Memorize Article 13(b) RECRUITMENT and PLACEMENT of the LABOR CODE.

Article 13(b) of the Labor Code, defines “recruitment and placement” as referring:

xxx to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not; Provided, That any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and placement.

Article 13. Definitions.

"Worker" means any member of the labor force, whether employed or unemployed.

"Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which,
in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement.

"Private fee-charging employment agency" means any person or entity engaged in recruitment and placement of workers for a fee which is charged,
directly or indirectly, from the workers or employers or both.

"License" means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency.

"Private recruitment entity" means any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging,
directly or indirectly, any fee from the workers or employers.

"Authority" means a document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as
a private recruitment entity.

"Seaman" means any person employed in a vessel engaged in maritime navigation.

"Overseas employment" means employment of a worker outside the Philippines.

"Emigrant" means any person, worker or otherwise, who emigrates to a foreign country by virtue of an immigrant visa or resident permit or its equivalent in
the country of destination.

And the definition of SOCIAL JUSTICE in the case of Calalang vs Williams.

Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but 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. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through
the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of
measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle
of salus populi est suprema lex.

II. Pre-Employment (Book I)

a. Recruitment and Placement of workers

i. General Provisions

1. Definitions

a. Definition of Recruitment and Placement

to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not; Provided, That any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and placement.

b. License and Authority

"License" means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency.

"Authority" means a document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as
a private recruitment entity.

b. Powers and Functions of the Philippines Overseas Employment Administration

a. RA 10022 [separate doc]

b. Requirements on the deployment of Workers

c. Direct Hiring

i. Exceptions

3. Mandatory Remittance

ii. Regulation of Recruitment and Placement Activities

1. Participation of the Private Sector

a. Requirements
i. Disqualifications

ii. Surety bond Requirement

1. Stronghold Insurance Company, Inc., v. CA and Adriano Urtesuela, GR No. 88050, January 30, 1992

G.R. No. 88050 January 30, 1992

STRONGHOLD INSURANCE COMPANY, INC., petitioner,

vs.
HON. COURT OF APPEALS and ADRIANO URTESUELA, respondents.

T.J. Sumawang & Associates for petitioner.

Linsangan Law Office for private respondent.

CRUZ, J.:

The petitioner invokes due process to escape liability on a surety bond executed for the protection of a Filipino seaman. It is a familiar argument that will be
denied, in light of the following findings.

Acting on behalf of its foreign principal, Qatar National Fishing Co., Pan Asian Logistics and Trading, a domestic recruiting and placement agency, hired
Adriano Urtesuela as captain of the vessel M/V Oryx for the stipulated period of twelve months. The required surety bond, in the amount of P50,000.00,
was submitted by Pan Asian and Stronghold Insurance Co., Inc., the herein petitioner, to answer for the liabilities of the employer. Urtesuela assumed his
duties on April 18, 1982, but three months later his services were terminated and he was repatriated to Manila. He thereupon filed a complaint against Pan
Asian and his former employer with the Philippine Overseas Employment Administration for breach of contract and damages.

In due time, the POEA rendered a decision in his favor for the amount of P6,374.94, representing his salaries for the unexpired portion of his contract and
the cash value of his unused vacation leave, plus attorney's fees and costs, which the respondents were required to pay. The judgment eventually became
final and executory, not having been appealed on time. Pursuant thereto, a writ of execution was issued against Pan Asian but could be enforced only
against its cash bond of P10,000.00, the company having ceased to operate. Urtesuela then filed a complaint with the Insurance Commission against
Stronghold on the basis of the aforementioned surety bond and prayed for the value thereof plus attorney's fees and litigation costs.

Under the bond, the petitioner and Pan Asian undertook —

To answer for all liabilities which the Philippine Overseas Employment Administration may adjudge/impose against the Principal in
connection with the recruitment of Filipino seamen.

It is understood that notice to the Principal is notice to the surety. (Exh. "I-2").

WHEREAS, the liability of the surety under this Bond shall in no case exceed the sum of PESOS: FIFTY THOUSAND ONLY (P50,000.00)
Philippine Currency.

After hearing, the Insurance Commission held that the complaint should be reformed because the provisions in the surety bond were not stipulations pour
autrui to entitle Urtesuela to bring the suit himself. It held that the proper party was the POEA.   This ruling was reversed on appeal by the respondent court
1

in its decision dated April 20, 1989.   It was there declared that, as the actual beneficiary of the surety bond, Urtesuela was competent to sue Stronghold,
2

which as surety was solidarily liable with Pan Asian for the judgment rendered against the latter by the POEA.

The petitioner asks for reversal of the Court of Appeals. It submits that the decision of the POEA is not binding upon it because it was not impleaded in the
complaint; it was not notified thereof nor did it participate in the hearing; and it was not specifically directed to pay the damages awarded to the
complainant.

In support of its posture, the petitioner cites abundant jurisprudence, particularly Aguasin v. Velasquez,   where the Court held:
3

If the surety is to be bound by his undertaking, it is essential according to Section 10 of Rule 62 in connection with Section 20 of Rule 59 of
the Rules of Court that the damages be awarded upon application and after proper hearing and included in the judgment. As a corollary to
these requirements, due notice to the plaintiff and his surety setting forth the facts showing his right to damages and the amount thereof
under the bond is indispensable. This has to be so if the surety is not to be condemned or made to pay without due process of law. It is to
be kept in mind that the surety in this case was not a party to the action and had no notice of or intervention in the trial. It seems elementary
that before being condemned to pay, it was the elementary right of the surety to be heard and to be informed that the party seeking
indemnity would hold it liable and was going to prove the grounds and extent of its liability. This case is different from those in which the
surety, by law and/or by the terms of his contract, has promised to abide by the judgment against the principal and renounced the right to
be sued or cited.

The Court has gone over the decision and finds that the petitioner is "hoist by its own petard." For as the quoted excerpt itself says, the case is "different
from those in which the surety, by law and/or by the terms of his contract, has promised to abide by the judgment against the principal and renounced the
right to be sued or cited."

In the surety bond, the petitioner unequivocally bound itself:

To answer for all liabilities which the Philippine Overseas Employment Administration may adjudge/impose against the Principal in
connection with the recruitment of Filipino seamen.

Strictly interpreted, this would mean that the petitioner agreed to answer for whatever decision might be rendered against the principal, whether or not the
surety was impleaded in the complaint and had the opportunity to defend itself. There is nothing in the stipulation calling for a direct judgment against the
surety as a co-defendant in an action against the principal. On the contrary, the petitioner agreed "to answer for all liabilities" that "might be adjudged or
imposed by the POEA against the Principal."

But even if this interpretation were rejected, considering the well-known maxim that "the surety is a favorite of the law," the petitioner would still have to
explain its other agreement that "notice to the Principal is notice to the surety." This was in fact another special stipulation typewritten on the printed form of
the surety bond prepared by the petitioner. Under this commitment, the petitioner is deemed, by the implied notice, to have been given an opportunity to
participate in the litigation and to present its side, if it so chose, to avoid liability. If it did not decide to intervene as a co-defendant (and perhaps also as
cross-claimant against Pan Asian), it cannot be heard now to complain that it was denied due process.
The petitioner contends, however, that the said stipulation is unconstitutional and contrary to public policy, because it is "a virtual waiver" of the right to be
heard and "opens wide the door for fraud and collusion between the principal and the bond obligee" to the prejudice of the surety. Hence, disregarding the
stipulation, the petitioner should be deemed as having received no notice at all of the complaint and therefore deprived of the opportunity to defend itself.

The Court cannot agree. The argument assumes that the right to a hearing is absolute and may not be waived in any case under the due process clause.
This is not correct. As a matter of fact, the right to be heard is as often waived as it is invoked, and validly as long as the party is given an opportunity to be
heard on his behalf. 4

The circumstance that the chance to be heard is not availed of does not disparage that opportunity and deprive the person of the right to due process. This
Court has consistently held in cases too numerous to mention that due process is not violated where a person is not heard because he has chosen, for
whatever reason, not to be heard. It should be obvious that if he opts to be silent where he has a right to speak, he cannot later be heard to complain that
he was unduly silenced.

Neither is public policy offended on the wicked ground of fraud and collusion imagined by the petitioner. For one thing, the speculation contravenes without
proof the presumption of good faith and unreasonably imputes dishonest motives to the principal and the obligee. For another, it disregards the fiduciary
relationship between the principal and the surety, which is the legal and also practical reason why the latter is willing to answer for the liabilities of the
former.

In a familiar parallel, notice to the lawyer is considered notice to the client he represents even if the latter is not actually notified. It has not been suspected
that this arrangement might result in a confabulation between the counsel and the other party to the client's prejudice.

