SECOND DIVISION 

[G.R. No. 179532, May 30 : 2011] 

CLAUDIO S. YAP, PETITIONER, VS. THENAMARIS SHIP'S MANAGEMENT AND INTERMARE MARITIME

AGENCIES, INC., RESPONDENTS.

DECISION 

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision[2] dated February 28, 2007, which affirmed with modification the National Labor Relations Commission (NLRC) resolution[3] dated April 20, 2005.

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

[Petitioner] Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited.  The contract of employment entered into by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare, was for a duration of 12 months.  On 23 August 2001, Yap boarded M/T SEASCOUT and commenced his job as electrician.  However, on or about 08 November 2001, the vessel was sold.  The Philippine Overseas Employment Administration (POEA) was informed about the sale on 06 December 2001 in a letter signed by Capt. Adviento.  Yap, along with the other crewmembers, was informed by the Master of their vessel that the same was sold and will be scrapped.  They were also informed about the Advisory sent by Capt. Constatinou, which states, among others:

" ...PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO BE TRANSFERRED TO OTHER VESSELS AFTER VESSEL S DELIVERY (GREEK VIA ATHENS-PHILIPINOS VIA MANILA...

...FOR CREW NOT WISH TRANSFER TO DECLARE THEIR PROSPECTED TIME FOR REEMBARKATION IN ORDER TO SCHEDULE THEM ACCLY..."

Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus.  However, with respect to the payment of his wage, he refused to accept the payment of one-month basic wage.  He insisted that he was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from employment.  He alleged that he opted for immediate transfer but none was made.

[Respondents], for their part, contended that Yap was not illegally dismissed.  They alleged that following the sale of the M/T SEASCOUT, Yap signed off from the vessel on 10 November 2001 and was paid his wages corresponding to the months he worked or until 10 November 2001 plus his seniority bonus, vacation bonus and extra bonus.  They further alleged that Yap's employment contract was validly terminated due to the sale of the vessel and no arrangement was made for Yap's transfer to Thenamaris' other vessels.[4]

Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and Attorney's Fees before the Labor Arbiter (LA). Petitioner claimed that he was entitled to the salaries corresponding to the unexpired portion of his contract. Subsequently, he filed an amended complaint, impleading Captain Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare) and Thenamaris Ship's Management (respondents), together with C.J. Martionos, Interseas Trading and Financing Corporation, and Vulture Shipping Limited/Stejo Shipping Limited.

On July 26, 2004, the LA rendered a decision[5] in favor of petitioner, finding the latter to have been constructively and illegally dismissed by respondents.  Moreover, the LA found that respondents acted in bad faith when they assured petitioner of re-embarkation and required him to produce an electrician certificate during the period of his contract, but actually he was not able to board one despite of respondents' numerous vessels. Petitioner made several follow-ups for his re-embarkation but respondents failed to heed his plea; thus, petitioner was forced to litigate in order to vindicate his rights. Lastly, the LA opined that since the unexpired portion of petitioner's contract was less than one year, petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine months. The LA disposed, as follows:

WHEREFORE, in view of the foregoing, a decision is hereby rendered declaring complainant to have been constructively dismissed.  Accordingly, respondents Intermare Maritime Agency Incorporated, Thenamaris Ship's Mgt., and Vulture Shipping Limited are ordered to pay jointly and severally complainant Claudio S. Yap the sum of $12,870.00 or its peso equivalent at the time of payment.  In addition, moral damages of ONE HUNDRED THOUSAND PESOS (P100,000.00) and exemplary damages of FIFTY THOUSAND PESOS (P50,000.00) are awarded plus ten percent (10%) of the total award as attorney's fees.

Other money claims are DISMISSED for lack of merit.

SO ORDERED.[6]

Aggrieved, respondents sought recourse from the NLRC.

In its decision[7] dated January 14, 2005, the NLRC affirmed the LA's findings that petitioner was indeed constructively and illegally dismissed; that respondents' bad faith was evident on their wilful failure to transfer petitioner to another vessel; and that the award of attorney's fees was warranted. However, the NLRC held that instead of an award of salaries corresponding to nine months, petitioner was only entitled to salaries for three months as provided under Section 10[8] of Republic Act (R.A.) No. 8042,[9] as enunciated in our ruling in Marsaman Manning Agency, Inc. v. National Labor Relations Commission.[10] Hence, the NLRC ruled in this wise:

WHEREFORE, premises considered, the decision of the Labor Arbiter finding the termination of complainant illegal is hereby AFFIRMED with a MODIFICATION. Complainant['s] salary for the unexpired portion of his contract should only be limited to three (3) months basic salary.

Respondents Intermare Maritime Agency, Inc.[,] Vulture Shipping Limited and Thenamaris Ship Management are hereby ordered to jointly and severally pay complainant, the following:

1. Three (3) months basic salary - US$4,290.00 or its peso equivalent at the time of actual payment.

2. Moral damages - P100,000.00

3. Exemplary damages - P50,000.00

4. Attorney's fees equivalent to 10% of the total monetary award.

SO ORDERED.[11]

Respondents filed a Motion for Partial Reconsideration,[12] praying for the reversal and setting aside of the NLRC decision, and that a new one be rendered dismissing the complaint. Petitioner, on the other hand, filed his own Motion for Partial Reconsideration,[13] praying that he be paid the nine (9)-month basic salary, as awarded by the LA.

On April 20, 2005, a resolution[14] was rendered by the NLRC, affirming the findings of Illegal Dismissal and respondents' failure to transfer petitioner to another vessel. However, finding merit in petitioner's arguments, the NLRC reversed its earlier Decision, holding that "there can be no choice to grant only three (3) months salary for every year of the unexpired term because there is no full year of unexpired term which this can be applied."  Hence -

WHEREFORE, premises considered, complainant's Motion for Partial Reconsideration is hereby granted.  The award of three (3) months basic salary in the sum of US$4,290.00 is hereby modified in that complainant is entitled to his salary for the unexpired portion of employment contract in the sum of US$12,870.00 or its peso equivalent at the time of actual payment.

