employer for
reimbursement of whatever payment it has made to the employee to answer for the
money claims against the foreign employer.
A further implication of making local agencies jointly and severally liable with the
foreign employer is that an additional layer of protection is afforded to overseas
workers. Local agencies, which are businesses by nature, are inoculated with interest
in being always on the lookout against foreign employers that tend to violate labor
law. Lest they risk their reputation or finances, local agencies must already have
mechanisms for guarding against unscrupulous foreign employers even at the level
prior to overseas employment applications.
With the present state of the pleadings, it is not possible to determine whether there
was indeed a transfer of obligations from petitioner to Pacific. This should not be an
obstacle for the respondent overseas worker to proceed with the enforcement of this
judgment. Petitioner is possessed with the resources to determine the proper legal
remedies to enforce its rights against Pacific, if any.
V
Many times, this court has spoken on what Filipinos may encounter as they travel
into the farthest and most difficult reaches of our planet to provide for their families.
In Prieto v. NLRC:141cralawred
The Court is not unaware of the many abuses suffered by our overseas workers in
the foreign land where they have ventured, usually with heavy hearts, in pursuit of a
more fulfilling future. Breach of contract, maltreatment, rape, insufficient
nourishment, sub-human lodgings, insults and other forms of debasement, are only a
few of the inhumane acts to which they are subjected by their foreign employers,
who probably feel they can do as they please in their own country. While these
workers may indeed have relatively little defense against exploitation while they are
abroad, that disadvantage must not continue to burden them when they return to
their own territory to voice their muted complaint. There is no reason why, in their
very own land, the protection of our own laws cannot be extended to them in full
measure for the redress of their grievances.142chanrobleslaw
But it seems that we have not said enough.
We face a diaspora of Filipinos. Their travails and their heroism can be told a
million times over; each of their stories as real as any other. Overseas Filipino
workers brave alien cultures and the heartbreak of families left behind daily. They
would count the minutes, hours, days, months, and years yearning to see their sons
and daughters. We all know of the joy and sadness when they come home to see
them all grown up and, being so, they remember what their work has cost them.
Twitter accounts, Facetime, and many other gadgets and online applications will
never substitute for their lost physical presence.

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

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

Inevitably, their dignity is ours as well.

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

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

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

SO ORDERED.

Carpio, Acting C.J., Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del
Castillo, Villarama, Jr., Perez, Mendoza, Reyes, and Perlas-Bernabe, JJ., concur.
Sereno, C.J., on Leave.
Brion, J., see dissenting opinion.