At any rate, it is too late now for the petitioner to challenge the stipulation. If it believed then that it was onerous and illegal, what it should have done was
object when its inclusion as a condition in the surety bond was required by the POEA. Even if the POEA had insisted on the condition, as now claimed,
there was still nothing to prevent the petitioner from refusing altogether to issue the surety bond. The petitioner did neither of these. The fact is that,
whether or not the petitioner objected, it in the end filed the surety bond with the suggested condition. The consequence of its submission is that it cannot
now argue that it is not bound by that condition because it was coerced into accepting it.

This Court has always been receptive to complaints against the denial of the right to be heard, which is the very foundation of a free society. This right is
especially necessary in the court of justice, where cases are decided after the parties shall have been given an opportunity to present their respective
positions, for evaluation by the impartial judge. Nevertheless, a party is not compelled to speak if it chooses to be silent. If it avails itself of the right to be
heard, well and good; but if not, that is also its right. In the latter situation, however, it cannot later complain that, because it was not heard, it was deprived
of due process.

Worthy of consideration also is the private respondent's contention that he sought to enforce the petitioner's liability not in NSB Case No. 3810-82 as
decided by the POEA, but in another forum. What he did was file an independent action for that purpose with the Insurance Commission on the basis of
the surety bond which bound the petitioner to answer for whatever liabilities might be adjudged against Qatar National Fishing Co. by the POEA. In the
proceedings before the Commission, the petitioner was given full opportunity (which it took) to present its side, in its answer with counterclaim to the
complaint, in its testimony at the hearings, in its motion to dismiss the complaint, and in its 10-page memorandum. There is absolutely no question that in
that proceeding, the petitioner was actually and even extensively heard.

The surety bond required of recruitment agencies   is intended for the protection of our citizens who are engaged for overseas employment by foreign
5

companies. The purpose is to insure that if the rights of these overseas workers are violated by their employers, recourse would still be available to them
against the local companies that recruited them for the foreign principal. The foreign principal is outside the jurisdiction of our courts and would probably
have no properties in this country against which an adverse judgment can be enforced. This difficulty is corrected by the bond, which can be proceeded
against to satisfy that judgment.

Given this purpose, and guided by the benign policy of social justice, we reject the technicalities raised by the petitioner against its established legal and
even moral liability to the private respondent. These technicalities do not impair the rudiments of due process or the requirements of the law and must be
rejected in deference to the constitutional imperative of justice for the worker.

WHEREFORE, the petition is DENIED and the challenged decision of the Court of Appeals AFFIRMED in toto. The respondent court is directed to
ENFORCE payment to the private respondent in full, and with all possible dispatch of the amount awarded to him by the POEA in its decision dated
May 13, 1983. It is so ordered.

Narvasa, C.J., Griño-Aquino and Medialdea, JJ., concur.

2. Catan v. NLRC, GR No. 77297, April 15, 1988

G.R. No. 77279 April 15, 1988

MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY, petitioners,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION and FRANCISCO D.
REYES, respondents.

Demetria Reyes, Merris & Associates for petitioners.

The Solicitor General for public respondents.

Bayani G. Diwa for private respondent.

CORTES, J.:

Petitioner, in this special civil action for certiorari, alleges grave abuse of discretion on the part of the National Labor Relations Commission in an effort to nullify the latters resolution and thus free petitioner from liability
for the disability suffered by a Filipino worker it recruited to work in Saudi Arabia. This Court, however, is not persuaded that such an abuse of discretion was committed. This petition must fail.

The facts of the case are quite simple.

Petitioner, a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi Group, a Saudi Arabian firm, recruited private respondent to work in
Saudi Arabia as a steelman.

The term of the contract was for one year, from May 15,1981 to May 14, 1982. However, the contract provided for its automatic renewal:

FIFTH: The validity of this Contract is for ONE YEAR commencing from the date the SECOND PARTY assumes hill port. This Contract is
renewable automatically if neither of the PARTIES notifies the other PARTY of his wishes to terminate the Contract by at least ONE
MONTH prior to the expiration of the contractual period. [Petition, pp. 6-7; Rollo, pp. 7-8].
The contract was automatically renewed when private respondent was not repatriated by his Saudi employer but instead was assigned to work as a
crusher plant operator. On March 30, 1983, while he was working as a crusher plant operator, private respondent's right ankle was crushed under the
machine he was operating.

On May 15, 1983, after the expiration of the renewed term, private respondent returned to the Philippines. His ankle was operated on at the Sta. Mesa
Heights Medical Center for which he incurred expenses.

On September 9, 1983, he returned to Saudi Arabia to resume his work. On May 15,1984, he was repatriated.

Upon his return, he had his ankle treated for which he incurred further expenses.

On the basis of the provision in the employment contract that the employer shall compensate the employee if he is injured or permanently disabled in the
course of employment, private respondent filed a claim, docketed as POEA Case No. 84-09847, against petitioner with respondent Philippine Overseas
Employment Administration. On April 10, 1986, the POEA rendered judgment in favor of private respondent, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the complainant and against the respondent, ordering the latter to pay to the
complainant:

1. SEVEN THOUSAND NINE HUNDRED EIGHTY-FIVE PESOS and 60/100 (P7,985.60), Philippine currency, representing disability
benefits;

2. TWENTY-FIVE THOUSAND NINETY-SIX Philippine pesos and 20/100 (29,096.20) representing reimbursement for medical expenses;

3. Ten percent (10%) of the abovementioned amounts as and for attorney's fees. [NLRC Resolution, p. 1; Rollo, p. 16].

On appeal, respondent NLRC affirmed the decision of the POEA in a resolution dated December 12, 1986.

Not satisfied with the resolution of the POEA, petitioner instituted the instant special civil action for certiorari, alleging grave abuse of discretion on the part
of the NLRC.

1. Petitioner claims that the NLRC gravely abused its discretion when it ruled that petitioner was liable to private respondent for disability benefits since at
the time he was injured his original employment contract, which petitioner facilitated, had already expired. Further, petitioner disclaims liability on the
ground that its agency agreement with the Saudi principal had already expired when the injury was sustained.

There is no merit in petitioner's contention.

Private respondents contract of employment can not be said to have expired on May 14, 1982 as it was automatically renewed since no notice of its
termination was given by either or both of the parties at least a month before its expiration, as so provided in the contract itself. Therefore, private
respondent's injury was sustained during the lifetime of the contract.

A private employment agency may be sued jointly and solidarily with its foreign principal for violations of the recruitment agreement and the contracts of
employment:

Sec. 10. Requirement before recruitment.— Before recruiting any worker, the private employment agency shall submit to the Bureau the
following documents:

(a) A formal appointment or agency contract executed by a foreign-based employer in favor of the license holder to recruit and hire
personnel for the former ...

xxx xxx xxx

2. Power of the agency to sue and be sued jointly and solidarily with the principal or foreign-based employer for any of the
violations of the recruitment agreement and the contracts of employment. [Section 10(a) (2) Rule V, Book I, Rules to
Implement the Labor Code].

Thus, in the recent case of Ambraque International Placement & Services v. NLRC [G.R. No. 77970, January 28,1988], the Court ruled that a recruitment
agency was solidarily liable for the unpaid salaries of a worker it recruited for employment in Saudi Arabia.

Even if indeed petitioner and the Saudi principal had already severed their agency agreement at the time private respondent was injured, petitioner may
still be sued for a violation of the employment contract because no notice of the agency agreement's termination was given to the private respondent:

Art 1921. If the agency has been entrusted for the purpose of contra with specified persons, its revocation shall not prejudice the latter if
they were not given notice thereof. [Civil Code].

In this connection the NLRC elaborated:

Suffice it to state that albeit local respondent M. S. Catan Agency was at the time of complainant's accident resulting in his permanent
partial disability was (sic) no longer the accredited agent of its foreign principal, foreign respondent herein, yet its responsibility over the
proper implementation of complainant's employment/service contract and the welfare of complainant himself in the foreign job site, still
existed, the contract of employment in question not having expired yet. This must be so, because the obligations covenanted in the
recruitment agreement entered into by and between the local agent and its foreign principal are not coterminus with the term of such
agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted
employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of the
employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very purpose for
which the law governing the employment of workers for foreign jobs abroad was enacted. [NLRC Resolution, p. 4; Rollo, p. 18]. (Emphasis
supplied).

2. Petitioner contends that even if it is liable for disability benefits, the NLRC gravely abused its discretion when it affirmed the award of medical expenses
when the said expenses were the consequence of private respondent's negligence in returning to work in Saudi Arabia when he knew that he was not yet
medically fit to do so.