All aspect of our January 14, 2005 Decision STANDS.

SO ORDERED.[15]

Respondents filed a Motion for Reconsideration, which the NLRC denied.

Undaunted, respondents filed a petition for certiorari[16] under Rule 65 of the Rules of Civil Procedure before the CA. On February 28, 2007, the CA affirmed the findings and ruling of the LA and the NLRC that petitioner was constructively and illegally dismissed. The CA held that respondents failed to show that the NLRC acted without statutory authority and that its findings were not supported by law, jurisprudence, and evidence on record. Likewise, the CA affirmed the lower agencies' findings that the advisory of Captain Constantinou, taken together with the other documents and additional requirements imposed on petitioner, only meant that the latter should have been re-embarked. In the same token, the CA upheld the lower agencies' unanimous finding of bad faith, warranting the imposition of moral and exemplary damages and attorney's fees. However, the CA ruled that the NLRC erred in sustaining the LA's interpretation of Section 10 of R.A. No. 8042. In this regard, the CA relied on the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 and held:

In the present case, the employment contract concerned has a term of one year or 12 months which commenced on August 14, 2001. However, it was preterminated without a valid cause. [Petitioner] was paid his wages for the corresponding months he worked until the 10th of November. Pursuant to the provisions of Sec. 10, [R.A. No.] 8042, therefore, the option of "three months for every year of the unexpired term" is applicable.[17]

Thus, the CA provided, to wit:

WHEREFORE, premises considered, this Petition for Certiorari is DENIED. The Decisiondated January 14, 2005, and Resolutions, dated April 20, 2005 and July 29, 2005, respectively, of public respondent National Labor Relations Commission-Fourth Division, Cebu City, in NLRC No. V-000038-04 (RAB VIII (OFW)-04-01-0006) are herebyAFFIRMED with the MODIFICATION that private respondent is entitled to three (3) months of basic salary computed at US$4,290.00 or its peso equivalent at the time of actual payment.

Costs against Petitioners.[18]

Both parties filed their respective motions for reconsideration, which the CA, however, denied in its Resolution[19] dated August 30, 2007.

Unyielding, petitioner filed this petition, raising the following issues:

1) Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords anillegally dismissed migrant worker the lesser benefit of - "salaries for [the] unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less" - is constitutional; and

2) Assuming that it is, whether or not the Court of Appeals gravely erred in granting petitioner only three (3) months backwages when his unexpired term of 9 months is far short of the "every year of the unexpired term" threshold.[20]

In the meantime, while this case was pending before this Court, we declared as unconstitutional the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in the case of Serrano v. Gallant Maritime Services, Inc.[21] on March 24, 2009.

Apparently, unaware of our ruling in Serrano, petitioner claims that the 5th paragraph of Section 10, R.A. No. 8042, is violative of Section 1,[22] Article III and Section 3,[23] Article XIII of the Constitution to the extent that it gives an erring employer the option to pay an illegally dismissed migrant worker only three months for every year of the unexpired term of his contract; that said provision of law has long been a source of abuse by callous employers against migrant workers; and that said provision violates the equal protection clause under the Constitution because, while illegally dismissed local workers are guaranteed under the Labor Code of reinstatement with full backwages computed from the time compensation was withheld from them up to their actual reinstatement, migrant workers, by virtue of Section 10 of R.A. No. 8042, have to waive nine months of their collectible backwages every time they have a year of unexpired term of contract to reckon with. Finally, petitioner posits that, assuming said provision of law is constitutional, the CA gravely abused its discretion when it reduced petitioner's backwages from nine months to three months as his nine-month unexpired term cannot accommodate the lesser relief of three months for every year of the unexpired term.[24]

On the other hand, respondents, aware of our ruling in Serrano, aver that our pronouncement of unconstitutionality of the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in Serrano should not apply in this case because Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and obligations of the parties in case of Illegal Dismissal of a migrant worker and is not merely procedural in character. Thus, pursuant to the Civil Code, there should be no retroactive application of the law in this case. Moreover, respondents asseverate that petitioner's tanker allowance of US$130.00 should not be included in the computation of the award as petitioner's basic salary, as provided under his contract, was only US$1,300.00. Respondents submit that the CA erred in its computation since it included the said tanker allowance. Respondents opine that petitioner should be entitled only to US$3,900.00 and not to US$4,290.00, as granted by the CA. Invoking Serrano, respondents claim that the tanker allowance should be excluded from the definition of the term "salary." Also, respondents manifest that the full sum of P878,914.47 in  Intermare's bank account was garnished and subsequently withdrawn and deposited with the NLRC Cashier of Tacloban City on February 14, 2007. On February 16, 2007, while this case was pending before the CA, the LA issued an Order releasing the amount of P781,870.03 to petitioner as his award, together with the sum of P86,744.44 to petitioner's former lawyer as attorney's fees, and the

amount of P3,570.00 as execution and deposit fees. Thus, respondents pray that the instant petition be denied and that petitioner be directed to return to Intermare the sum of US$8,970.00 or its peso equivalent.[25]

On this note, petitioner counters that this new issue as to the inclusion of the tanker allowance in the computation of the award was not raised by respondents before the LA, the NLRC and the CA, nor was it raised in respondents' pleadings other than in their Memorandum before this Court, which should not be allowed under the circumstances.[26]

The petition is impressed with merit.

Prefatorily, it bears emphasis that the unanimous finding of the LA, the NLRC and the CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the tribunals' unanimous finding of bad faith on the part of respondents, thus, warranting the award of moral and exemplary damages and attorney's fees. What remains in issue, therefore, is the constitutionality of the 5thparagraph of Section 10 of R.A. No. 8042 and, necessarily, the proper computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.