FIRST DIVISION
G.R. No. 198664, November 23, 2016
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. OWEN MARCELO
CAGALINGAN AND BEATRIZ B. CAGALINGAN, Accused-Appellants.
DECISION
BERSAMIN, J.:
Illegal recruitment is a crime committed by a person who, not having the valid license
or authority required by law to enable him to lawfully engage in recruitment and
placement of workers, undertakes any of the activities within the meaning of
"recruitment and placement" mentioned in Article 13(b) of the Labor Code, or any of
the prohibited practices enumerated in Section 6 of Republic Act No. 8042 (Migrant
Workers' Act), against three or more persons, individually or as a group.
The Case
The accused-appellants assail the decision promulgated on March 18, 2011,1 whereby
the Court of Appeals (CA) affirmed their convictions for illegal recruitment in large
scale and three counts of estafa handed down on November 25, 2004 by the Regional
Trial Court (RTC), Branch 18, in Cagayan de Oro City.2
Antecedents
The factual and procedural antecedents, as summarized by the CA, are as follows:
Accused-appellants Owen Marcelo Cagalingan (Owen) and Beatriz B. Cagalingan
(Beatriz) (accused spouses) were charged with Illegal Recruitment in Large Scale
before the Regional Trial Court of Cagayan de Oro City in a complaint initiated by
private complainants Reynalyn B. Cagalingan (Reynalyn), Roselle Q. Cagalingan
(Roselle), Laarni E. Sanchez (Laarni), Norma R. Cagalingan (Norma); and Arcele J.
Bacorro (Arcele). Accused-appellants were likewise indicted for three (3) counts
of estafa in the same court by private complainants Reynalyn, Roselle, and Arcele,
docketed as Criminal Case Nos. 2003-124, 2003-125, and 2003-238, respectively.
The information in Criminal Case No. 2003-173, which charged the accused with
illegal recruitment in large scale reads, as follows:
"That on or about and during the period from the months of October up to November,
2002, in the City of Cagayan de Oro, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, representing themselves to have the
capacity to contract, enlist, hire and transport Filipino workers for employment in
Macau, China, conspiring, confederating together and mutually helping one another,
did then and there willfully, unlawfully and feloniously, for a fee, recruit and promise
employment/job placement to the following persons:
1. Reynalyn B. Cagalingan
2. Roselle Q. Cagalingan
3. Laarni E. Sanchez
4. Norma R. Cagalingan; and
5. Arcele J. Bacorro
Without first having secured or obtained the required license or authority from the
government agency.
Contrary to and in Violation of Section 6, in relation to Section 7(b) of RA 8042, the
Migrant Workers and Overseas Filipinos Act of 1995."
chanroblesvirtuallawlibrary
That in Criminal Case No. 2003-124 for the crime of estafa, the information reads:
"That on or about November 23, 2002 in the City of Cagayan de Oro, Philippines and
within the jurisdiction of this Honorable Court, the above-named accused, conspiring,
confederating together and mutually helping one another, did then and there willfully,
unlawfully and feloniously defraud Reynalyn Cagalingan in the following manner, to
wit: the said accused, by means of false manifestation and fraudulent representations
which they made to said Reynalyn Cagalingan to the effect that they had the power
and capacity to recruit and employ her abroad as a worker in Macao, China and could
facilitate the pertinent papers, if given the necessary amount, to meet the requirements
thereof, and by means of other similar deceits, induced and succeeded in inducing the
said Reynalyn Cagalingan to give and deliver, as in fact the latter gave and deliver
(sic), to said accused the amount of Php 40,000.00 on the strength of said
manifestations and representations, said accused well knowing that the same were
false and fraudulent and were made solely to obtain, as in fact they did obtain the
amount of Php 40,000.00 which amount once in their possession, with intent to
defraud, they willfully, unlawfully and feloniously appropriated, misapplied and
converted to their own personal use and benefit, to the damage and prejudice of said
Reynalyn Cagalingan in the aforesaid amount of Php 40,000.00, Philippine Currency.
Contrary to Article 315 (2)(a) of the Revised Penal Code."
cralawlawlibrary
That in Criminal Case No. 2003-125 for the crime of estafa, the information reads:
"That on or about November 22, 2002 in the City of Cagayan de Oro, Philippines, and
within the jurisdiction of this Honorable Code, the above-named accused, conspiring,
confederating together and mutually helping one another, did then and there willfully,
unlawfully and feloniously defraud Roselle Cagalingan in the following manner, to
wit: the said accused, by means of false manifestation and fraudulent representations
which they made to said Roselle Cagalingan to the effect that they had the power and
capacity to recruit and employ her abroad as a worker in Macau, China and could
facilitate the pertinent papers, if given the necessary amount, to meet the requirements
thereof, and by means of other similar deceits, induced and succeeded in inducing the
said Roselle Cagalingan to give and deliver, as in fact the latter gave and deliver (sic),
to said accused the amount of Php 40,000.00 on the strength of said manifestation and
fraudulent representations, said accused well knowing that the same were false and
fraudulent and were made solely to obtain, as in fact they did obtain the amount of
Php 40,000.00 which amount once in their possession, with intent to defraud, they
willfully, unlawfully and feloniously appropriated, misapplied and converted to their
own personal use and benefit, to the damage and prejudice of said Roselle Cagalingan
in the aforesaid amount of Php. 40,000.00, Philippine Currency.
CONTRARY to Article 315 (2)(a) of the Revised Penal Code."
chanroblesvirtuallawlibrary
And that in Criminal Case No. 2003-238 for estafa, the information reads:
"That on October 28, 2002, in the City of Cagayan de Oro, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused, conspiring,
confederating together and mutually helping one another, did then and there
willfully, unlawfully and feloniously defraud Arcele J. Bacorro in the following
manner, to wit: accused by means of false pretenses and fraudulent representations,
which they made to said Arcele J. Bacorro representing that they had the power and
capacity to recruit and employ her to work at Macau, China and by means of their
similar deceits, induced and succeeded in inducing the said Arcele J. Bacorro to give
and deliver, as in fact the latter did give and deliver (sic), to said accused the amount
of Php 40,000.00 as placement fee well-knowing that their representations were
false and fraudulent and made solely to obtain, as in fact they did obtain the amount
of Php 40,00.00 which amount once in their possession, accused willfully,
unlawfully and feloniously misappropriated, misapplied and converted to their own
personal, use, gain and benefit, to the damage and prejudice of the offended party
Arcele J. Bacorro in the aforesaid sum of P40,000.00, Philippine Currency.
Contrary to and in violation of Article 315 (2)(a) of the Revised Penal Code."
chanroblesvirtuallawlibrary
Warrants of arrest against accused spouses were issued on various dates and accused
spouses were arrested on May 26, 2003 in Vigan, Ilocos Sur. Nevertheless, due to
budgetary constraints, accused spouses were brought to the court a quo only on June
4, 2004.
Thereafter, upon arraignment both accused assisted by counsel pleaded "not guilty"
to the crimes charged. Joint trial ensued thereafter.
The prosecution presented as witnesses the following: private complainants Arcele,
Reynalyn, Laarni, and Roselle; Leonardo G. Rodrigo (Leonardo), Officer-in-Charge
of the Philippine Overseas Employment Administration (POEA)-Regional Extension
Unit-10, Cagayan de Oro City; and Marichu Damasing (Marichu), Branch Clerk of
Court, Branch 1, MTCC-Cagayan de Oro City. The evidence presented by the
prosecution established the following facts.
On different dates and occasions, private complainants were recruited by Accused
Spouses to work in Macau, China for a fee. Accused spouses Owen and Beatriz
were from Vigan, Ilocos Sur but Owen grew up and finished his high school
education in Cagayan de Oro City. Owen is the first cousin of the husbands of