Again, there is no merit in this contention.

No evidence was introduced to prove that private respondent was not medically fit to work when he returned to Saudi Arabia. Exhibit "B", a certificate
issued by Dr. Shafquat Niazi, the camp doctor, on November 1, 1983, merely stated that private respondent was "unable to walk properly, moreover he is
still complaining [of] pain during walking and different lower limbs movement" [Annex "B", Reply; Rollo, p. 51]. Nowhere does it say that he was not
medically fit to work.

Further, since petitioner even assisted private respondent in returning to work in Saudi Arabia by purchasing his ticket for him [Exhibit "E"; Annex "A",
Reply to Respondents' Comments], it is as if petitioner had certified his fitness to work. Thus, the NLRC found:
 Furthermore, it has remained unrefuted by respondent that complainant's subsequent departure or return to Saudi Arabia on September 9,
1983 was with the full knowledge, consent and assistance of the former. As shown in Exhibit "E" of the record, it was respondent who
facilitated the travel papers of complainant. [NLRC Resolution, p. 5; Rollo, p. 19].

WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit, with costs against petitioner.

SO ORDERED.

3. Exception to Solidary Liability

a. Feagle Construction Corp. v. Gayda, GR No. 82310, June 18, 1990

[G.R. No. 82310. June 18, 1990.]

FEAGLE CONSTRUCTION CORPORATION, Petitioner, v. GAVINO GAYDA, ELPIDIO AGPALAYA, MIGUELITO BATOON,

ELIGIO CUENCO, CLARO CUNANAN, SANTIAGO CURAMENG, MANUEL DACO, EDUARDO DEPONE, RAYMUNDO ERVERA,
JOSE ESTABILLO, ROGELIO FIGUEROA, ARTEMIO HULINGNGA, JORGE ITING, EMILIANO NACAM, ALEXANDER MAPUTOL,
AVELINO MENDOZA, ROGELIO NOO, ROLANDO PATINIO, VITALIANO PEÑA, ROLLY PERALES, DOMINADOR STA.
CATALINA, ARSENIO SANTOS, FELIPE TESADO and NATIONAL LABOR RELATIONS COMMISSION, Respondents.

[G.R. No. 87998. June 18, 1990.]

FEAGLE CONSTRUCTION CORPORATION, Petitioner, v. JOSEPH ORPILLA AND NATIONAL LABOR RELATIONS

COMMISSION, Respondents.

Jacinto D. Jimenez for Petitioner.

Millora, Nario, Canto & Pontejos for Private Respondents.

DECISION

GANCAYCO, J.:

The singular issue in this case is whether or not petitioner may be held solidarily liable with the foreign employer for any unpaid claims
of private respondents against their foreign principal employer even as they have a stipulation to this effect.

This petition (G.R. No. 82310) was previously dismissed on March 23, 1988 for failure of Petitioner to sufficiently show that the
respondent Commission had committed a grave abuse of discretion in rendering its questioned judgment. 1 An amended petition was
filed on April 4, 1988. 2 The amended petition was given due course on July 4, 1988. 3

Petitioner questions the decision of the First Division of public respondent National Labor Relations Commission 4 dated January 29,
1988 in POEA Case No. L-86-10-971, which modified the decision dated July 20, 1987, of Commissioner Tomas D. Achacoso of the
Philippine Overseas Employment Administration dated July 20, 1987, excluding petitioner’s officials Florentino Aguila and Rene Aguila
from liability, but affirming the liability of the petitioner to private respondents on the ground that petitioner is solidarily liable together
with the private respondents’ foreign employer-Algosaibi-Bison Ltd., Dammam, Saudi Arabia. 5

The modified decision of Administrator Achacoso has the following dispositive portion: jgc:chanrobles.com.ph

"WHEREFORE, premises considered, respondents Feagle Construction Corporation, Florentino Aguila and Rene Aguila and its (sic)
foreign principal Algosaibi Bison, Ltd., Dammam, Saudi Arabia are hereby held jointly and severally liable to pay herein complainants
within ten (10) days from receipt of this Order, the peso equivalent at the time of actual payment of the sum appearing opposite
complainants’ names representing their total claim for unpaid salaries/wages, remittances and other benefits, to wit: chanrob1es virtual 1aw library

1. Elpidio Agpalza S.R. 19,245.00

2. Miguel Batoon 9,433.00

3. Eligio Cuenco 18,015.00

4. Claro Cunanan 16,409.00

5. Santiago Curameng 13,065.00

6. Manuel Daco 9,062.00

7. Eduardo Depone 24,038.00

8. Raymundo Ervera 15,235.00

9. Jose Estabillo 9,358.00

10. Rogelio Figueroa 19,554.00

11. Gavino Gayda 14,977.00

12. Artemio Hulingnga 8,581.00

13. Jorge Iting 18,436.00

14. Emiliano Macam 13,436.00

15. Alexander Maputol 16,394.00

16. Avelino Mendoza 8,124.00

17. Rogelio Noo 18,930.00

18. Rolando Patinio 18,598.00

19. Vitiliano Pena 16,187.00

20. Rolly Perales 10,713.00

21. Dominador Sta. Catalina 12,767.00

22. Arsenio L. Santos 17,708.00

23. Felipe Tesado 14,236.00

TOTAL S.R. 342,501.00

We take note that complainants have been paid of (sic) their plane fare bonds as evidenced by check vouchers duly signed by
individual complainants, hence, such claim is considered settled and/or fully, paid.

Respondent are further ordered to pay attorney’s fees equivalent to five percent (5%) of the total amount of the claims.

All other claims are hereby dismissed for lack of merit.

No pronouncement as to cost." 6

A temporary restraining order was issued by this Court on September 12, 1988 and the petitioner filed the required bond in the
amount of P50,000.00. 7

The following antecedent pertinent facts are not disputed: jgc:chanrobles.com.ph

"1. Private respondents have been employed with Algosaibi-Bison, Ltd. in Saudi Arabia for three to five years working on construction
projects for the Kingdom of Saudi Arabia.

2. Sometime in 1983, Algosaibi-Bison, Ltd. started encountering financial difficulties because of the drop in the price of oil. Because of
the drop in the price of oil, the income of the Kingdom of Saudi Arabia plunged from about one hundred billion dollars a year to
eighteen billion dollars a year. As a result, the Kingdom of Saudi Arabia encountered financial difficulties in paying Algosaibi-Bison, Ltd.
for its construction projects.

3. Starting in 1983, the remittance of the allotments of the beneficiaries of Filipino workers employed with Algosaibi-Bison, Ltd. was
delayed. Although all the allotments for 1983 and 1984 were eventually paid, all these payments were delayed.

4. During all these years petitioner never charged Filipino workers like private respondents a single centavo for sending them to work
for Algosaibi-Bison, Ltd. Petitioner advanced all mobilization expenses out of its funds.

5. Because of its financial difficulties, Algosaibi-Bison, Ltd. could not even reimburse petitioner for the mobilization expenses petitioner
advanced, such as passport fees, medical fees, and visa application fees. Petitioner insisted that Algosaibi-Bison, Ltd. should give top
priority to the payment of the wages and the allotments of the Filipino workers employed with it.

6. Because of this development, petitioner decided to stop sending back Filipino workers to work with Algosaibi-Bison, Ltd. Workers are
given a one-month vacation after a year with re-entry visa.

7. Sometime in July, 1984, the Filipino workers employed with Algosaibi-Bison, Ltd. who had returned to Manila, including private
respondents, requested for a meeting with the management of petitioner. About forty (40) Filipino workers attended the meeting.
During the meeting, the workers requested petitioner to return them to their job site in Saudi Arabia. Mr. Florentino B. Aguila, the
president of petitioner, informed the workers that petitioner did not want to send back any workers to Saudi Arabia because of the big
risk due to the financial difficulties of Algosaibi-Bison, Ltd.

8. However, the workers pleaded with Mr. Florentino B. Aguila to send them back to Saudi Arabia. They explained that they were
jobless in the Philippines, because of the depressed economic condition of the country. Rather than remain jobless, they would rather
to take a chance in Saudi Arabia. They assured petitioner that they were willing to assume the risk in case the remittance of their
salaries would be delayed. They emphasized that they were willing to sign a written statement indicating that they would not hold
petitioner liable for any delay or non-payment of their salaries and any amounts due them from Algosaibi-Bison, Ltd. In accordance
with their commitment, the said workers, including private respondents, signed a Statement . . . Moreover, the workers stated they
would seek the help of Saudi labor authorities individually in the event they would not be paid.