Verily, we have already declared in Serrano that the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws. In an exhaustive discussion of the intricacies and ramifications of the said clause, this Court, in Serrano, pertinently held:

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.[27]

Moreover, this Court held therein that the subject clause does not state or imply any definitive governmental purpose; hence, the same violates not just therein petitioner's right to equal protection, but also his right to substantive due process under Section 1, Article III of the Constitution.[28] Consequently, petitioner therein was accorded 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.

We have already spoken. Thus, this case should not be different from Serrano.

As a general rule, an unconstitutional act 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. The general rule is supported by Article 7 of the Civil Code, which provides:

Art. 7.   Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary.

The doctrine of operative fact serves as an exception to the aforementioned general rule. In Planters Products, Inc. v. Fertiphil Corporation,[29] we held:

The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing

that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration.

The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it.[30]

Following Serrano, we hold that this case should not be included in the aforementioned exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. 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.

In the same vein, we cannot subscribe to respondents' postulation that the tanker allowance of US$130.00 should not be included in the computation of the lump-sum salary to be awarded to petitioner.

First. It is only at this late stage, more particularly in their Memorandum, that respondents are raising this issue. It was not raised before the LA, the NLRC, and the CA. They did not even assail the award accorded by the CA, which computed the lump-sum salary of petitioner at the basic salary of US$1,430.00, and which clearly included the US$130.00 tanker allowance. Hence, fair play, justice, and due process dictate that this Court cannot now, for the first time on appeal, pass upon this question. Matters not taken up below cannot be raised for the first time on appeal. They must be raised seasonably in the proceedings before the lower tribunals. Questions raised on appeal must be within the issues framed by the parties; consequently, issues not raised before the lower tribunals cannot be raised for the first time on appeal.[31]

Second. Respondents' invocation of Serrano is unavailing. Indeed, we made the following pronouncements in Serrano, to wit:

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.[32]

A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. Respondents themselves in their petition for certiorari before the CA averred that petitioner's basic salary, pursuant to the contract, was "US$1,300.00 + US$130.00 tanker allowance."[33] If respondents intended it differently, the contract per se should have indicated that said allowance does not form part of the basic salary or, simply, the contract should have separated it from the basic salary clause.

A final note.

We ought to be reminded of the plight and sacrifices of our OFWs.  In Olarte v. Nayona,[34] this Court held that:

Our overseas workers belong to a disadvantaged class. Most of them come from the poorest sector of our society. Their profile shows they live in suffocating slums, trapped in an environment of crimes. Hardly literate and in ill health, their only hope lies in jobs they find with difficulty in our country. Their unfortunate circumstance makes them easy prey to avaricious employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just to survive. Out of despondence, they will work under sub-human conditions and accept salaries below the minimum. The least we can do is to protect them with our laws.

WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision dated February 28, 2007 and Resolution dated August 30, 2007 are hereby MODIFIED to the effect that petitioner is AWARDEDhis salaries for the entire unexpired portion of his employment contract consisting of nine months computed at the rate of US$1,430.00 per month. All other awards are hereby AFFIRMED.  No costs.

SO ORDERED.

Carpio, J., Chairperson, Peralta, Abad, and Mendoza, JJ., concur.

SECOND DIVISION 

[G.R. No. 175558 : February 08, 2012] 

SKIPPERS UNITED PACIFIC, INC. AND SKIPPERS MARITIME SERVICES, INC., LTD., PETITIONERS, VS.

NATHANIEL DOZA, NAPOLEON DE GRACIA, ISIDRO L. LATA, AND CHARLIE APROSTA, RESPONDENTS. 

D E C I S I O N 

CARPIO, J.:

The Case

This is a Petition for Review under Rule 45 assailing the 5 July 2006 Decision[1] and 7 November 2006 Resolution[2] of the Court of Appeals in CA-G.R. SP No. 88148.[3]cralaw 

This arose from consolidated labor case[4] filed by seafarers Napoleon De Gracia (De Gracia), Isidro L. Lata (Lata), Charlie Aprosta (Aprosta), and Nathaniel Doza (Doza) against local manning agency Skippers United Pacific, Inc. and its foreign principal, Skippers Maritime Services, Inc., Ltd. (Skippers) for unremitted home allotment for the month of December 1998, salaries for the unexpired portion of their employment contracts, moral damages, exemplary damages, and attorney's fees. Skippers, on the other hand, answered with a claim for reimbursement of De Gracia, Aprosta and Lata's repatriation expenses, as well as award of moral damages and attorney's fees.

De Gracia, Lata, Aprosta and Doza's (De Gracia, et al.) claims were dismissed by the Labor Arbiter for lack of merit.[5] The Labor Arbiter also dismissed Skippers' claims.[6] De Gracia, et al. appealed[7]the Labor Arbiter's decision with the National Labor Relations Commission (NLRC), but the First Division of the NLRC dismissed the appeal for lack of merit.[8] Doza, et al.'s Motion for Reconsideration was likewise denied by the NLRC,[9] so they filed a Petition for Certiorari with the Court of Appeals (CA).[10]

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

The Facts

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

Name: Napoleon O. De GraciaPosition: 3rd EngineerContract Duration:

10 months

Basic Monthly Salary:

US$800.00

Contract Date: 17 July 1998[14]

Name: Isidro L. LataPosition: 4th EngineerContract Duration:

12 months

Basic Monthly Salary:

US$600.00

Contract Date: 17 April 1998[15]

Name: Charlie A. AprostaPosition: Third OfficerContract Duration:

12 months

Basic Monthly Salary:

US$600.00

Contract Date: 17 April 1998[16]