private complainants Reynalyn and Roselle and the nephew of the husband of
private complainant Norma.
Private complainant Arcele testified that she met accused spouses on October 28,
2002 at around 12 o'clock noon, at the house of private complainant Norma. The
latter introduced accused spouses to her and she was told by accused Owen that her
wife, accused Beatriz, was asked by her employer, a certain Lu Ting Hoi Simon, of
Macau, China to hire office workers who are computer literate to work at Mandarin
Oriental Hotel. Beatriz confirmed this information and added that she was even
given a leave of absence by her employer just to come home in order to hire
workers. It was Owen who explained to her about the job and the requirements like:
passport, bio-data, Diploma in lieu of Transcript of Records, and Forty Thousand
Pesos (P40,000.00) for roundtrip tickets and documentation fees as Beatriz could not
speak Visayan.
On November 6, 2002, Arcele paid Fifteen Thousand Pesos (P15,000.00) to accused
Owen and subsequently, another P5,000.00 after she mortgaged her house in order
to raise the required amount. She was issued a receipt for the P20,000.00 and was
told that the balance of P20,0000.00 was needed for the documentation fee. She was
likewise told that her departure for Manila would be on November 22, 2002 and on
November 23, 2002 for Macau, China. Nonetheless, as she was not able to pay the
P20,000.00 before the scheduled date, her departure was postponed. Hence, on
November 23, 2002, she paid in full the balance of P20,000.00 without receipt as
she trusted accused spouses. The departure was rescheduled on November 29, 2002
for Manila at 3 o'clock in the afternoon and on November 30, 2002 for Macau,
China. They further agreed that Accused Spouses would fetch her at her house at 12
o'clock noon on November 29, 2002. Unfortunately, on the said date and time.
accused spouses failed to appear. Hence, she decided to proceed to Cagayan de Oro
City airport and look for accused spouses but the latter were not around. Instead, she
met the other recruits at the airport and they all realized that they were victims of
illegal recruitment. She and the other private complainants went home aggrieved and
humiliated.
Private complainant Reynalyn likewise recounted that accused Owen was the first
cousin of her husband and accused spouses were introduced to her by her parents-in-
law on October 4, 2002 as the latter stayed at the house of her parents-in-law located
adjacent to her house. Accused Owen offered to help her find work in Macau, China
as accused Beatriz was allegedly asked by her employer to find Filipino workers
who could replace the Taiwanese and Protuguese workers in Mandarin Oriental
Hotel at Macau, China. As Reynalyn was not a college graduate, she was told that
she could be assigned at the laundry section with a salary rate equivalent to Eighteen
Thousand Pesos (P18,000.00) per month. She was told to secure her passport, to fill-
up the bio-data with Chinese character and to pay P40,000.00 for plane tickets and
other documents. She paid accused spouses the said amount and a receipt was issued
to her. However, on the scheduled date of departure to Manila on November 29,
2002, she waited for accused spouses at the airport but to her disappointment, the
latter failed to show up.
Another prosecution witness, private complainant Laarni, also testified that it was
private complainant Roselle who informed her that accused spouses were recruiting
workers for Macau, China. On October 21, 2002, she met Roselle together with
accused spouses and the latter asked her if she was willing to work in Macau. She
was asked about her educational background and upon knowing that she is an AB
Journalism graduate, and took up computer informatics, Beatriz assured her that she
could work in Macau. She was offered as office secretary for a two (2) years
contract with a salary of P18,000.00 a month. She was then given a bio-data with
Chinese characters with a corresponding English translation to fill up and was
required to submit her transcript of records, diploma, certificate of employment and
a photocopy of her passport. She was also required to pay P40,000.00 for the
processing fee, plane ticket and documentation. Thereafter, accused spouses made
follow-ups at the office of her father at Branch 1, MTCC-Cagayan de Oro City.
On November 20, 2002, she met accused spouses again at the office of her father
and she told accused spouses that she might not proceed with her application as she
was able to raise only P11,500.00 and the said amount was even borrowed from a
lending institution. Accused Spouses nonetheless accepted the said amount and told
her that the balance of the payment would be deducted from her salary in Macau,
China. Thereafter, Accused Spouses issued a receipt and she was told that her
departure for Manila would be on November 29, 2002 and they would just meet at
Cagayan de Oro airport at 1 o'clock in the afternoon. However, on the said date, she
did not find accused spouses at the airport and upon inquiry from the airline counter
she was informed that their names were not on the plane manifest.
The testimony of Laarni as to the receipt of P11,500.00 was collaborated by
prosecution witness Marichu Damasing. She testified that the said amount was
received by Beatriz and the latter even counted the money at her table. The receipt
was prepared by Laarni's father and was signed by Beatriz and witnessed by her. She
further testified that upon receipt of the said amount, accused spouses left the office.
Corollarily, private complainant Roselle narrated that she met accused spouses on
October 4, 2002 at the house of her mother-in-law. Accused spouses told her that
they would be hiring workers for Macau, China and considering that at that time she
was jobless, she told them of her interest to apply for work. She was then offered the
position of an office clerk for two (2) years with a monthly salary of P22,000.00 and
was asked to submit the required documents and to pay P40,000.00 as placement
fee. Albeit it was the first time she met them, yet, she trusted them considering that
Owen was the first cousin of his husband and they were staying at the same house.
On November 20, 2002, she initially paid P20,000.00 and on November 26, 2002,
the balance of P20,000.00. A receipt was issued to her and she was told that her
depmiure to Manila would be on November 29, 2002. Upon the request of accused
spouses, a "despidida" party was held on November 28, 2002 at the house of private
complainant Reynalyn located just beside the house of her mother-in-law.
She further narrated that on November 29, 2002, accused spouses left the house of
her mother-in-law at about 8 o'clock in the morning and told her that they would go
to Gusa, Cagayan de Oro City to attend another "despidida" party and they would
just meet at the airport. Accordingly, at about 12 o'clock noon, she and other private
complainants were already at the Cagayan de Oro City airport but accused spouses
were not around. They stayed at the airpmi until 5 o'clock in the afternoon but still
accused spouses did not show up. Together with the other private complainants, they
proceeded to Macabalan, Cagayan de Oro City at the house of Arcele and stayed
there until 12 o'clock midnight as she was ashamed of her neighbours (sic). When
she finally got home, she and her family checked the bag of accused spouses which
was left at the house of her mother-in-law and to their surprise, the bag contained
pillows only. Hence, she reported the incident and upon verification with the POEA
she learned that Accused Spouses were not licensed recruiters.
The prosecution likewise presented Leonardo, the officer-in-charge of the POEA-
Regional Extension Unit-10. At the trial, he issued certifications upon requests of
private complainants Reynalyn, Roselle, Arcele and Norma certifying that upon
verification of their computer database, accused spouses were neither licensed nor
authorized to recruit workers and/or applicants for employment abroad.
On the other hand, the accused spouses denied the charges against them and argued
that they neither recruited nor promised private complainants any work in Macau
and explained that it was very difficult to find work in Macau, China unless they
have relatives or siblings working there who could find work for them and who