9. It was under the foregoing circumstances that petitioner reluctantly agreed to send back private respondents to Saudi Arabia to help
them in their dire financial need if they would sign the aforementioned `Statement’ . . . before they leave for Saudi Arabia . . .

10. While the Filipino workers were in Saudi Arabia, they received their salaries directly from Algosaibi-Bison, Ltd.

11. When Algosaibi-Bison, Ltd. went into bankruptcy in 1986, all the Filipino workers in its employ, including private respondents dealt
with the liquidator directly and in their individual capacities. They filed their claims with the liquidator, and the liquidator issued to each
of them a certificate stating the amount payable to each of them as soon as funds are available. The said Filipino workers, including
private respondents, agreed that the liquidator would pay them directly and individually through their bank accounts in the Philippines .
..

12. Just the same, to assist the workers, petitioner has written the liquidator to follow up the claims of the Filipino workers, and the
liquidator has replied to it. The reply of the liquidator confirmed the individual agreement of the said workers, including private
respondents, that they would be paid by the liquidator directly and individually. Thus, petitioner has nothing to do with the remittance
of the payments due private respondents. In fact, the liquidator even refused to furnish the petitioner a list of their individual claims
and corresponding amounts due each of them. The liquidator considered these information confidential and privy to said workers . . .

13. Under the law of Saudi Arabia, the claims of the Filipino workers of Algosaibi-Bison, Ltd. has first priority for payment in the
bankruptcy proceeding. Article 15 of the Labor Law of Saudi Arabia provides: chanrob1es virtual 1aw library

‘The amounts to which the workman or his dependents are entitled under the provisions of this Law shall be considered first class
privileged debts, and for the recovery thereof the workman or his heirs shall have a priority rights over all the employer’s property.’
14. On October 3, 1986, private respondents filed with the Philippine Overseas Employment Administration a Complaint against
petitioner for the payment of their claims with the liquidator of Algosaibi-Bison, Ltd.

15. On December 2, 1986, petitioner filed its Answer. In its Answer, it pointed out that it was never furnished with a copy of any
Complaint from private respondent Artemio Hulingnga.

16. On July 20, 1987, the Philippine Overseas Employment Administration rendered a Decision in favor of private respondents,
including respondent Artemio Hulingnga, although petitioner was never furnished with a copy of his Complaint.

17. On August 7, 1987, petitioner appealed to respondent National Labor Relations Commission (hereinafter referred to as respondent
Commission).

18. On January 29, 1988, respondent Commission rendered a Decision affirming the Decision of the Philippine Overseas Employment
Administration with the modification that the `president’ and the `vice president for administration and finance’ of petitioner were
exempted from liability for the claims of private respondents . . .

19. On February 11, 1988, petitioner filed a Motion for Reconsideration . . .

20. On February 29, 1988, respondent Commission issued a Resolution denying the Motion for Reconsideration . . .

21. On March 8, 1988, before receipt of the aforementioned Resolution of respondent Commission, petitioner filed a Supplemental
Motion for Reconsideration . . . Petitioner received the said Resolution of respondent Commission only after petitioner had filed its
Supplemental Motion for Reconsideration." 8

The petition is impressed with merit.

We agree with Public Respondents that the general rule as provided for in Section 1, Rule II of the rules and regulations of the
Philippine Overseas Employment Administration is that every licensed private recruitment agency shall be jointly and solidarily liable
with the employer for all claims and liabilities which may arise in connection with the implementation of the contract of employment.

In this case, however, We find it necessary to deviate from the general rule. First, because of changed circumstances, and second,
because of individual agreements between petitioner and private respondents which cannot be considered void because the same
cannot be considered contrary to law.

It is the uncontradicted contention of petitioner that 13 of private respondents filed their claims for salaries due in January, February
and March of 1986, when their contracts of employment expired in 1985. 9

It is also clear that private respondents executed new and different contracts of employment directly with Algosaibi-Bison, Ltd. without
the participation and consent of the petitioner. The former contracts with the petitioner expired and private respondents entered into
new contracts of employment with the Algosaibi-Bison, Ltd., without the participation of petitioner.

The claims of private respondents were made directly with the liquidator of Algosaibi-Bison, Ltd. and they agreed to wait for the
promised payment. Again the petitioner had nothing to do with those claims.

We simply cannot ignore that petitioner was reluctant to send the private respondents back to Saudi Arabia because as early as 1983,
the Algosaibi-Bison, Ltd. started encountering financial difficulties because of the drop in the price of oil. Private respondents were the
ones who insisted that they be allowed to resume employment. They were informed of the risks involved relating to the financial
reverses of the employer. They insisted to return to Saudi Arabia and they agreed to sign individual statements, which they did, to the
effect that each one of them did not hold petitioner responsible for delay or non-payment of their salaries and any amounts due them
from Algosaibi-Bison, Ltd.

These individual statements voluntarily signed by the private respondents to convince the reluctant petitioner to send them back to
Saudi Arabia, notwithstanding their knowledge of the financial reverses of this employer, are eloquent individual waivers of their rights
against petitioner. They were informed of the risk involved in returning to an employer in serious financial distress. They insisted on
returning to work, even persuading petitioner to allow them to do so, by waiving the possible liability of petitioner. Under these
circumstances, when private respondents were insisting to return to work despite the warning, We cannot consider their written
waivers as to petitioner’s responsibilities void. They were not victims of deceit or deception. They entered into those waivers with open
eyes and clear minds. They were aware of the imminent danger and the great risks involved in their renewed ventures.

We also consider that as of record in the past, petitioner never took advantage of private respondents. They were always treated fairly
and in accordance with law. Private respondents did not question the good faith of Petitioner. Their former employer Algosaibi-Bison,
Ltd. went into bankruptcy in 1986 and petitioner had nothing to do with that. Private respondents filed their claims directly with the
Liquidator of their former employer Algosaibi-Bison, Ltd. They were given certificates of the amounts due them, to be given preference
under the laws of Saudi Arabia. They were to be paid directly, again without participation of the petitioner. Petitioner wrote the
Liquidator just to help private respondents, so that their claims may be expedited.

Holding, therefore, that in view of the circumstances proven in this case, and the very clear waiver of liability individually signed by
private respondents in favor of petitioner, the petitioner cannot be held jointly and solidarily liable with the employer Algosaibi-Bison,
Ltd. for the claims of private respondents. All other issues need no longer be discussed.

WHEREFORE, the temporary restraining order issued on September 12, 1988, is made permanent and the bond filed of P50,000.00 by
petitioner is cancelled. The questioned decision of the National Labor Relations Commission dated January 29, 1988, and the order
denying the motion for reconsideration of the same in POEA Case No. L-86-10-971, are modified, in that petitioner and its officials are
not solidarily liable with petitioner with the Algosaibi-Bison, Ltd. on the claims filed by private respondents. Costs against private
respondents.

This decision is immediately executory.

SO ORDERED.

Narvasa, Cruz and Medialdea, JJ., concur.

Griño-Aquino, J., is on leave.

4. Applicability of the Theory of Imputed Knowledge

a. Sunace International Managemnet Inc. vs. NLRC, GR No. 161757, January 25, 2006

G.R. No. 161757             January 25, 2006

SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC.Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division; HON. ERNESTO S. DINOPOL, in his capacity as Labor Arbiter, NLRC; NCR,
Arbitration Branch, Quezon City and DIVINA A. MONTEHERMOZO, Respondents.

DECISION

CARPIO MORALES, J.:

Petitioner, Sunace International Management Services (Sunace), a corporation duly organized and existing under the laws of the Philippines, deployed to
Taiwan Divina A. Montehermozo (Divina) as a domestic helper under a 12-month contract effective February 1, 1997. 1 The deployment was with the
assistance of a Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd.

After her 12-month contract expired on February 1, 1998, Divina continued working for her Taiwanese employer, Hang Rui Xiong, for two more years, after
which she returned to the Philippines on February 4, 2000.

Shortly after her return or on February 14, 2000, Divina filed a complaint2 before the National Labor Relations Commission (NLRC) against Sunace, one
Adelaide Perez, the Taiwanese broker, and the employer-foreign principal alleging that she was jailed for three months and that she was underpaid.

The following day or on February 15, 2000, Labor Arbitration Associate Regina T. Gavin issued Summons 3 to the Manager of Sunace, furnishing it with a
copy of Divina’s complaint and directing it to appear for mandatory conference on February 28, 2000.

The scheduled mandatory conference was reset. It appears to have been concluded, however.