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

De Gracia, et al. claimed that Skippers failed to remit their respective allotments for almost five months, compelling them to air their grievances with the Romanian Seafarers Free Union.[18] On 16 December 1998, ITF Inspector Adrian Mihalcioiu of the Romanian Seafarers Union sent Captain Savvas of Cosmos Shipping a fax letter, relaying the complaints of his crew, namely: home allotment delay, unpaid salaries (only advances), late provisions, lack of laundry services (only one washing machine), and lack of maintenance of the vessel (perforated and unrepaired deck).[19] To date, however, Skippers only failed to remit the home allotment for the month of December 1998.[20] On 28 January 1999, De Gracia, et al. were unceremoniously discharged from MV Wisdom Stars and immediately repatriated.[21] Upon arrival in the Philippines, De Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter on 4 April 1999 and prayed for payment of their home allotment for the month of December 1998, salaries for the unexpired portion of their contracts, moral damages, exemplary damages, and attorney's fees.[22]

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

Skippers also claims that at 12:00 noon on 22 January 1999, four Filipino seafarers, namely Aprosta, De Gracia, Lata and Doza, arrived in the master's cabin and demanded immediate repatriation because they were not satisfied with the ship.[26] De Gracia, et al. threatened that they may become crazy any moment and demanded for all outstanding payments due to them.[27] This is evidenced by a telex of Cosmoship MV Wisdom to Skippers, which however bears conflicting dates of 22 January 1998 and 22 January 1999.[28]

Skippers also claims that, due to the disembarkation of De Gracia, et al., 17 other seafarers disembarked under abnormal circumstsances.[29] For this reason, it was suggested that Polish seafarers be utilized instead of Filipino seamen.[30] This is again evidenced by a fax of Cosmoship MV Wisdom to Skippers, which bears conflicting dates of 24 January 1998 and 24 January 1999.[31]

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

Seafarer Repatriation Expense

Home Allotment

Balance

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

Lata US$1,340.00 US$600.00 US$740.00

Since De Gracia, et al. pre-terminated their contracts, Skippers claims they are liable for their repatriation expenses[33] in accordance with Section 19(G) of Philippine Overseas Employment Administration (POEA) Memorandum Circular No. 55, series of 1996 which states:

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

Skippers also prayed for payment of moral damages and attorney's fees.[34]

The Decision of the Labor Arbiter

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

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

SO ORDERED.[35]

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

The Labor Arbiter also dismissed De Gracia et al.'s claim for

home allotment for December 1998.[40]The Labor Arbiter explained that payment for home allotment is "in the nature of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary benefit."[41] Since De Gracia, et al. were not able to prove their entitlement to home allotment, such claim was dismissed.[42]

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

The Decision of the NLRC

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

The Decision of the Court of Appeals

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

WHEREFORE, the instant petition for certiorari is GRANTED. The Resolution dated October 28, 2002 and the Order dated August 31, 2004 rendered by the public respondent NLRC are ANNULLED and SET ASIDE. Let another judgment be entered holding private respondents jointly and severally liable to petitioners for the payment of:

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

a. De Gracia = US$900.00b. Lata = US$600.00c. Aprosta = US$600.00

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

a. De Gracia = US$2,400.00b. Lata = US$1,800.00c. Aprosta = US$1,800.00

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

SO ORDERED.[47]

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

voluntarily demanded their immediate repatriation."[49] For this reason, the repatriation of De Gracia, et al. prior to the expiration of their contracts showed they were illegally dismissed from employment.[50]

In addition, the failure to remit home allotment pay was effectively admitted by Skippers, and prayed to be offset from the repatriation expenses.[51] Since there is no proof that De Gracia, et al. voluntarily pre-terminated their contracts, the repatriation expenses are for the account of Skippers, and cannot be offset with the home allotment pay for December 1998.[52]

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

The Issues

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

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

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

c) The Court of Appeals seriously erred in awarding attorney's fees in favor of respondents despite its findings that the facts attending in this case do not support the claim for moral and exemplary damages.[55]

The Ruling of this Court

We deny the petition and affirm the CA Decision, but modify the award.

For a worker's dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process.[56]

Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second notice informs the employee of the employer's decision to dismiss him. Before the issuance of the second notice, the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not necessary that an actual hearing be conducted.[57]

Substantive due process, on the other hand, requires that dismissal by the employer be made under a just or authorized cause under Articles 282 to 284 of the Labor Code.

In this case, there was no written notice furnished to De Gracia, et al. regarding the cause of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the local manning agency, claiming that De Gracia, et al. were repatriated because the latter voluntarily pre-terminated their contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment contract "akin to resignation" and no illegal dismissal. However, as correctly ruled by the CA, the telex message is "a biased and self-serving document

that does not satisfy the requirement of substantial evidence." If, indeed, De Gracia, et al. voluntarily pre-terminated their contracts, then De Gracia, et al. should have submitted their written resignations.

Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving written notice on the employer at least one (1) month in advance." Given that provision, the law contemplates the requirement of a written notice of resignation. In the absence of a written resignation, it is safe to presume that the employer terminated the seafarers. In addition, the telex message relied upon by the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22 January 1999, giving doubt to the veracity and authenticity of the document. In 22 January 1998, De Gracia, et al. were not even employed yet by the foreign principal. For these reasons, the dismissal of De Gracia, et al. was illegal.

On the issue of home allotment pay, Skippers effectively admitted non-remittance of home allotment pay for the month of December 1998 in its Position Paper. Skippers sought the repatriation expenses to be offset with the home allotment pay. However, since De Gracia, et al.'s dismissal was illegal, their repatriation expenses were for the account of Skippers and could not be offset with the home allotment pay.