could recommend them to their employers. Albeit they admitted to be in Cagayan de
Oro City sometime in August and September 2002, yet, they denied being in
Cagayan de Oro City sometime in October and November 2002 as alleged by private
complainants. They admitted that they met private complainants on different
occasions while they were in Cagayan de Oro City as some of them were relatives of
accused Owen but they asserted that they neither offered any work nor required
private complainants to submit any documents and pay any amount for possible
work in Macau. In fact, it was private complainants who requested them to find
work for them in Macau but they turned down their requests as it was very difficult
to find work in said place. They likewise denied having received any money from
private complainants because they were not in Cagayan de Oro City when the
alleged payments were made and as indicated in the receipts and they further
testified that some of the private complainants were hard up and were incapable of
producing the said amount. They could not think of any reason why private
complainants accused them and filed charges against them except that they turned
down their requests for job placements in Macau, China.3
chanroblesvirtuallawlibrary
Judgment of the RTC
On November 25, 2004, the RTC rendered judgment convicting the accused-
appellants,4 disposing:
IN THE LIGHT OF ALL THE FOREGOING, the court finds accused OWEN
MARCELO CAGALINGAN and BEATRIZ B. CAGALINGAN GUILTY beyond
reasonable doubt of violating Section 6 of Republic Act 8042, otherwise known as
"Migrant Workers and Overseas Filipinos Act of 1995" (Criminal Case No. 2003-
173). Accordingly, they are hereby sentenced and are SO ORDERED to suffer the
penalty of LIFE IMPRISONMENT, and for each accused to pay a fine of One
Million Pesos (P1,000,000.00).
Both accused are jointly and severally directed and SO ORDERED to pay to Mrs.
Arcele J. Bacorro the sum of Forty Thousand Pesos (P40,000.00), with legal interest
to start from the date of the promulgation of this judgement until fully satisfied, as
refund for the plane ticket and documentation fee; SO ORDERED to pay Mrs.
Reynalyn Cagalingan the sum of Forty Thousand Pesos (P40,000.00), with legal
interest to start from the date of promulgation until fully satisfied as refund for the
plane ticket and affidavit of support; SO ORDERED to pay Mrs. Roselle Q.
Cagalingan the sum of Forty Thousand Pesos (P40,000.00), with legal interest to
start from the date of the promulgation until fully satisfied, as refund for the plane
ticket and affidavit of support; SO ORDERED to pay Miss Laarni E. Sanchez the
sum of Eleven Thousand Five Hundred Pesos (P11,500.00), with legal interest to
start from the promulgation until fully satisfied, as refund for the processing fee.
The Court likewise finds OWEN MARCELO CAGALINGAN and BEATRIZ B.
CAGALINGAN GUlLTY beyond reasonable doubt (in Criminal Case No. 2003-
124) of violating paragraph 2(a) of Article 315 of the Revised Penal Code, for
swindling Reynalyn Cagalingan the sum of P40,000.00 with the promised (sic) to
employ her in Macao, (sic) China. Accordingly, after applying the Indeterminate
Sentence law, both accused are hereby sentenced and SO ORDERED to suffer the
imprisonment of Four (4) Years Nine Months and Eleven (11) days of Frisian
Correccional, as the Minimum, to Nine (9) years of Frisian Mayor. as the maximu,
including its accessory penalty.
The Court likewise finds OWN MARCELO CAGALINGAN and BEATRIZ B.
CAGALINGAN GUILTY beyond reasonable doubt (in Criminal Case No. 2003-
125) of violating paragraph 2(a) of Article 315 of the Revised Penal Code, for
swindling Roselle Cagalingan the sum of P40,000.00 with the promised (sic) to
employ her in Macao (sic), China. Accordingly, after applying the Indeterminate
Sentence Law, both accused are hereby sentenced and SO ORDERED to suffer the
imprisonment of Four (4) Years Nine (9) Months and Eleven (11) days of Prision
Correccional, as the Minimum, to Nine (9) years of Prision Mayor, as the Maximum,
including its accessory penalty.
The Court likewise finds OWEN MARCELO CAGALINGAN and BEATRIZ B.
CAGALINGAN GUILTY beyond reasonable doubt (in Criminal Case No. 2003-
238) of violating paragraph 2(a) of Article 315 of the Revised Penal Code, for
swindling Arcele J. Bacorro the sum of P40,000.00 with the promised to employ her
in Macao (sic), China. Accordingly, after applying the Indeterminate Sentence Law,
both accused are hereby sentenced and SO ORDERED to suffer the imprisonment
of Four (4) Years Nine (9) Months and Eleven (11) days of Prision Correccional, as
the Minimum, to Nine (9) years of Prision Mayor, as the Maximum, including its
accessory penalty.
The Court declines to award damages in estafa cases since they were provided
already in the case of Illegal Recruitment in Large Scale.
SO ORDERED. cralawlawlibrary5
cralawlawlibrary
Decision of the CA
On March 18, 2011, the CA affirmed the convictions of the accused-appellants by the
RTC,6viz.:
WHEREFORE, premises foregoing, the instant appeal is DISMISSED for lack of
merit.
SO ORDERED. cralawlawlibrary7
chanroblesvirtuallawlibrary
Hence, this appeal.
Issue
The accused-appellants assign the sole error that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RTC
DECISION FINDING THE ACCUSED-APPELLANTS GUILTY OF THE CRIME
CHARGED DESPITE THE PROSECUTION'S FAILURE TO ESTABLISH
BEYOND REASONABLE DOUBT ALL THE ELEMENTS OF THE CRIMES
CHARGED.8
chanroblesvirtuallawlibrary
The accused-appellants insist that the complainants well knew that they were not
connected to any recruitment agency, or that they were not recruiters themselves; that
they did not represent themselves to the latter as having the capability to deploy
workers overseas;9 that they did not commit any act of fraudulent misrepresentations
essential in the estafa for which they were convicted; and that they simply assisted in
processing the papers of the latter to help them realize their desire to work abroad. 10
Did the CA correctly affirm the convictions of the accused-appellants for illegal
recruitment in large scale and for three counts of estafa?
Ruling of the Court
The appeal lacks merit.
We find no reason to disturb the factual findings and legal conclusions by the CA
affirming the factual findings of the RTC, to wit:
To constitute illegal recruitment in large scale, three elements must concur: (a) the
offender has no valid license or authority required by law to enable him to lawfully
engage in recruitment and placement of workers; (b) the offender undertakes any of
the activities within the meaning of "recruitment and placement" under Article 13(b)
of the Labor Code, or any of the prohibited practices enumerated under Article 34 of
the same Code (now Section 6 of Republic Act No. 8042); and, (c) the offender
committed the same against three (3) or more persons, individually or as a group.
xxxx
In the case at bench, all three (3) elements were established during trial. First, it was
proved by private complaints that accused spouses were not licensed or authorized
to engage in recruitment activities. This fact was substantiated by POEA's
Certifications and as testified to by the Officer-in-Charge of the POEA who issued
the same. Second, private complainants testified and proved that indeed accused
spouses undertook acts constituting recruitment and placement as defined under
Article 13 (b) of the Labor Code. They testified that they were induced, offered and
promised by accused spouses employment in Macau, China for two (2) years for a
fee. They were made to believe that accused spouses were authorized to hire them
and capable of sending them to Macau for work with higher pays. They paid accused
spouses for documentation and processing fees, yet, they were unable to go abroad.
These testimonies, as well as the documentary evidence they submitted consisting of
the receipts issued to them by accused spouses, all proved that the latter were
engaged in recruitment and placement activities. And third, there are five (5)
complainants against whom accused spouses are alleged to have recruited.
Moreover, the defense proffered by accused spouses consisted merely of alibi and
denial. It is however noteworthy to state that denial, like alibi, is inherently a weak
defense and it is not at all persuasive. Accused spouses did not deny being in
Cagayan de Oro City, albeit they asserted to have arrived months earlier than the