On April 6, 2000, Divina filed her Position Paper 4 claiming that under her original one-year contract and the 2-year extended contract which was with the
knowledge and consent of Sunace, the following amounts representing income tax and savings were deducted:

Year Deduction for Income Tax Deduction for Savings

1997 NT10,450.00 NT23,100.00
1998 NT9,500.00 NT36,000.00
1999 NT13,300.00 NT36,000.00;5

and while the amounts deducted in 1997 were refunded to her, those deducted in 1998 and 1999 were not. On even date, Sunace, by its
Proprietor/General Manager Maria Luisa Olarte, filed its Verified Answer and Position Paper, 6 claiming as follows, quoted verbatim:

COMPLAINANT IS NOT ENTITLED FOR THE REFUND OF HER 24 MONTHS SAVINGS

3. Complainant could not anymore claim nor entitled for the refund of her 24 months savings as she already took back her saving already last year and the
employer did not deduct any money from her salary, in accordance with a Fascimile Message from the respondent SUNACE’s employer, Jet Crown
International Co. Ltd., a xerographic copy of which is herewith attached as ANNEX "2" hereof;

COMPLAINANT IS NOT ENTITLED TO REFUND OF HER 14 MONTHS TAX AND PAYMENT OF ATTORNEY’S FEES

4. There is no basis for the grant of tax refund to the complainant as the she finished her  one year contract and hence, was not illegally dismissed by her
employer. She could only lay claim over the tax refund or much more be awarded of damages such as attorney’s fees as said reliefs are available only
when the dismissal of a migrant worker is without just valid or lawful cause as defined by law or contract.

The rationales behind the award of tax refund and payment of attorney’s fees is not to enrich the complainant but to compensate him for actual injury
suffered. Complainant did not suffer injury, hence, does not deserve to be compensated for whatever kind of damages.

Hence, the complainant has NO cause of action against respondent SUNACE for monetary claims, considering that she has been totally paid of all the
monetary benefits due her under her Employment Contract  to her full satisfaction.

6. Furthermore, the tax deducted from her salary is in compliance with the Taiwanese law, which respondent SUNACE has no control and complainant has
to obey and this Honorable Office has no authority/jurisdiction to intervene because the power to tax is a sovereign power which the Taiwanese
Government is supreme in its own territory. The sovereign power of taxation of a state is recognized under international law and among sovereign states.

7. That respondent SUNACE respectfully reserves the right to file supplemental Verified Answer and/or Position Paper to substantiate its prayer for the
dismissal of the above case against the herein respondent. AND BY WAY OF -

x x x x (Emphasis and underscoring supplied)

Reacting to Divina’s Position Paper, Sunace filed on April 25, 2000 an ". . . answer to complainant’s position paper" 7 alleging that Divina’s 2-year extension
of her contract was without its knowledge and consent, hence, it had no liability attaching to any claim arising therefrom, and Divina in fact executed a
Waiver/Quitclaim and Release of Responsibility and an Affidavit of Desistance, copy of each document was annexed to said ". . . answer to complainant’s
position paper."

To Sunace’s ". . . answer to complainant’s position paper," Divina filed a 2-page reply, 8 without, however, refuting Sunace’s disclaimer of knowledge of the
extension of her contract and without saying anything about the Release, Waiver and Quitclaim and Affidavit of Desistance.

The Labor Arbiter, rejected Sunace’s claim that the extension of Divina’s contract for two more years was without its knowledge and consent in this wise:

We reject Sunace’s submission that it should not be held responsible for the amount withheld because her contract was extended for 2 more years without
its knowledge and consent because as Annex "B"9 shows, Sunace and Edmund Wang have not stopped communicating with each other  and yet the matter
of the contract’s extension and Sunace’s alleged non-consent thereto has not been categorically established.

What Sunace should have done was to write to POEA about the extension and its objection thereto, copy furnished the complainant herself, her foreign
employer, Hang Rui Xiong and the Taiwanese broker, Edmund Wang.

And because it did not, it is presumed to have consented to the extension and should be liable for anything that resulted thereform (sic).10 (Underscoring
supplied)

The Labor Arbiter rejected too Sunace’s argument that it is not liable on account of Divina’s execution of a Waiver and Quitclaim and an Affidavit of
Desistance. Observed the Labor Arbiter:

Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be reduced to writing and signed by the parties and
their respective counsel (sic), if any, before the Labor Arbiter.

The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily entered into by the parties and after having explained to
them the terms and consequences thereof.
A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before whom the case is pending shall be approved by him, if
after confronting the parties, particularly the complainants, he is satisfied that they understand the terms and conditions of the settlement and that it was
entered into freely voluntarily (sic) by them and the agreement is not contrary to law, morals, and public policy.

And because no consideration is indicated in the documents, we strike them down as contrary to law, morals, and public policy. 11

He accordingly decided in favor of Divina, by decision of October 9, 2000, 12 the dispositive portion of which reads:

Wherefore, judgment is hereby rendered ordering respondents SUNACE INTERNATIONAL SERVICES and its owner ADELAIDA PERGE, both in their
personal capacities and as agent of Hang Rui Xiong/Edmund Wang  to jointly and severally pay complainant DIVINA A. MONTEHERMOZO the sum of
NT91,950.00 in its peso equivalent at the date of payment, as refund for the amounts which she is hereby adjudged entitled to as earlier discussed plus
10% thereof as attorney’s fees since compelled to litigate, complainant had to engage the services of counsel.

SO ORDERED.13 (Underescoring supplied)

On appeal of Sunace, the NLRC, by Resolution of April 30, 2002, 14 affirmed the Labor Arbiter’s decision.

Via petition for certiorari,15 Sunace elevated the case to the Court of Appeals which dismissed it outright by Resolution of November 12, 2002, 16 the full text
of which reads:

The petition for certiorari faces outright dismissal.

The petition failed to allege facts constitutive of grave abuse of discretion on the part of the public respondent amounting to lack of jurisdiction when the
NLRC affirmed the Labor Arbiter’s finding that petitioner Sunace International Management Services impliedly consented to the extension of the contract of
private respondent Divina A. Montehermozo. It is undisputed that petitioner was continually communicating with private respondent’s foreign
employer (sic). As agent of the foreign principal, "petitioner cannot profess ignorance of such extension as obviously,  the act of the principal extending
complainant (sic) employment contract necessarily bound it." Grave abuse of discretion is not present in the case at bar.

ACCORDINGLY, the petition is hereby DENIED DUE COURSE and DISMISSED.17

SO ORDERED.

(Emphasis on words in capital letters in the original; emphasis on words in small letters and underscoring supplied)

Its Motion for Reconsideration having been denied by the appellate court by Resolution of January 14, 2004, 18 Sunace filed the present petition for review
on certiorari.

The Court of Appeals affirmed the Labor Arbiter and NLRC’s finding that Sunace knew of and impliedly consented to the extension of Divina’s 2-year
contract. It went on to state that "It is undisputed that [Sunace] was continually communicating with [Divina’s] foreign employer." It thus concluded that "[a]s
agent of the foreign principal, ‘petitioner cannot profess ignorance of such extension as obviously, the act of the principal extending complainant (sic)
employment contract necessarily bound it.’"

Contrary to the Court of Appeals finding, the alleged continuous communication was with the Taiwanese broker Wang, not with the foreign employer Xiong.

The February 21, 2000 telefax message from the Taiwanese broker to Sunace, the only basis of a finding of continuous communication, reads verbatim:

xxxx

Regarding to Divina, she did not say anything about her saving in police station. As we contact with her employer, she took back her saving
already last years. And they did not deduct any money from her salary. Or she will call back her employer to check it again. If her employer
said yes! we will get it back for her.

Thank you and best regards.

(Sgd.)
Edmund Wang
President19

The finding of the Court of Appeals solely on the basis of the above-quoted telefax message, that Sunace continually communicated with the foreign
"principal" (sic) and therefore was aware of and had consented to the execution of the extension of the contract is misplaced. The message does not
provide evidence that Sunace was privy to the new contract executed after the expiration on February 1, 1998 of the original contract.

 That Sunace and the Taiwanese broker communicated regarding Divina’s allegedly withheld savings does not necessarily mean that Sunace ratified
the extension of the contract. As Sunace points out in its Reply20 filed before the Court of Appeals,

As can be seen from that letter communication, it was just an information given to the petitioner that the private respondent had t[aken] already her savings
from her foreign employer and that no deduction was made on her salary. It contains nothing about the extension or the petitioner’s consent thereto.

21

Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume that it was sent to enlighten Sunace who had been directed, by
Summons issued on February 15, 2000, to appear on February 28, 2000 for a mandatory conference following Divina’s filing of the complaint on February
14, 2000.