Contrary to the claim of the Labor Arbiter and NLRC that the home allotment pay is in "the nature of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary benefit," Section 8 of POEA Memorandum Circular No. 55, series of 1996, states that the allotment actually constitutes at least eighty percent (80%) of the seafarer's salary:

The seafarer is required to make an allotment which is payable once a month to his designated allottee in the Philippines through any authorized Philippine bank. The master/employer/agency shall provide the seafarer with facilities to do so at no expense to the seafarer. The allotment shall be at least eighty percent   (80%) of the seafarer's monthly basic salary including backwages, if any. (Emphasis supplied)

Paragraph 2 of the employment contracts of De Gracia, Lata and Aprosta incorporated the provisions of above Memorandum Circular No. 55, series of 1996, in the employment contracts. Since said memorandum states that home allotment of seafarers actually constitutes at least eighty percent (80%) of their salary, home allotment pay is not in the nature of an extraordinary money or benefit, but should actually be considered as salary which should be paid for services rendered. For this reason, such non-remittance of home allotment pay should be considered as unpaid salaries, and Skippers shall be liable to pay the home allotment pay of De Gracia, et al. for the month of December 1998.

Damages

As admitted by Skippers in its Position Paper, the home allotment pay for December 1998 due to De Gracia, Lata and Aprosta is:

Seafarer Home Allotment PayDe Gracia US$900.00Aprosta US$600.00

Lata US$600.00

The monthly salary of De Gracia, according to his employment contract, is only US$800.00. However, since Skippers admitted in its Position Paper a higher home allotment pay for De Gracia, we award the higher amount of

home allotment pay for De Gracia in the amount of US$900.00. Since the home allotment pay can be considered as unpaid salaries, the peso equivalent of the dollar amount should be computed using the prevailing rate at the time of termination since it was due and demandable to De Gracia, et al. on 28 January 1999.

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

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

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

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

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

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

As such, we compute the claims as follows:

Seafarer

Contract

Term

Contract

Date

Repatriation Date

Unexpired Term

Monthly

Salary

Total Claims

De Gracia

10 month

s

17 Jul. 1998

28 Jan. 1999

3 months & 20 days

US$800

US$2933.34

Lata 12 month

s

17 Apr. 1998

28 Jan. 1999

2 months & 20 days

US$600

US$1600

Aprosta

12 month

s

17 Apr. 1998

28 Jan. 1999

2 months & 20 days

US$600

US$1600

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

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

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

(1) A criminal offense resulting in physical injuries;(2) Quasi-delicts causing physical injuries;(3) Seduction, abduction, rape, or other lascivious acts;(4) Adultery or concubinage;(5) Illegal or arbitrary detention or arrest;(6) Illegal search;(7) Libel, slander or any other form of defamation;(8) Malicious prosecution;(9) Acts mentioned in Article 309;(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

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

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

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

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

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

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

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

(1) When exemplary damages are awarded;(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;(3) In criminal cases of malicious prosecution against the plaintiff;(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;(6) In actions for legal support;(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;(8) In actions for indemnity under workmen's compensation and employer's liability laws;(9) In a separate civil action to recover civil liability arising from a crime;(10) When at least double judicial costs are awarded;(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

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

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

Art. 111. Attorney's fees.

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

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

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

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

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

a. De Gracia = US$900.00b. Lata = US$600.00c. Aprosta = US$600.00

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

a. De Gracia = US$2,933.34b. Lata = US$1,600.00c. Aprosta = US$1,600.00

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

SO ORDERED.Brion, Perez, Sereno, and Reyes, JJ., concur.

EN BANC

[G.R. NO. 167614 : March 24, 2009]

ANTONIO M. SERRANO, Petitioner, v. Gallant MARITIME SERVICES, INC. and MARLOW

NAVIGATION CO., INC., Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their earnings have built houses, provided health care, equipped schools and planted the seeds of businesses. They have woven together the world by transmitting ideas and knowledge from country to country. They have provided the dynamic human link between cultures, societies and economies. Yet, only recently have we begun to understand not only how much international migration impacts development, but how smart public policies can magnify this effect.

United Nations Secretary-General Ban Ki-MoonGlobal Forum on Migration and DevelopmentBrussels, July 10, 20071

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit:

Sec. 10. Money Claims. - x 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)cralawlibrary

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

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

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

Duration of contract

12 months

Position Chief Officer

Basic monthly salary

US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay

7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer by the end of April 1998.6

Respondents did not deliver on their promise to make petitioner Chief Officer.7 Hence, petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.8

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73, broken down as follows:

May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90

June 01/30, 1998 2,590.00

July 01/31, 1998 2,590.00

August 01/31, 1998 2,590.00

Sept. 01/30, 1998 2,590.00

Oct. 01/31, 1998 2,590.00

Nov. 01/30, 1998 2,590.00

Dec. 01/31, 1998 2,590.00

Jan. 01/31, 1999 2,590.00

Feb. 01/28, 1999 2,590.00

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

  - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

  25,382.23

Amount adjusted to chief mate's salary  

(March 19/31, 1998 to April 1/30, 1998) + 1,060.5010

  - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

TOTAL CLAIM US$ 26,442.7311

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

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

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

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

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

All other claims are hereby DISMISSED.

SO ORDERED.13 (Emphasis supplied)cralawlibrary

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

Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed.

Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts.18

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered to pay complainant, jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following:

1. Three (3) months salary

$1,400 x 3 US$4,200.00

2. Salary differential 45.00

US$4,245.00

3. 10% Attorney's fees 424.50

TOTAL US$4,669.50

The other findings are affirmed.

SO ORDERED.19

The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 "does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay."20

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause.21 The NLRC denied the motion.22

Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge against the subject clause.24 After initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003 which granted the Petition for Certiorari, docketed as G.R. No. 151833, filed by petitioner.

In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.25

His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to this Court on the following grounds:

I

The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the Supreme Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired portion of his contract of employment instead of limiting it to three (3) months

II

In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals gravely erred in law when it failed to discharge its judicial duty to decide questions of substance not theretofore determined by the Honorable Supreme Court, particularly, the constitutional issues raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas workers to three (3) months.