alleged date, and they likewise did not deny having met private complainants on
different occasions as some of the private complainants were even relatives of
accused Owen.
xxxx
Parenthetically, there is no question that accused spouses are likewise liable
for estafa under Article 315 (2) (a) of the Revised Penal Code. We are convinced
that the prosecution proved beyond reasonable doubt Accused Spouses' guilt for
three (3) counts of Estafa.
xxxx
There are three ways of committing estafa under Article 315 (a) of the Revised
Penal Code: (1) by using a fictitious name; (2) by falsely pretending to possess
power, influence, qualifications, property, credit, agency, business or imaginary
transactions; and (3) by means of other similar deceits. Under this class
of estafa, the element of deceit is indispensable. Likewise, it is essential that the
false statement or fraudulent representation constitutes the very cause or the only
motive which induces the complainant to part with the thing of value.
In the present case, private complainants were led to believe by accused spouses that
they possessed the power and qualifications to provide them with work in Macau
when in fact they were neither licensed nor authorized to do so. Accused spouses
made it appear to private complainants that Beatriz was requested by her employer
to hire workers for Macau, when in fact she was not. They even recruited their own
relatives in the guise of helping them get better jobs with higher pays abroad for
them to improve their standard of living. Likewise, private complainants were
deceived by accused spouses by pretending that the latter could arrange their
employment in Macau, China. With these misrepresentations, false assurances and
deceit, they suffered damages and they were forced to part with their hard-earned
money, as one of them even testified to have mortgaged her house and another, to
have borrowed money from a lending institution just to raise the alleged processing
fees.11
chanroblesvirtuallawlibrary
The factual findings of the CA are accepted because the Court is not a trier of facts.
Such findings, which affirmed those of the RTC as the trial court, are now even
binding on us. This is because the RTC had the unique advantage to observe the
witnesses' demeanor while testifying, and the personal opportunity to test the accuracy
and reliability of their recollections of past events, both of which are very decisive in
a litigation like this criminal prosecution for the serious crime of illegal recruitment
committed in large scale where the parties have disagreed on the material facts.12 The
Court may revise such findings in its rare and extraordinary role of a trier of facts only
when the appellants convincingly demonstrate that such findings were either
erroneous, or biased, or unfounded, or incomplete, or unreliable, or conflicted with
the findings of fact of the CA.13 Alas, that demonstration was not made herein.
The records show that the Prosecution presented the complainants themselves to
establish that the accused-appellants had made the complainants believe that they
could deploy them abroad for a fee despite their having had no license or authority to
do so from the proper government agency; receipts; and the certification from the
POEA on the lack of the license to recruit having been issued in favor of the accused-
appellants.
In contrast, the accused-appellants offered only denial. Such defense was futile
because denial, essentially a negation of a fact, did not prevail over the affirmative
assertions of the fact. The courts – trial as well as appellate – have generally viewed
denial in criminal cases with considerable caution, if not outright rejection. This
dismissive judicial attitude comes from the recognition that denial is inherently weak
and unreliable by virtue of its being an excuse too easy and too convenient for the
guilty to make. Denial, to be worthy of consideration at all, should be substantiated
by clear and convincing evidence. Hence, the appeal of the accused should also fail
because it relied solely on negative and self-serving negations. Verily, the denial
carried no weight in law and had no greater evidentiary value than the testimonies of
credible witnesses of the Prosecution who testified on affirmative matters.14
We next ascertain if the CA properly affirmed the imposition of the penalties for
illegal recruitment in large scale and the three counts of estafa.
Under Section 7(b)15 of the Migrant Workers' Act, the penalty for illegal recruitment
in large scale is life imprisonment and fine of not less than P500,000.00 nor more than
P1,000,000.00 Although Republic Act No. 10022,16 approved on March 8, 2010, has
since introduced an amendment to the Migrant Workers' Act to raise the imposable
fine to not less than P2,000,000.00 nor more than P5,000,000.00, the amendment does
not apply herein because the illegal recruitment subject of this case was committed in
October and November, 2002, or long before the amendment took effect.
Accordingly, we hold that the RTC and CA correctly imposed life imprisonment and
fine of P1,000,000.00.17
For the three counts of estafa, the relevant legal provision is Article 315, first
paragraph, of the Revised Penal Code, which provides:
Article 315. Swindling (estafa). - Any person who shall defraud another by any of
the means mentioned herein below shall be punished by:
1st. The penalty of prision correccional in its maximum period to prision mayor in
its minimum period, if the amount of the fraud is over 12,000 pesos but does not
exceed 22,000 pesos; and if such amount exceeds the latter sum, the penalty
provided in this paragraph shall be imposed in its maximum period, adding one year
for each additional 10,000 pesos; but the total penalty which may be imposed shall
not exceed twenty years. In such cases, and in connection with the accessory
penalties which may be imposed and for the purpose of the other provisions of this
Code, the penalty shall be termed prision mayor or reclusion temporal, as the case
may be.
xxxx
chanroblesvirtuallawlibrary
The minimum of the indeterminate sentence for each count of estafa is fixed within penalty of four years of prision correcional, as minimum, to seven years, eight
the range of the penalty next lower to that prescribed by Article 315 of the Revised months, and 21 days of prision mayor;
Penal Code,18 which is prision correccional in its minimum period to prision
correccional in its medium period (i.e., six months and one day to four years and 3. The accused-appellants shall indemnify complainants Arcele J. Bacorro,
two months). The RTC imposed the minimum of four years, nine months, and Reynalyn Cagalingan, Roselle Q. Cagalingan, and Laarni E. Sanchez in the
eleven days of prision correccional, thereby exceeding the legal range for the respective amounts of P40,000.00, P40,000.00, P40,000.00, and P11,500.00 plus
minimum of the indeterminate sentence. Accordingly, the minimum of the interest of 6% per annum from the finality of this decision until the amounts are
indeterminate sentence is reduced to four years of prision correccional considering fully paid; and
the absence of any modifying circumstances.
4. The accused-appellants shall pay the costs of suit.
As to the maximum term for each count of estafa under the Indeterminate Sentence
Law, the maximum period of the prescribed penalty is first determined, and the SO ORDERED
incremental penalty of one year of imprisonment for every P10,000.00 in excess of
P22,000.00 is then added, provided that the total penalty shall not exceed 20 years. Sereno, C.J., Leonardo-De Castro, and Caguioa, JJ., concur.
To compute the maximum period of the prescribed penalty, the time included Perlas-Bernabe, J., on leave.
in prision correccional maximum to prision mayor minimum shall be divided into
three equal portions, with each portion forming a period. 19 Based on the
computation, the maximum period for prision correccional maximum to prision
mayor minimum is from six years, eight months, and 21 days to eight years. The
incremental penalty, when proper, shall thus be added to anywhere from six years,
eight months, and 21 days to eight years, at the discretion of the court. In computing
the incremental penalty, the amount defrauded shall be subtracted by P22,000.00,
and the difference shall be divided by P10,000.00. Any fraction of a year is
disregarded.20