Respecting the Court of Appeals following dictum:

As agent of its foreign principal, [Sunace] cannot profess ignorance of such an extension as obviously, the act of its principal extending [Divina’s]
employment contract necessarily bound it,22

it too is a misapplication, a misapplication of the theory of imputed knowledge.

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer Xiong, not the other way around.23 The
knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent Sunace.

There being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment contract extension, it cannot be said to be
privy thereto. As such, it and its "owner" cannot be held solidarily liable for any of Divina’s claims arising from the 2-year employment extension. As the
New Civil Code provides,

Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law.24
Furthermore, as Sunace correctly points out, there was an implied revocation of its agency relationship with its foreign principal when, after the termination
of the original employment contract, the foreign principal directly negotiated with Divina and entered into a new and separate employment contract in
Taiwan. Article 1924 of the New Civil Code reading

The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.

thus applies.

In light of the foregoing discussions, consideration of the validity of the Waiver and Affidavit of Desistance which Divina executed in favor of Sunace is
rendered unnecessary.

WHEREFORE, the petition is GRANTED. The challenged resolutions of the Court of Appeals are hereby REVERSED and SET ASIDE. The complaint of
respondent Divina A. Montehermozo against petitioner is DISMISSED.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO DANTE O. TINGA

Associate Justice Asscociate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s
Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairman’s Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

ARTEMIO V. PANGANIBAN
Chief Justice

iii. Pretermination of Employment Contract of Migrant Workers

1. Serrano vs. Gallant Maritime Services Inc. and Marlow Navigation Company, Inc. GR. No. 167614, March 24, 2009

G.R. No. 167614               March 24, 2009

ANTONIO M. SERRANO, Petitioner,
vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.

DECISION

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-Moon

Global Forum on Migration and Development
Brussels, July 10, 20071

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

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)

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 Decision 3 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 Complaint 9 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. 1avvphi1

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)

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:

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)
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 Commission 43 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-impairment
of contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package
he will receive57 is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation, 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 labor
as a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal protection of the law.

Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without distinction as to place of deployment, full protection of
their rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary benefits
should be equally enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied
the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances. 65

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its legislation;
however, to be valid, the classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of
the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class. 66

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or rational basis
scrutiny in which the challenged classification needs only be shown to be rationally related to serving a legitimate state interest; 67 b) the middle-tier or
intermediate scrutiny in which the government must show that the challenged classification serves an important state interest and that the classification is
at least substantially related to serving that interest; 68 and c) strict judicial scrutiny69 in which a legislative classification which impermissibly interferes with
the exercise of a fundamental right 70 or operates to the peculiar disadvantage of a suspect class 71 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 classifications 73 based on race74 or gender75 but not when the classification is
drawn along income categories.76

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, 77 the
constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was challenged for
maintaining its rank-and-file employees under the Salary Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been
exempted from the SSL by their respective charters. Finding that the disputed provision contained a suspect classification based on salary grade, the Court
deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said provision. More significantly, it was in this case that
the Court revealed the broad outlines of its judicial philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and respect by the courts of
justice except when they run afoul of the Constitution. The deference stops where the classification violates a fundamental right, or prejudices persons
accorded special protection by the Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of
constitutional guaranties, and require a stricter and more exacting adherence to constitutional limitations. Rational basis should not suffice.

Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter judicial scrutiny finds no support in
American or English jurisprudence. Nevertheless, these foreign decisions and authorities are not per se controlling in this jurisdiction. At best, they are
persuasive and have been used to support many of our decisions. We should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own decisions through the employment of our own endowments. We live in a different
ambience and must decide our own problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and
always with our own concept of law and justice. Our laws must be construed in accordance with the intention of our own lawmakers and such intent may
be deduced from the language of each law and the context of other local legislation related thereto. More importantly, they must be construed to serve our
own public interest which is the be-all and the end-all of all our laws. And it need not be stressed that our public interest is distinct and different from others.

xxxx

Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of effective judicial intervention.

Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims "equality" as an ideal precisely in protest
against crushing inequities in Philippine society. The command to promote social justice in Article II, Section 10, in "all phases of national development,"
further explicitated in Article XIII, are clear commands to the State to take affirmative action in the direction of greater equality. x x x [T]here is thus in the
Philippine Constitution no lack of doctrinal support for a more vigorous state effort towards achieving a reasonable measure of equality.

Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Under the
policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less
privilege in life should have more in law. And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches but
also on the judiciary to translate this pledge into a living reality. Social justice calls for the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception may at least be approximated.

xxxx

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

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

xxxx

In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin to a distinction based on economic
class and status, with the higher grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP now receive higher
compensation packages that are competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The
implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank -
possessing higher and better education and opportunities for career advancement - are given higher compensation packages to entice them to stay.
Considering that majority, if not all, the rank-and-file employees consist of people whose status and rank in life are less and limited, especially in terms of
job marketability, it is they - and not the officers - who have the real economic and financial need for the adjustment . This is in accord with the policy of the
Constitution "to free the people from poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of life
for all." Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass muster. (Emphasis
supplied)

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

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

First, OFWs with employment contracts of less than one year vis-à-vis 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 Commission 79 (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)

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 of Unexpired Period Applied in

Period Service Period the Computation
of the Monetary
Award

Skippers v. 6 months 2 months 4 months 4 months

Maguad84

Bahia Shipping 9 months 8 months 4 months 4 months

v. Reynaldo
Chua 85

Centennial 9 months 4 months 5 months 5 months

Transmarine v.
dela Cruz l86

Talidano v. 12 months 3 months 9 months 3 months

Falcon87

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

Oriental v. CA 89 12 months more than 2 10 months 3 months

months

PCL v. NLRC90 12 months more than 2 more or less 9 3 months

months months

Olarte v. 12 months 21 days 11 months and 9 3 months

Nayona91 days

JSS v.Ferrer92 12 months 16 days 11 months and 3 months

24 days

Pentagon v. 12 months 9 months and 2 months and 23 2 months and 23

Adelantar93 7 days days days

Phil. Employ v. 12 months 10 months 2 months Unexpired portion

Paramio, et al.94
 Flourish 2 years 26 days 23 months and 4 6 months or 3
Maritime v. days months for each
Almanzor 95 year of contract

Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3

Manpower v. months and and 28 days months for each
Villanos 96 28 days 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 and PCL 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 of Unexpired Period Applied in the

Period Service Period Computation of the
Monetary Award

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

al.98

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

v. NLRC99 and 23 days days

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

Agoy v. 2 years 2 months 22 months 22 months

NLRC101

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

al.102

Barros v. 12 months 4 months 8 months 8 months

NLRC, et al.103

Philippine 12 months 6 months 5 months and 5 months and 18 days

Transmarine v. and 22 days 18 days
Carilla104

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were treated alike in terms of the
computation of their monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries
multiplied by the entire unexpired portion of their employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed OFWs
based on their employment periods, in the process singling out one category whose contracts have an unexpired portion of one year or more and
subjecting them to the peculiar disadvantage of having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof,
whichever is less, but all the while sparing the other category from such prejudice, simply because the latter's unexpired contracts fall short of one year.

Among OFWs With Employment Contracts of More Than One Year

Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on the accuracy of the Marsaman interpretation.

The Court notes that the subject clause "or for three (3) months for every year of the unexpired term, whichever is less" contains the qualifying phrases
"every year" and "unexpired term." By its ordinary meaning, the word "term" means a limited or definite extent of time. 105 Corollarily, that "every year" is but
part of an "unexpired term" is significant in many ways: first, the unexpired term must be at least one year, for if it were any shorter, there would be no
occasion for such unexpired term to be measured by every year; and second, the original term must be more than one year, for otherwise, whatever would
be the unexpired term thereof will not reach even a year. Consequently, the more decisive factor in the determination of when the subject clause "for three
(3) months for every year of the unexpired term, whichever is less" shall apply is not the length of the original contract period as held in Marsaman,106 but
the length of the unexpired portion of the contract period -- the subject clause applies in cases when the unexpired portion of the contract period is at least
one year, which arithmetically requires that the original contract period be more than one year.

Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for more than one year: those who
are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof, while those
who are illegally dismissed with one year or more remaining in their contracts shall be covered by the subject clause, and their monetary benefits limited to
their salaries for three months only.

To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes hypothetical OFW-C and OFW-D, who each
have a 24-month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th month.
Considering that there is at least 12 months remaining in the contract period of OFW-C, the subject clause applies to the computation of the latter's
monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the contract, but
to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the contract. On the other hand, OFW-D is
spared from the effects of the subject clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00,
which is equivalent to his/her total salaries for the entire 11-month unexpired portion.