III

Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals gravely erred in law in excluding from petitioner's award the overtime pay and vacation pay provided in his contract since under the contract they form part of his salary.28

On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he intends to make use of the monetary award for his medical treatment and medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to allow partial execution of the undisputed monetary award and, at the same time, praying that the constitutional question be resolved.30

Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional question raised therein.

On the first and second issues

The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.

Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1,400.00 covering the period of three months out of the unexpired portion of nine months and 23 days of his employment contract or a total of US$4,200.00.

Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00

awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment contract, computed at the monthly rate of US$2,590.00.31

The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a determinate employment period and a fixed salary package.32 It also impinges on the equal protection clause, for it treats OFWs differently from local Filipino workers (local workers) by putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary award for local workers when their dismissal is declared illegal; that the disparate treatment is not reasonable as there is no substantial distinction between the two groups;33 and that it defeats Section 18,34 Article II of the Constitution which guarantees the protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas.35

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected OFWs.36

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to benefit local placement agencies. He marks the statement made by the Solicitor General in his Memorandum, viz.:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)cralawlibrary

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,50 otherwise the Court will dismiss the case or decide the same on some other ground.51

Without a doubt, there exists in this case an actual controversy directly involving petitioner who is personally aggrieved that the labor tribunals and the CA computed his monetary award based on the salary period of three months only as provided under the subject clause.

The constitutional challenge is also timely. It should be borne in mind that the requirement that a constitutional issue be raised at the earliest opportunity entails the interposition of the issue in the pleadings before a competent court, such that, if the issue is not raised in the pleadings before that competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot be considered on appeal.52 Records disclose that the issue on the constitutionality of the subject clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration with said labor tribunal,53 and reiterated in his Petition for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised because it is not the NLRC but the CA which has the competence to resolve the constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial function - its function in the present case is limited to determining questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in accordance with the standards laid down by the law itself;55 thus, its foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with the power of judicial review or the power to declare unconstitutional a law or a provision thereof, such as the subject clause.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-impairmentof 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,58 and cannot affect acts or contracts already perfected;59 however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.

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

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

Does the subject clause violate Section 1,Article III of the Constitution, and Section 18,Article II and Section 3, Article XIII on laboras 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.

x x x

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.

x x x

Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be based on the "rational basis" test, and the legislative discretion would be given deferential treatment.

But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice against persons favored by the Constitution with special protection, judicial scrutiny ought to be more strict. A weak and watered down view would call for the abdication of this Court's solemn duty to strike down any law repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a private person or the government itself or one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of the actor.

x x x

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)cralawlibrary

Imbued with the same sense of "obligation to afford protection to labor," the Court in the present case also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a suspect classification prejudicial to OFWs.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:

First, OFWs with employment contracts of less than one year vis - à-vis OFWs with employment contracts of one year or more;

Second, among OFWs with employment contracts of more than one year; and

Third, OFWs vis - à-vis local workers with fixed-period employment;

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

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

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

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

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

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

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

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission(Third Division, December 1998),83 which involved an OFW (therein respondent 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 her salaries for the entire unexpired portion of four and one-half months of her contract.

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

Case Title Contract Period

Period of Service

Unexpired Period Period Applied in the Computation of the Monetary Award

Skippers v. Maguad84

6 months 2 months 4 months 4 months

Bahia Shipping v. Reynaldo Chua 85

9 months 8 months 4 months 4 months

Centennial Transmarine v.

dela Cruz l86

9 months 4 months 5 months 5 months

Talidano v. Falcon87

12 months 3 months 9 months 3 months

Univan v. CA 88 12 months 3 months 9 months 3 months

Oriental v. CA 89 12 months more than 2 months

10 months 3 months

PCL v. NLRC90 12 months more than 2 months

more or less 9 months

3 months

Olarte v. Nayona91 12 months 21 days 11 months and 9 days

3 months

JSS v. .Ferrer92 12 months 16 days 11 months and 24 days

3 months

Pentagon v. Adelantar93

12 months 9 months and 7 days

2 months and 23 days

2 months and 23 days

Phil. Employ v. Paramio, et al.94

12 months 10 months 2 months Unexpired portion

Flourish Maritime v. Almanzor 95

2 years 26 days 23 months and 4 days

6 months or 3 months for each year of

contract

Athenna Manpower v.

Villanos96

1 year, 10 months and

28 days

1 month 1 year, 9 months and 28 days

6 months or 3 months for each year of

contract

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

their contract. The second category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired portion of their contracts.

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

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced work on the same day and under the same employer, and were illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.

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

Case Title Contract Period

Period of Service

Unexpired Period

Period Applied in the Computation of the

Monetary Award

ATCI v. CA, et 2 years 2 months 22 months 22 months

Phil. Integrated v. 2 years 7 days 23 months and 23 days

23 months and 23 days

JGB v. NLC100 2 years 9 months 15 months 15 months

Agoy v. NLRC101 2 years 2 months 22 months 22 months

EDI v. NLRC, et 2 years 5 months 19 months 19 months

Barros v. NLRC, 12 months 4 months 8 months 8 months

Philippine Transmarine v.

104

12 months 6 months and 22 days

5 months and 18 days

5 months and 18 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 forevery 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 WorkersWith 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 v. Daly, 61 N. Y., 362; Allen v. Whitlark, 99 Mich., 492; Farrell v. School District No. 2, 98 Mich., 43.)115 (Emphasis supplied)cralawlibrary

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.116Much 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,119 involving 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)cralawlibrary

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-vis their foreign principals, there are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs.

The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring foreign employers who default on their contractual obligations to migrant workers and/or their Philippine agents. These disciplinary measures range from temporary disqualification to preventive suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring foreign employers.

Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement agencies in enforcing the solidary liability of their foreign principals.

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.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

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 3,131 Article 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,133particularly 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 andjudicial 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 of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.

No costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 127195. August 25, 1999]

MARSAMAN MANNING AGENCY, INC. and DIAMANTIDES MARITIME,

INC.,Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION and WILFREDO T.

CAJERAS, Respondents.

D E C I S I O N

BELLOSILLO, J.:

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

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

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

On 28 September 1995 he was handed his Seaman's Service Record Book with the following entry: "Cause of discharge - Mutual Consent."2 Private respondent promptly objected to the entry but was not able to do anything more as he was immediately ushered to a waiting taxi which transported him to the Amsterdam Airport for the return flight to Manila.

After his arrival in Manila on 29 September 1995 Cajeras complained to MARSAMAN but to no avail.3cräläwvirtualibräry

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

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

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

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

WHEREFORE, judgment is hereby rendered declaring the repatriation and dismissal of complaint Wilfredo T. Cajeras as illegal and ordering respondents Marsaman Manning Agency, Inc. and Diamantides Maritime, Inc. to jointly and severally pay complainant the sum of USD 5,100.00 or its peso equivalent at the time of payment plus USD 510.00 as 10% attorneys fees it appearing that complainant had to engage the service of counsel to protect his interest in the prosecution of this case.

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

Petitioners appealed to the NLRC.7 On 16 September 1996 the NLRC affirmed the appealed findings and conclusions of the Labor Arbiter.8 The NLRC subscribed to the view that Cajeras repatriation by alleged mutual consent was not proved by petitioners, especially after noting that private respondent did not actually sign his Seamans Service Record Book to signify his assent to the repatriation as alleged by petitioners. The entry made by Capt. Alekos in the Deck Log was not considered reliable proof that private respondent

agreed to his repatriation because no opportunity was given the latter to contest the entry which was against his interest. Similarly, the Medical Report issued by Dr. Hoed of Holland was dismissed as being of dubious value since it contained only a sweeping statement of the supposed ailment of Cajeras without any elaboration on the factual basis thereof.

Petitioners' motion for reconsideration was denied by the NLRC in its Resolution dated 12 November 1996.9 Hence, this petition contending that the NLRC committed grave abuse of discretion: (a) in not according full faith and credit to the official entry by Capt. Alekos in the vessels Deck Log conformably with the rulings in Haverton Shipping Ltd. v. NLRC10 andWallem Maritime Services, Inc. v. NLRC;11 (b) in not appreciating the Medical Report issued by Dr. Wden Hoed as conclusive evidence that respondent Cajeras was suffering from paranoia and other mental problems; (c) in affirming the award of attorneys fees despite the fact that Cajeras' claim for exemplary damages was denied for lack of merit; and, (d) in ordering a monetary award beyond the maximum of three (3) months salary for every year of service set by RA 8042.

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

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

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

In the instant case, petitioners do not deny the fact that they have fallen short of the requirement. No document exists whereby Capt. Alekos and private respondent reduced to writing their alleged mutual consent to the termination of their employment contract. Instead, petitioners presented the vessel's Deck Log wherein an entry unilaterally made by Capt. Alekos purported to show that private respondent himself asked for his repatriation. However, the NLRC correctly dismissed its evidentiary value. For one thing, it is a unilateral act which is vehemently denied by private respondent. Secondly, the entry in no way satisfies the requirement of a bilateral documentation to prove early termination of an overseas employment contract by mutual consent required by the Standard Employment Contract. Hence, since the latter sets the minimum terms and conditions of employment for the protection of Filipino seamen subject only to the adoption of better terms and conditions over and above the minimum standards,14 the NLRC could not be accused of grave abuse of discretion in not accepting anything less.

However petitioners contend that the entry should be considered prima facie evidence that respondent himself requested his repatriation conformably with the rulings in Haverton Shipping Ltd. v. NLRC15 and Abacast Shipping and Management Agency, Inc. v. NLRC.16Indeed, Haverton says that a vessels log book is prima facie evidence of the facts stated therein as they are official entries made by a person in the performance of a duty required by law. However, this jurisprudential principle does not apply to win the case for petitioners. In Wallem Maritime Services, Inc. v. NLRC17 the Haverton ruling was not given unqualified application because the log book presented therein was a mere typewritten collation of excerpts from

what could be the log book.18 The Court reasoned that since the log book was the only piece of evidence presented to prove just cause for the termination of respondent therein, the log book had to be duly identified and authenticated lest an injustice would result from a blind adoption of its contents which were but prima facieevidence of the incidents stated therein.

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

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

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

With respect to attorneys fees, suffice it to say that in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum award of ten percent (10%) of the monetary award by way of attorneys fees is legally and morally justifiable under Art. 111 of the Labor Code,22 Sec. 8, Rule VIII, Book III of its Implementing Rules,23 and par. 7, Art. 220824 of the Civil Code.25The case of Albenson Enterprises Corporation v. Court of Appeals26 cited by petitioners in arguing against the award of attorneys fees is clearly not applicable, being a civil action for damages which deals with only one of the eleven (11) instances when attorneys fees could be recovered under Art. 2208 of the Civil Code.

Lastly, on the amount of salaries due private respondent, the rule has always been that an illegally dismissed worker

whose employment is for a fixed period is entitled to payment of his salaries corresponding to the unexpired portion of his employment.27 However on 15 July 1995, RA 8042 otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 took effect, Sec. 10 of which provides:

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

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

We agree with petitioners that Sec. 10, RA 8042, applies in the case of private respondent and to all overseas contract workers dismissed on or after its effectivity on 15 July 1995 in the same way that Sec. 34,28 RA 6715,29 is made applicable to locally employed workers dismissed on or after 21 March 1989.30 However, we cannot subscribe to the view that private respondent is entitled to three (3) months salary only. A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the words for every year of the unexpired term which follows the words salaries 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 amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect31 since the law-making body is presumed to know the meaning of the words employed in the statue and to have used them advisedly.32 Ut res magis valeat quam pereat.33cräläwvirtualibräry

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

SO ORDERED.