For the maximum term of the three counts of estafa, the RTC imposed nine years.
We note that the RTC ordered the gravest imposable penalty within the range (eight
years of prision mayor plus the one-year incremental penalty). However, because
neither the RTC nor the CA found the attendance of any modifying
circumstance,21 we reduce the maximum to six years, eight months, and 21 days
of prision mayor and add the incremental penalty of one year, or a total of seven
years, eight months, and 21 days.

Finally, in line with prevailing jurisprudence,22 the accused-appellants shall pay

interest of 6% per annum on the respective amounts due to each of the complainants,
reckoned from the finality of this decision until the amounts are fully paid.

WHEREFORE, the Court AFFIRMS the decision promulgated on March 18,

2011 IN ALL RESPECTSsubject to the following MODIFICATIONS:

1. In Criminal Case No. 2003-173, the accused-appellants shall suffer the penalty of
life imprisonment and fine of P1,000,000.00 each;

2. In each of Criminal Case No. 2003-124, Criminal Case No. 2003-125, and
Criminal Case No. 2003-238, the accused-appellants shall suffer an indeterminate

FIRST DIVISION
[G.R. NO. 168445 November 11, 2005]
PEOPLE OF THE PHILIPPINES, Appellee, v. CAPT. FLORENCIO O.
GASACAO, Appellant.
DECISION
YNARES-SANTIAGO, J.:
This is an appeal from the May 18, 2005 Decision1 of the Court of Appeals in CA-
G.R. CR No. 00800 dismissing the appeal of appellant, Florencio O. Gasacao and
affirming the March 5, 2001 Joint Decision2of the Regional Trial Court (RTC) of
Quezon City, Branch 218, finding appellant guilty beyond reasonable doubt of Large
Scale Illegal Recruitment in Crim. Case No. Q-00-94240 and acquitting him of the
charge in Crim. Case No. Q-00-94241.
The factual antecedents are as follows:
Appellant was the Crewing Manager of Great Eastern Shipping Agency Inc., a
licensed local manning agency, while his nephew and co-accused, Jose Gasacao, was
the President. As the crewing manager, appellant's duties included receiving job
applications, interviewing the applicants and informing them of the agency's
requirement of payment of performance or cash bond prior to deployment.
On August 4, 2000, appellant and Jose Gasacao were charged with Large Scale Illegal
Recruitment defined under Section 6, paragraphs (a), (l) and (m) of Republic Act (RA)
No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, and penalized
under Section 7 (b) of the same law, before the RTC of Quezon City.
The informations read:
In Criminal Case No. Q-00-94240
That sometime in the months of May to December, 1999 or thereabout, in Quezon
City, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, conspiring, confederating and mutually helping one
another, did then and there willfully, unlawfully and criminally recruit, enlist and
promise overseas employment to the private complainants, namely, Lindy M.
Villamor, Dennis Cabangahan, Erencio C. Alaba, Victorino U. Caderao, Rommel B.
Patolen, Joseph A. Demetria and Louie A. Arca, as overseas seamen/seafarers, the
said accused thereby charging, exacting and collecting from the said private
complainants cash bonds and/or performance bonds in amounts ranging from
P10,000.00 to P20,000.00 without any authority to do so and despite the fact that the
same is prohibited by the POEA Rules and Regulations, which amount is greater than
that specified in the schedule of allowable fees prescribed by the Secretary of Labor
and Employment, and despite the payment of the said fees, the said accused failed to
actually deploy the private complainants without valid reasons as determined by the
Department of Labor and Employment and despite the failure of deployment, the said
accused failed to reimburse the expenses incurred by the said private complainants in
connection with their documentation and processing for the purpose of their supposed
deployment.
CONTRARY TO LAW.3
In Criminal Case No. Q-00-94241
That sometime in the months of September to November 1999 or thereabout, in
Quezon City, Metro Manila, Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused, conspiring, confederating and mutually helping one
another, did then and there willfully, unlawfully and criminally recruit, enlist and
promise overseas employment to the private complainants, namely, Melvin I. Yadao,
Frederick Calambro and Andy Bandiola, as overseas seamen/seafarers, the said
accused thereby charging, exacting and collecting from the said private complainants
cash bonds and/or performance bonds in amounts ranging from P10,000.00 to
P20,000.00 without any authority to do so and despite the fact that the same is
prohibited by the POEA Rules and Regulations, which amount is greater that that
specified in the schedule of allowable fees prescribed by the Secretary Labor and
Employment, and despite the payment of said fees, the said accused failed to actually
deploy the private complainants without valid reasons as determined by the
Department of Labor and Employment and despite the failure of deployment, the said
accused failed to reimburse the expenses incurred by the said private complainants in
connection with their documentation and processing for the purpose of their supposed
deployment.
SO ORDERED.4
Only the appellant was arrested while Jose Gasacao remained at large. When
arraigned, appellant pleaded not guilty to the offense charged. Thereafter, trial on the
merits ensued. On March 5, 2001, the RTC of Quezon City, Branch 218, rendered its
Joint Decision convicting appellant of Large Scale Illegal Recruitment in Crim. Case
No. Q-00-94240 and acquitting him of the charge in Crim. Case No. Q-00-94241. The
dispositive portion of the joint decision reads:
WHEREFORE, judgment is hereby rendered as follows:
1. In Crim. Case No. Q-00-94240, the prosecution having established the guilt of the
accused beyond reasonable doubt, the Court finds Florencio O. Gasacao GUILTY of
Large Scale Illegal Recruitment punishable under Section 7, (b) of R.A. 8042. He is
sentenced to suffer life imprisonment and a fine of P500,000.00. He shall also
indemnify Dennis C. Cabangahan in the amount of P8,750.00; Lindy M. Villamor for
P20,000.00; Victorino U. Caderao for P20,000.00; Rommel B. Patolen for
P20,000.00; and Erencio C. Alaba for P20,000.00. Complainants Louie A. Arca and
Joseph A. Demetria did not testify.
2. In Crim. Case No. Q-00-94241, complainants Melvin I. Yadao, Frederick Calambro
and Andy Bandiola did not testify. Moreover, the Court believes all these
complainants should have been grouped in just one (1) information. Hence, for failure
of the prosecution to prove the guilt of the accused beyond reasonable doubt, the Court
finds Florencio O. Gasacao NOT GUILTY of the offense charged.
SO ORDERED.5
Conformably with our pronouncement in People v. Mateo,6 which modified pertinent
provisions of the Rules of Court insofar as they provide for direct appeals from the
RTC to the Supreme Court in cases where the penalty imposed is death, reclusion
perpetua or life imprisonment, as in this case, as well as this Court's Resolution dated
September 19, 1995, we resolved on February 2, 2005 to transfer the case to the Court
of Appeals for appropriate action and disposition.7
On May 18, 2005, the Court of Appeals promulgated the assailed Decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, the present appeal is hereby DISMISSED for
lack of merit. The appealed Joint Decision dated March 5, 2001 of the trial court in
Criminal Case No. Q-00-94240 is hereby AFFIRMED and UPHELD.
With costs against the accused-appellant.
SO ORDERED.8
Hence, this appeal.
The core issue for resolution is whether error attended the trial court's findings, as
affirmed by the Court of Appeals, that appellant was guilty beyond reasonable doubt
of the crime of large scale illegal recruitment.
RA No. 8042 defines illegal recruitment as follows:
II. ILLEGAL RECRUITMENT
Sec. 6. DEFINITIONS. 'For purposes of this Act, illegal recruitment shall mean any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring
workers and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not, when undertaken by a non-licensee or
non-holder of authority contemplated under Article 13(f) of Presidential Decree No.
442, as amended, otherwise known as the Labor Code of the Philippines: Provided,
that such non-licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged. It shall
likewise include the following acts, whether committed by any persons, whether a
non-licensee, non-holder, licensee or holder of authority.
(a) To charge or accept directly or indirectly any amount greater than the specified in
the schedule of allowable fees prescribed by the Secretary of Labor and Employment,
or to make a worker pay any amount greater than that actually received by him as a
loan or advance;
....
(l) Failure to actually deploy without valid reason as determined by the Department
of Labor and Employment; andcralawlibrary
(m) Failure to reimburse expenses incurred by the workers in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the worker's fault. Illegal recruitment
when committed by a syndicate or in large scale shall be considered as offense
involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate carried out by a group of three
(3) or more persons conspiring or confederating with one another. It is deemed
committed in large scale if committed against three (3) or more persons individually
or as a group.
A license is a document issued by the Department of Labor and Employment (DOLE)
authorizing a person or entity to operate a private employment agency, while an
authority is a document issued by the DOLE authorizing a person or association to