OFWs vis-à-vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in place. This
uniform system was applicable even to local workers with fixed-term employment. 107

The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce (1888), 108 to wit:

Article 299. If the contracts between the merchants and their shop clerks and employees should have been made of a fixed period, none of the contracting
parties, without the consent of the other, may withdraw from the fulfillment of said contract until the termination of the period agreed upon.

Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the provisions contained in the following
articles.

In Reyes v. The Compañia Maritima, 109 the Court applied the foregoing provision to determine the liability of a shipping company for the illegal discharge of
its managers prior to the expiration of their fixed-term employment. The Court therein held the shipping company liable for the salaries of its managers for
the remainder of their fixed-term employment.

There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which provides:

Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they cannot be discharged
until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to
the vessel or to its cargo by malice or manifest or proven negligence.

Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in

which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally dismissed employees for the entire unexpired
portion of their employment contracts.

While Article 605 has remained good law up to the present, 111 Article 299 of the Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to
wit:

Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain work cannot leave or be dismissed without
sufficient cause, before the fulfillment of the contract. (Emphasis supplied.)

Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a conjunctive "and" so as to apply the provision to local workers
who are employed for a time certain although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de France
Company.113 And in both Lemoine and Palomar, the Court adopted the general principle that in actions for wrongful discharge founded on Article 1586,
local workers are entitled to recover damages to the extent of the amount stipulated to be paid to them by the terms of their contract. On the computation of
the amount of such damages, the Court in Aldaz v. Gay114 held:

The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the contrary under Spanish jurisprudence, that
when an employee is wrongfully discharged it is his duty to seek other employment of the same kind in the same community, for the purpose of reducing
the damages resulting from such wrongful discharge. However, while this is the general rule, the burden of showing that he failed to make an effort to
secure other employment of a like nature, and that other employment of a like nature was obtainable, is upon the defendant. When an employee is
wrongfully discharged under a contract of employment his prima facie damage is the amount which he would be entitled to had he continued in such
employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)

On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title
I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV. 116 Much like Article 1586 of the Civil Code of 1889,
the new provisions of the Civil Code do not expressly provide for the remedies available to a fixed-term worker who is illegally discharged. However, it is
noted that in Mackay Radio & Telegraph Co., Inc. v. Rich, 117 the Court carried over the principles on the payment of damages underlying Article 1586 of the
Civil Code of 1889 and applied the same to a case involving the illegal discharge of a local worker whose fixed-period employment contract was entered
into in 1952, when the new Civil Code was already in effect. 118

More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-term employment contracts were illegally
terminated, such as in First Asian Trans & Shipping Agency, Inc. v. Ople, 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)

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. 1avvphi1

Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the subject clause from the lone perspective that
the clause directly violates state policy on labor under Section 3,131 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,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor Relations Commission,134 has described
to be not self-actuating:

Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the sense that these are automatically
acknowledged and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the
full exercise of the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such
view presents the dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when
examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor against any form of
removal regardless of circumstance. This interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still
hardly within the contemplation of the framers. Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure the
protection and promotion, not only the rights of the labor sector, but of the employers' as well. Without specific and pertinent legislation, judicial bodies will
be at a loss, formulating their own conclusion to approximate at least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable right to stave off the dismissal of an
employee for just cause owing to the failure to serve proper notice or hearing. As manifested by several framers of the 1987 Constitution, the provisions on
social justice require legislative enactments for their enforceability. 135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of which the questioned clause may be
declared unconstitutional. It may unwittingly risk opening the floodgates of litigation to every worker or union over every conceivable violation of so broad a
concept as social justice for labor.

It must be stressed that Section 3, Article XIII does not directly bestow on the working class any actual enforceable right, but merely clothes it with the
status of a sector for whom the Constitution urges protection through executive or legislative action and judicial recognition. Its utility is best limited to
being an impetus not just for the executive and legislative departments, but for the judiciary as well, to protect the welfare of the working class. And it was
in fact consistent with that constitutional agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko
Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated the judicial precept that when the challenge to a
statute is premised on the perpetuation of prejudice against persons favored by the Constitution with special protection -- such as the working class or a
section thereof -- the Court may recognize the existence of a suspect classification and subject the same to strict judicial scrutiny.

The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee Association exaggerate the
significance of Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause. Article
XIII, by itself, without the application of the equal protection clause, has no life or force of its own as elucidated in Agabon.

Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's right to substantive due process, for it deprives him of
property, consisting of monetary benefits, without any existing valid governmental purpose. 136

The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement of OFWs to their three-month salary in case
of illegal dismissal, is to give them a better chance of getting hired by foreign employers. This is plain speculation. As earlier discussed, there is nothing in
the text of the law or the records of the deliberations leading to its enactment or the pleadings of respondent that would indicate that there is an existing
governmental purpose for the subject clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause violates not just petitioner's
right to equal protection, but also her right to substantive due process under Section 1, 137 Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment
contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

On the Third Issue

Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary award, because these are fixed
benefits that have been stipulated into his contract.

Petitioner is mistaken.

The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996,
provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday pay is compensation for any
work "performed" on designated rest days and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's monetary
award, unless there is evidence that he performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,138

However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. National Labor Relations Commission, to
wit:

The rendition of overtime work and the submission of sufficient proof that said was actually performed are conditions to be satisfied before a seaman could
be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right
to overtime pay but the entitlement to such benefit must first be established.

In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted since the same is given during the actual service
of the seamen.

WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year of the unexpired term, whichever is less" in the 5th
paragraph 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.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice

ANTONIO T. CARPIO RENATO C. CORONA

Associate Justice Associate Justice

CONCHITA CARPIO MORALES DANTE O. TINGA

Associate Justice Associate Justice

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

ANTONIO EDUARDO B. NACHURA TERESITA J. LEONARDO-DE CASTRO

Associate Justice Associate Justice

(see concurring opinion) DIOSDADO M. PERALTA

 ARTURO D. BRION
Associate Justice
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court.

REYNATO S. PUNO
Chief Justice

2. Sammer Overseas Placement Agency v. Cabiles, GR. No. 170139, August 5, 2014

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

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

DECISION

LEONEN, J.:

This case involves an overseas Filipino worker with shattered dreams. It is our duty, given the facts and the law, to approximate justice
for her.

We are asked to decide a petition for review 1 on certiorari assailing the Court of Appeals’ decision 2 dated June 27, 2005. This decision
partially affirmed the National Labor Relations Commission’s resolution dated March 31, 2004, 3 declaring respondent’s dismissal illegal,
directing petitioner to pay respondent’s three-month salary equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering it to
reimburse the NT$3,000.00 withheld from respondent, and pay her NT$300.00 attorney’s fees. 4 cralawred

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency. 5 Responding to an ad it published,
respondent, Joy C. Cabiles, submitted her application for a quality control job in Taiwan. 6 cralawred

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.9 cralawred

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.12 cralawred

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.” 14 cralawred

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. 16 cralawred

On October 15, 1997, Joy filed a complaint 17 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.20 cralawred

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.25 cralawred

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. 30 cralawred

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. 35 cralawred

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. 42 cralawred

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. 45 cralawred

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. 46 cralawred

The Commission denied the agency’s motion for reconsideration 47 dated May 12, 2004 through a resolution48 dated July 2, 2004.

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition 49 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 partly AFFIRMED 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. 54 cralawred

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. 56 cralawred

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.57 cralawred

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

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. 58 They may also impose reasonable
rules to ensure that the employees comply with these standards. 59 Failure to comply may be a just cause for their
dismissal.60 Certainly, employers cannot be compelled to retain the services of an 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. 64 cralawred

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; and ChanRoblesVirtualawlibrary

(e) Other causes analogous to the foregoing.

Petitioner’s allegation that respondent was inefficient in her work and negligent in her duties 69 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. 71 cralawred

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.” 72 cralawred

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.” 73 cralawred

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 with

the 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. 75 The 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.” 79 cralawred

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.” 85
cralawred

We are aware that the clause  “or for three (3) months for every year of the unexpired term, whichever is less” was reinstated in
Republic Act No. 8042 upon promulgation of Republic Act No. 10022 in 2010. Section 7 of Republic Act No. 10022 provides: chanRoblesvirtualLawlibrary

Section 7. Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows: chanRoblesvirtualLawlibrary
SEC. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the
filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of damage. Consistent with this
mandate, the NLRC shall endeavor to update and keep abreast with the developments in the global services industry.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and
several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its
approval. The performance bond to de [sic] filed by the recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a foreign country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid
within thirty (30) days from approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any
unauthorized deductions from the migrant worker’s salary, the worker shall be entitled to the full reimbursement if [sic] his placement
fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is less.