EN BANC

G.R. No. 170139, August 05, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. JOY C. CABILES, Respondent.

D E C I S I O N

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’ decision2dated 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$9,000.15 According 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 there were just causes for termination.40 There was no sufficient proof to show that respondent was inefficient in her work and that she failed to comply with company requirements.41 Furthermore, procedural due process was not observed in terminating respondent.42cralawred

The National Labor Relations Commission did not rule on the

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

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

The Commission denied the agency’s motion for reconsideration47 dated May 12, 2004 through a resolution48 dated July 2, 2004.

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

The Court of Appeals50 affirmed the decision of the National Labor Relations Commission with respect to the finding of illegal dismissal, Joy’s entitlement to the equivalent of three months worth of salary, reimbursement of withheld repatriation expense, and attorney’s fees.51 The Court of Appeals remanded the case to the National Labor Relations Commission to address the validity of petitioner's allegations against Pacific.52 The Court of Appeals held, thus:chanRoblesvirtualLawlibrary

Although the public respondent found the dismissal of the complainant-respondent illegal, we should point out that the NLRC merely awarded her three (3) months backwages or the amount of NT$46,080.00, which was based upon its finding that she was dismissed without due process, a finding that we uphold, given petitioner’s lack of worthwhile discussion upon the same in the proceedings below or before us. Likewise we sustain NLRC’s finding in regard to the reimbursement of her fare, which is squarely based on the law; as well as the award of attorney’s fees.

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

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

SO ORDERED.53

Dissatisfied, Sameer Overseas Placement Agency filed this petition.54cralawred

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

Petitioner reiterates that there was just cause for termination because there was a finding of Wacoal that respondent was inefficient in her work.55 Therefore, it claims that respondent’s dismissal was valid.56cralawred

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

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

I

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

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

This prerogative, however, should not be abused. It is “tempered with the employee’s right to security of tenure.”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.

. . . .chanrobleslaw

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:chanRoblesvirtualLawlibrary

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

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

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

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

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; andChanRoblesVirtualawlibrary

(e) Other causes analogous to the foregoing.

Petitioner’s allegation that respondent was inefficient in her work and negligent in her duties69 may, therefore, constitute a just cause for termination under Article 282(b), but only if petitioner was able to prove it.

The burden of proving that there is just cause for termination is on the employer. “The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.”70 Failure to show that there was valid or just cause for termination would necessarily mean that the dismissal was illegal.71cralawred

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

This is similar to the law and jurisprudence on probationary employees, which allow termination of the employee only when there is “just cause or when [the probationary employee] fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his [or her] engagement.”72cralawred

However, we do not see why the application of that ruling should be limited to probationary employment. That rule is basic to the idea of security of tenure and due process, which are guaranteed to all employees, whether their employment is probationary or regular.

The pre-determined standards that the employer sets are the bases for determining the probationary employee’s fitness, propriety, efficiency, and qualifications as a regular employee. Due process requires that the probationary employee be informed of such standards at the time of his or her engagement so he or she can adjust his or her character or workmanship accordingly. Proper adjustment to fit the standards upon which the employee’s qualifications will be evaluated will increase one’s chances of being positively assessed for regularization by his or her employer.

Assessing an employee’s work performance does not stop after regularization. The employer, on a regular basis, determines if an employee is still qualified and efficient, based on work standards. Based on that determination, and after complying with the due process requirements of notice and hearing, the employer may exercise its management prerogative of terminating the employee found unqualified.

The regular employee must constantly attempt to prove to his or her employer that he or she meets all the standards for employment. This time, however, the standards to be met are set for the purpose of retaining employment or promotion. The employee cannot be expected to meet any standard of character or workmanship if such standards were not communicated to him or her. Courts should remain vigilant on allegations of the employer’s failure to communicate work standards that would govern one’s employment “if [these are] to discharge in good faith [their] duty to adjudicate.”73cralawred

In this case, petitioner merely alleged that respondent failed to comply with her foreign employer’s work requirements and was inefficient in her work.74No evidence was shown to support such allegations. Petitioner did not even bother to specify what requirements were not met, what efficiency standards were violated, or what particular acts of respondent constituted inefficiency.

There was also no showing that respondent was sufficiently informed of the standards against which her work efficiency

and performance were judged. The parties’ conflict as to the position held by respondent showed that even the matter as basic as the job title was not clear.

The bare allegations of petitioner are not sufficient to support a claim that there is just cause for termination. There is no proof that respondent was legally terminated.

Petitioner failed to comply withthe due process requirements 

Respondent’s dismissal less than one year from hiring and her repatriation on the same day show not only failure on the part of petitioner to comply with the requirement of the existence of just cause for termination. They patently show that the employers did not comply with the due process requirement.

A valid dismissal requires both a valid cause and adherence to the valid procedure of dismissal.75The employer is required to give the charged employee at least two written notices before termination.76 One of the written notices must inform the employee of the particular acts that may cause his or her dismissal.77 The other notice must “[inform] the employee of the employer’s decision.”78 Aside from the notice requirement, the employee must also be given “an opportunity to be heard.”79cralawred

Petitioner failed to comply with the twin notices and hearing requirements. Respondent started working on June 26, 1997. She was told that she was terminated on July 14, 1997 effective on the same day and barely a month from her first workday. She was also repatriated on the same day that she was informed of her termination. The abruptness of the termination negated any finding that she was properly notified and given the opportunity to be heard. Her constitutional right to due process of law was violated.

II

Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired portion 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 toSerrano. 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.93However, 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.”113 The adoption of the reinstated clause in Republic Act No. 8042 subjected the money claims of illegally dismissed overseas workers with an unexpired term of at least a year to a cap of three months worth of their salary.114 There was no such limitation on the money claims of illegally terminated local workers with fixed-term employment.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.119In 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.