engage in recruitment and placement activities as a private recruitment entity.
However, it appears that even licensees or holders of authority can be held liable for
illegal recruitment should they commit any of the above-enumerated acts.
Thus, it is inconsequential that appellant committed large scale illegal recruitment
while Great Eastern Shipping Agency, Inc. was holding a valid authority. We thus
find that the court below committed no reversible error in not appreciating that the
manning agency was a holder of a valid authority when appellant recruited the private
complainants.
There is no merit in appellant's contention that he could not be held liable for illegal
recruitment since he was a mere employee of the manning agency, pursuant to Section
6 of RA No. 8042 which provides:
The persons criminally liable for the above offenses are the principals, accomplices
and accessories. In case of juridical persons, the officers having control, management
or direction of their business shall be liable.
Contrary to appellant's claim, he is not a mere employee of the manning agency but
the crewing manager. As such, he receives job applications, interviews applicants and
informs them of the agency's requirement of payment of performance or cash bond
prior to the applicant's deployment. As the crewing manager, he was at the forefront
of the company's recruitment activities.
Private complainant Lindy Villamor testified that it was appellant who informed him
that if he will give a cash bond of P20,000.00, he will be included in the first batch of
applicants to be deployed. Notwithstanding the payment of the cash bond as evidenced
by a receipt dated December 15, 1999 and issued by the appellant, Villamor was not
deployed overseas. He further testified that when he found out that appellant was no
longer connected with Great Eastern Shipping Agency Inc., he confronted Jose
Gasacao and showed to him a photocopy of the receipt. Jose Gasacao gave him the
address of the appellant but he failed to recover the amount from the latter.
Another private complainant, Erencio C. Alaba testified that he applied as a seaman
with Great Eastern Shipping Agency Inc. in May 1999 and submitted all the
requirements to appellant. The latter told Alaba that after payment of a cash bond, he
will be deployed within three months. On June 3, 1999, Alaba gave P10,000.00 to the
appellant as evidenced by a cash voucher which was approved and signed by the
appellant in the presence of Alaba.
Afterwards, appellant asked Alaba to have his medical examination. He was also
informed that those who had completed paying the P20,000.00 cash bond will have
priority in deployment. Thus, Alaba gave another P10,000.00 to appellant on August
2, 1999 and was again informed that he will be deployed in a dredging or supply boat
within three months from August 1999. Despite appellant's representations, Alaba was
never deployed and was also unable to recover the amount of the cash bond that he
paid.
Private complainant Dennis Cabangahan testified that he applied as a seaman with
Great Eastern Shipping Agency Inc. on July 27, 1999 and paid the cash bond of
P19,000.00 as evidenced by a receipt issued by appellant. The latter informed him that
he will be deployed abroad within three months. As what had happened to the other
complainants, Cabangahan was never deployed overseas nor did he recover his
money.
Victoriano Cadirao9 also testified that on August 1, 1999, he applied with the manning
agency for the position of mess man. He submitted his application to appellant who
told him to come back when he has the money to cover the cash bond of P20,000.00.
Appellant told him that the payment of the cash bond is optional, but that his
deployment will be fast-tracked if he pays the cash bond. On August 10, 1999, he gave
P20,000.00 to appellant who issued a receipt. When the promised employment failed
to materialize, the appellant told Cadirao to wait for another dredging vessel. In
December 1999, he found out that appellant was no longer connected with Great
Eastern Shipping Agency Inc. so he went to his residence and demanded the return of
his money. Appellant however refused to return the amount of the cash bond.
On the other hand, Rommel B. Patolen testified that he applied with Great Eastern
Shipping Agency Inc. as an ordinary seaman in May 1999. After complying with the
requirements, appellant told him to report to the agency thrice a week. From May to
December 1999, Patolen reported to the agency as instructed. On December 11, 1999,
he gave P20,000.00 to appellant who acknowledged its receipt. Patolen further
testified that he paid the cash bond because appellant told him that his prospective
employer will arrive in December 1999 from Saudi Arabia with a vessel to
accommodate him. He was further advised that he could leave within three months if
he paid the cash bond. However, Patolen was never deployed and when he found out
that appellant was no longer connected with Great Eastern Shipping Agency Inc., he
went to the house of the latter and informed him that he was withdrawing his
application. Appellant asked him to wait for his new agency, Ocean Grandeur, which
has no license yet.
The foregoing testimonies of the private complainants clearly established that
appellant is not a mere employee of Great Eastern Shipping Agency Inc. As the
crewing manager, it was appellant who made representations with the private
complainants that he can secure overseas employment for them upon payment of the
cash bond.
It is well settled that to prove illegal recruitment, it must be shown that appellant gave
complainants the distinct impression that he had the power or ability to send
complainants abroad for work such that the latter were convinced to part with their
money in order to be employed.10 Appellant's act of promising the private
complainants that they will be deployed abroad within three months after they have
paid the cash bond clearly shows that he is engaged in illegal recruitment.
The trial court's appreciation of the complainants' testimonies deserves the highest
respect since it was in a better position to asses their credibility.
Even assuming that appellant was a mere employee, such fact is not a shield against
his conviction for large scale illegal recruitment. In the case of People v. Cabais,11 we
have held that an employee of a company or corporation engaged in illegal recruitment
may be held liable as principal, together with his employer, if it is shown that he
actively and consciously participated in the recruitment process. We further stated
that:
In this case, evidence showed that accused-appellant was the one who informed
complainant of job prospects in Korea and the requirements for deployment. She also
received money from them as placement fees. All of the complainants testified that
they personally met the accused-appellant and transacted with her regarding the
overseas job placement offers. Complainants parted with their money, evidenced by
receipts signed by accused Cabais and accused Forneas. Thus, accused-appellant
actively participated in the recruitment of the complainants. 12
Clearly, the acts of appellant vis - Ã -vis the private complainants, either as the
crewing manager of Great Eastern Shipping Agency Inc. or as a mere employee of the
same, constitute acts of large scale illegal recruitment which should not be
countenanced.
We find no reason to deviate from the findings of the trial court that appellant is guilty
beyond reasonable doubt of large scale illegal recruitment. It was established that he
promised overseas employment to five applicants, herein private complainants. He
interviewed and required them to complete and submit documents purportedly needed
for their employment. Although he informed them that it is optional, he collected cash
bonds and promised their deployment notwithstanding the proscription against its
collection under Section 60 of the Omnibus Rules and Regulations Implementing R.A.
No. 804213 which state that:
SEC. 60. Prohibition on Bonds and Deposits. 'In no case shall an employment
agency require any bond or cash deposit from the worker to guarantee performance
under the contract or his/her repatriation.
We find as flimsy and self serving appellant's assertion that he was unaware of the
prohibition against the collection of bonds or cash deposits from applicants. It is an
established dictum that ignorance of the law excuses no one from compliance
therewith.14 The defense of good faith is neither available.
It is also undisputed that appellant failed to deploy the private complainants without
any valid reason, this notwithstanding his promise to them that those who can pay the
cash bond will be deployed within three months from payment of the same. Such
failure to deploy constitutes a violation of Section 6 (l) of RA No. 8042. Worse, when
it became clear that appellant cannot deploy the private complainants without their
fault, he failed to return the amount of the cash bond paid by them.
Illegal recruitment is deemed committed in large scale if committed against three or
more persons individually or as a group. In this case, five complainants testified
against appellant's acts of illegal recruitment, thereby rendering his acts tantamount to
economic sabotage. Under Section 7 (b) of RA No. 8042, the penalty of life
imprisonment and a fine of not less than P500,000.00 nor more than P1,000.000.00
shall be imposed if illegal recruitment constitutes economic sabotage.
Verily, the trial court and the Court of Appeals correctly found appellant guilty beyond
reasonable of large scale illegal recruitment.
WHEREFORE,the May 18, 2005 Decision of the Court of Appeals in CA-G.R. CR
No. 00800 is AFFIRMED.
SO ORDERED.

THIRD DIVISION
[G.R. No. 93666. April 22, 1991.]
GENERAL MILLING CORPORATION and EARL TIMOTHY
CONE, Petitioners, v. HON. RUBEN D. TORRES, in his capacity as Secretary of
Labor and Employment, HON. BIENVENIDO E. LAGUESMA, in his capacity as
Acting Secretary of Labor and Employment, and BASKETBALL COACHES
ASSOCIATION OF THE PHILIPPINES, Respondents.
Sobrevinas, Diaz, Hayudini & Bodegon Law Office, for Petitioners.
Rodrigo, Cuevas & De Borja for respondent BCAP.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT;
PROCEDURAL DUE PROCESS; FAILURE TO NOTIFY PARTY OF APPEAL,
CURED WHEN OPPOSING PARTY FILED THEIR MOTION FOR
RECONSIDERATION. — The alleged failure to notify petitioners of the appeal filed
by private respondent BCAP was cured when petitioners were allowed to file their
Motion for Reconsideration before respondent Secretary of Labor.
2. ID.; ID.; EMPLOYMENT OF ALIEN; EMPLOYMENT PERMIT FROM THE
DEPARTMENT OF LABOR; INDISPENSABLE. — Petitioner GMC’s claim that
hiring of a foreign coach is an employer’s prerogative has no legal basis at all. Under
Article 40 of the Labor Code, an employer seeking employment of an alien must first
obtain an employment permit from the Department of Labor. Petitioner GMC’s right to
choose whom to employ is, of course, limited by the statutory requirement of an alien
employment permit.
3. CONSTITUTIONAL LAW; BILL OF RIGHTS; EQUAL PROTECTION CLAUSE;
DESTINCTION BETWEEN NON-RESIDENT ALIEN AND RESIDENT ALIEN;
CASE AT BAR. — Petitioners will not find solace in the equal protection clause of the
Constitution. As pointed out by the Solicitor-General, no comparison can be made
between petitioner Cone and Mr. Norman Black as the latter is "a long time resident of
the country," and thus, not subject to the provisions of Article 40 of the Labor Code
which apply only to "non-resident aliens." In any case, the term "non-resident alien"
and its obverse "resident alien," here must be given their technical connotation under
our law on immigration.
4. ID.; ID.; PROHIBITION AGAINST IMPAIRMENT OF OBLIGATIONS; NOT
INFRINGED WHERE LEGAL PROVISIONS REQUIRING ALIEN EMPLOYMENT
PERMITS WERE IN EXISTENCE LONG BEFORE PETITIONERS ENTERED
INTO THEIR EMPLOYMENT CONTRACTS. — Neither can petitioners validly
claim that implementation of respondent Secretary’s decision would amount to an
impairment of the obligations of contracts. The provisions of the Labor Code and its
Implementing Rules and Regulations requiring alien employment permits were in
existence long before petitioners entered into their contract of employment. It is firmly
settled that provisions of applicable laws, especially provisions relating to matters
affected with public policy, are deemed written into contracts. Private parties cannot
constitutionally contract away the otherwise applicable provisions of law.
5. LABOR AND SOCIAL LEGISLATION; LABOR CODE; SECRETARY OF
LABOR; VESTED WITH JURISDICTION TO DETERMINE THE QUESTION OF
AVAILABILITY OF LOCAL WORKER. — The Labor Code itself specifically
empowers respondent Secretary to make a determination as to the availability of the
services of a "person in the Philippines who is competent, able and willing at the time
of application to perform the services for which an alien is desired." In short, the
Department of Labor is the agency vested with jurisdiction to determine the question of
availability of local workers. The constitutional validity of legal provisions granting
such jurisdiction and authority and requiring proof of non-availability of local nationals
able to carry out the duties of the position involved, cannot be seriously questioned.
6. ID.; ID.; ID.; MAY TAKE INTO ACCOUNT THE QUESTION OR WHETHER
OR NOT EMPLOYMENT OF AN ALIEN WOULD REDOUND TO THE
NATIONAL INTEREST. — Petitioners apparently suggest that the Secretary of Labor
is not authorized to take into account the question of whether or not employment of an
alien applicant would "redound to the national interest" because Article 40 does not
explicitly refer to such assessment. This argument (which seems impliedly to concede
that the relationship of basketball coaching and the national interest is tenuous and
unreal) is not persuasive. In the first place, the second paragraph of Article 40 says:"
[t]he employment permit may be issued to a non-resident alien or to the applicant
employer after a determination of the non-availability of a person in the Philippines
who is competent, able and willing at the time of application to perform the services for
which the alien is desired." The permissive language employed in the Labor Code
indicates that the authority granted involves the exercise of discretion on the part of the
issuing authority. In the second place, Article 12 of the Labor Code sets forth a
statement of objectives that the Secretary of Labor should, and indeed must, take into
account in exercising his authority and jurisdiction granted by the Labor Code.
7. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; MOOT AND
ACADEMIC; DISMISSAL OF PETITION NOT AUTOMATIC. — While ordinarily
this Court would dismiss a petition that clearly appears to have become moot and
academic, the circumstances of this case and the nature of the questions raised by
petitioners are such that we do not feel justified in leaving those questions unanswered.
Moreover, assuming that an alien employment permit has in fact been issued to
petitioner Cone, the basis of the reversal by the Secretary of Labor of his earlier
decision does not appear on the record. If such reversal is based on some view of
constitutional law or labor law different from those here set out, then such employment
permit, if one has been issued, would appear open to serious legal objections.
RESOLUTION
FELICIANO, J.:
On 1 May 1989, the National Capital Region of the Department of Labor and
Employment issued Alien Employment Permit No. M-0689-3-535 in favor of petitioner
Earl Timothy Cone, a United States citizen, as sports consultant and assistant coach for
petitioner General Milling Corporation ("GMC").
On 27 December 1989, petitioners GMC and Cone entered into a contract of
employment whereby the latter undertook to coach GMC’s basketball team.
On 15 January 1990, the Board of Special Inquiry of the Commission on Immigration
and Deportation approved petitioner Cone’s application for a change of admission
status from temporary visitor to prearranged employee.
On 9 February 1990, petitioner GMC requested renewal of petitioner Cone’s alien
employment permit. GMC also requested that it be allowed to employ Cone as full-
fledged coach. The DOLE Regional Director, Luna Piezas, granted the request on 15
February 1990.
On 18 February 1990, Alien Employment Permit No. M-02903-881, valid until 25
December 1990, was issued.
Private respondent Basketball Coaches Association of the Philippines ("BCAP")
appealed the issuance of said alien employment permit to the respondent Secretary of
Labor who, on 23 April 1990, issued a decision ordering cancellation of petitioner
Cone’s employment permit on the ground that there was no showing that there is no
person in the Philippines who is competent, able and willing to perform the services
required nor that the hiring of petitioner Cone would redound to the national interest.
Petitioner GMC filed a Motion for Reconsideration and two (2) Supplemental Motions
for Reconsideration but said Motions were denied by Acting Secretary of Labor
Bienvenido E. Laguesma in an Order dated 8 June 1990.
Petitioners are now before the Court on a Petition for Certiorari, dated 14 June 1990,
alleging that:chanrobles virtual lawlibrary
1. respondent Secretary of Labor gravely abused his discretion when he revoked
petitioner Cone’s alien employment permit; and
2. Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code
is null and void as it is in violation of the enabling law as the Labor Code does not
empower respondent Secretary to determine if the employment of an alien would
redound to national interest.
Deliberating on the present Petition for Certiorari, the Court considers that petitioners
have failed to show any grave abuse of discretion or any act without or in excess of
jurisdiction on the part of respondent Secretary of Labor in rendering his decision,
dated 23 April 1990, revoking petitioner Cone’s Alien Employment Permit.
The alleged failure to notify petitioners of the appeal filed by private respondent BCAP
was cured when petitioners were allowed to file their Motion for Reconsideration
before respondent Secretary of Labor. 1
Petitioner GMC’s claim that hiring of a foreign coach is an employer’s prerogative has
no legal basis at all. Under Article 40 of the Labor Code, an employer seeking
employment of an alien must first obtain an employment permit from the Department
of Labor. Petitioner GMC’s right to choose whom to employ is, of course, limited by
the statutory requirement of an alien employment permit.
Petitioners will not find solace in the equal protection clause of the Constitution. As
pointed out by the Solicitor-General, no comparison can be made between petitioner
Cone and Mr. Norman Black as the latter is "a long time resident of the country," and
thus, not subject to the provisions of Article 40 of the Labor Code which apply only to
"non-resident aliens." In any case, the term "non-resident alien" and its obverse
"resident alien," here must be given their technical connotation under our law on
immigration.
Neither can petitioners validly claim that implementation of respondent Secretary’s
decision would amount to an impairment of the obligations of contracts. The provisions
of the Labor Code and its Implementing Rules and Regulations requiring alien
employment permits were in existence long before petitioners entered into their
contract of employment. It is firmly settled that provisions of applicable laws,
especially provisions relating to matters affected with public policy, are deemed written
into contracts. 2 Private parties cannot constitutionally contract away the otherwise
applicable provisions of law.
Petitioners’ contention that respondent Secretary of Labor should have deferred to the
findings of Commission on Immigration and Deportation as to the necessity of
employing petitioner Cone, is, again, bereft of legal basis. The Labor Code itself
specifically empowers respondent Secretary to make a determination as to the
availability of the services of a "person in the Philippines who is competent, able and
willing at the time of application to perform the services for which an alien is desired."
3 In short, the Department of Labor is the agency vested with jurisdiction to determine
the question of availability of local workers. The constitutional validity of legal
provisions granting such jurisdiction and authority and requiring proof of non-
availability of local nationals able to carry out the duties of the position involved,
cannot be seriously questioned.chanrobles.com.ph : virtual law library
Petitioners apparently also question the validity of the Implementing Rules and
Regulations, specifically Section 6 (c), Rule XIV, Book I of the Implementing Rules, as
imposing a condition not found in the Labor Code itself Section 6 (c), Rule XIV, Book
I of the Implementing Rules, provides as follows:jgc:chanrobles.com.ph
"Section 6. Issuance of Employment Permit — The Secretary of Labor may issue an
employment permit to the applicant based on:chanrob1es virtual 1aw library
(a) Compliance by the applicant and his employer with the requirements of Section 2
hereof;
(b) Report of the Bureau Director as to the availability or non-availability of any person
in the Philippines who is competent and willing to do the job for which the services of
the applicant are desired.
(c) His assessment as to whether or not the employment of the applicant will redound to
the national interest;
(d) Admissibility of the alien as certified by the Commission on Immigration and
Deportation;
(e) The recommendation of the Board of Investments or other appropriate government
agencies if the applicant will be employed in preferred areas of investments or in
accordance with the imperative of economic development;
x x x"
(Emphasis supplied)
Article 40 of the Labor Code reads as follows:jgc:chanrobles.com.ph
"ART. 40. Employment permit of non-resident aliens. — Any alien seeking admission
to the Philippines for employment purposes and any domestic or foreign employer who
desires to engage an alien for employment in the Philippines shall obtain an
employment permit from the Department of Labor.
The employment permit may be issued to a non-resident alien or to the applicant
employer after a determination of the non-availability of a person in the Philippines
who is competent, able and willing at the time of application to perform the services for
which the alien is desired.
For an enterprise registered in preferred areas of investments, said employment permit
may be issued upon recommendation of the government agency charged with the
supervision of said registered enterprise." (Emphasis supplied)
Petitioners apparently suggest that the Secretary of Labor is not authorized to take into
account the question of whether or not employment of an alien applicant would
"redound to the national interest" because Article 40 does not explicitly refer to such
assessment. This argument (which seems impliedly to concede that the relationship of
basketball coaching and the national interest is tenuous and unreal) is not persuasive. In
the first place, the second paragraph of Article 40 says:" [t]he employment permit may
be issued to a non-resident alien or to the applicant employer after a determination of
the non-availability of a person in the Philippines who is competent, able and willing at
the time of application to perform the services for which the alien is desired." The
permissive language employed in the Labor Code indicates that the authority granted
involves the exercise of discretion on the part of the issuing authority. In the second
place, Article 12 of the Labor Code sets forth a statement of objectives that the
Secretary of Labor should, and indeed must, take into account in exercising his
authority and jurisdiction granted by the Labor Code.
"ART. 12. Statement of Objectives. — It is the policy of the State:chanrob1es virtual
1aw library
a) To promote and maintain a state of full employment through improved manpower
training, allocation and utilization;
x x x
c) To facilitate a free choice of available employment by persons seeking work in
conformity with the national interest;

d) To facilitate and regulate the movement of workers in conformity with the national
interest;

e) To regulate the employment of aliens, including the establishment of a registration

and or work permit system;

x x x"

Thus, we find petitioners’ arguments on the above points of constitutional law too
insubstantial to require further consideration.cralawnad

Petitioners have very recently manifested to this Court that public respondent Secretary
of Labor has reversed his earlier decision and has issued an Employment Permit to
petitioner Cone. Petitioners seek to withdraw their Petition for Certiorari on the ground
that it has become moot and academic.

While ordinarily this Court would dismiss a petition that clearly appears to have
become moot and academic, the circumstances of this case and the nature of the
questions raised by petitioners are such that we do not feel justified in leaving those
questions unanswered. 4 Moreover, assuming that an alien employment permit has in
fact been issued to petitioner Cone, the basis of the reversal by the Secretary of Labor
of his earlier decision does not appear on the record. If such reversal is based on some
view of constitutional law or labor law different from those here set out, then such
employment permit, if one has been issued, would appear open to serious legal
objections.

ACCORDINGLY, the Court Resolved to DISMISS the Petition for Certiorari for lack
of merit. Costs against petitioners.

Fernan, C.J., Bidin and Davide, Jr., JJ., concur.