In case of a final and executory judgement against a foreign employer/principal, it shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment Program and from recruiting and hiring Filipino workers until
and unless it fully satisfies the judgement award.

Noncompliance with the mandatory periods for resolutions of case provided under this section shall subject the responsible officials to
any or all of the following penalties:
cralawlawlibrary

(a) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith; chanroblesvirtuallawlibrary

(b) Suspension for not more than ninety (90) days; or

(c) Dismissal from the service with disqualification to hold any appointive public office for five (5) years.

Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may have
incured [sic] under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.
(Emphasis supplied)

Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of the clause in Republic Act No. 8042
was not yet in effect at the time of respondent’s termination from work in 1997. 86 Republic Act No. 8042 before it was amended by
Republic Act No. 10022 governs this case.

When a law is passed, this court awaits an actual case that clearly raises adversarial positions in their proper context before
considering a prayer to declare it as unconstitutional.

However, we are confronted with a unique situation. The law passed incorporates the exact clause already declared as unconstitutional,
without any perceived substantial change in the circumstances.

This may cause confusion on the part of the National Labor Relations Commission and the Court of Appeals. At minimum, the existence
of Republic Act No. 10022 may delay the execution of the judgment in this case, further frustrating remedies to assuage the wrong
done to petitioner. Hence, there is a necessity to decide this constitutional issue.

Moreover, this court is possessed with the constitutional duty to “[p]romulgate rules concerning the protection and enforcement of
constitutional rights.”87 When cases become moot and academic, we do not hesitate to provide for guidance to bench and bar in
situations where the same violations are capable of repetition but will evade review. This is analogous to cases where there are millions
of Filipinos working abroad who are bound to suffer from the lack of protection because of the restoration of an identical clause in a
provision previously declared as unconstitutional.

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may exercise its powers in any manner
inconsistent with the Constitution, regardless of the existence of any law that supports such exercise. The Constitution cannot be
trumped by any other law. All laws must be read in light of the Constitution. Any law that is inconsistent with it is a nullity.

Thus, when a law or a provision of law is null because it is inconsistent with the Constitution, the nullity cannot be cured by
reincorporation or reenactment of the same or a similar law or provision. A law or provision of law that was already declared
unconstitutional remains as such unless circumstances have so changed as to warrant a reverse conclusion.

We are not convinced by the pleadings submitted by the parties that the situation has so changed so as to cause us to reverse binding
precedent.

Likewise, there are special reasons of judicial efficiency and economy that attend to these cases.

The new law puts our overseas workers in the same vulnerable position as they were prior to Serrano. Failure to reiterate the very
ratio decidendi of that case will result in the same untold economic hardships that our reading of the Constitution intended to avoid.
Obviously, we cannot countenance added expenses for further litigation that will reduce their hard-earned wages as well as add to the
indignity of having been deprived of the protection of our laws simply because our precedents have not been followed. There is no
constitutional doctrine that causes injustice in the face of empty procedural niceties. Constitutional interpretation is complex, but it is
never unreasonable.

Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the Office of the Solicitor General to comment on the
constitutionality of the reinstated clause in Republic Act No. 10022.

In its comment,89 petitioner argued that the clause was constitutional. 90 The legislators intended a balance between the employers’ and
the employees’ rights by not unduly burdening the local recruitment agency. 91 Petitioner is also of the view that the clause was already
declared as constitutional in Serrano.92 cralawred
The Office of the Solicitor General also argued that the clause was valid and constitutional. 93 However, since the parties never raised
the issue of the constitutionality of the clause as reinstated in Republic Act No. 10022, its contention is that it is beyond judicial
review.94cralawred

On the other hand, respondent argued that the clause was unconstitutional because it infringed on workers’ right to contract. 95 cralawred

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.” 98 cralawred

In creating laws, the legislature has the power “to make distinctions and classifications.” 99 In exercising such power, it has a wide
discretion.100 cralawred

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. 104 cralawred

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.” 105 cralawred

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. 108 cralawred

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.” 109 cralawred

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.” 111 cralawred

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. 115 cralawred

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.117 cralawred

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.”118 cralawred

We do not need strict scrutiny to conclude that these classifications do not rest on any real or substantial distinctions that would justify
different treatments in terms of the computation of money claims resulting from illegal termination.

Overseas workers regardless of their classifications are entitled to security of tenure, at least for the period agreed upon in their
contracts. This means that they cannot be dismissed before the end of their contract terms without due process. If they were illegally
dismissed, the workers’ right to security of tenure is violated.

The rights violated when, say, a fixed-period local worker is illegally terminated are neither greater than nor less than the rights
violated when a fixed-period overseas worker is illegally terminated. It is state policy to protect the rights of workers without
qualification as to the place of employment. 119 In both cases, the workers are deprived of their expected salary, which they could have
earned had they not been illegally dismissed. For both workers, this deprivation translates to economic insecurity and disparity. 120 The
same is true for the distinctions between overseas workers with an employment contract of less than one year and overseas workers
with at least one year of employment contract, and between overseas workers with at least a year left in their contracts and overseas
workers with less than a year left in their contracts when they were illegally dismissed.

For this reason, we cannot subscribe to the argument that “[overseas workers] are contractual employees who can never acquire
regular employment status, unlike local workers”121 because it already justifies differentiated treatment in terms of the computation of
money claims.122 cralawred

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.” 125 cralawred

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.” 127 cralawred

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. 128 cralawred

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.” 129 cralawred

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:130 cralawred

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. 132 cralawred

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.” 134 cralawred

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. 136 cralawred

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. 137 cralawred

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. 140 cralawred

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:141 cralawred

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. 142 chanrobleslaw

But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be told a million times over; each of their stories as real as any
other. Overseas Filipino workers brave alien cultures and the heartbreak of families left behind daily. They would count the minutes,
hours, days, months, and years yearning to see their sons and daughters. We all know of the joy and sadness when they come home
to see them all grown up and, being so, they remember what their work has cost them. Twitter accounts, Facetime, and many other
gadgets and online applications will never substitute for their lost physical presence.

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

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

Inevitably, their dignity is ours as well.

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

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

SO ORDERED.

Carpio, Acting C.J., Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Villarama, Jr., Perez, Mendoza,
Reyes, and Perlas-Bernabe, JJ.,  concur.
Sereno, C.J., on Leave.
Brion, J., see dissenting opinion.

b. Limitations on the License to Authority

c. Prohibited Acts

i. Art. 34, Labor Code

To furnish or publish any false notice or information or document in relation to recruitment or employment; To give any false notice, testimony, information
or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code.

ii. Additional Prohibited Acts under RA. 10022

d. Suspension and Cancellation of License or Authority

i. Grounds for Cancellation or Suspension

iii. Illegal Recruitment

1. Definition and Elements of Illegal Recruitment

a. People v. Laogo, GR. No. 176264, January 10, 2011

G.R. No. 176264               January 10, 2011

PEOPLE OF THE PHILIPPINES, Appellee,

vs.
TERESITA "TESSIE" LAOGO, Appellant.

DECISION

VILLARAMA, JR., J.:

This petition assails the July 31, 2006 Decision1 of the Court of Appeals (CA) in CA-G.R. CR.-H.C. No. 01664, which affirmed the Decision 2 of the Regional
Trial Court (RTC), Branch 12, of Malolos, Bulacan in Criminal Case No. 693-M-2001. The RTC found appellant Teresita "Tessie" Laogo guilty beyond
reasonable doubt of the crime of illegal recruitment in large scale.
Appellant Teresita "Tessie" Laogo was the proprietor and manager of Laogo Travel Consultancy, a travel agency firm located along Padre Faura Street in
Manila. On March 7, 2001, an Information3 was filed against appellant and a certain Susan Navarro (Susan) in Malolos, Bulacan charging them of the
crime of Illegal Recruitment (Large Scale). The information reads:

INFORMATION

The undersigned Asst. Provincial Prosecutor accuses Susan Navarro and Tessie [Teresita] Laogo of the crime of illegal recruitment, penalized under Art.
38 in relation to Art[s]. 34 and 39 of the Labor Code of the Philippines, as amended by Presidential Decree No. 1412, committed as follows:

That in or about and during the months of May and June 2000, in the municipality of Bulacan, province of Bulacan, Philippines, and within the jurisdiction of
this Honorable Court, the above-named accused, knowing that they are non-licensee or non-holder of authority from the Department of Labor to recruit
and/or place workers in employment either locally or overseas, conspiring, confederating together and helping each other, did then and there wi[l]lfully,
unlawfully and feloniously engage in illegal recruitment, placement or deployment activities for a fee, which they received from complainants Edith
Bonifacio-Ulanday, Rogelio Enriquez y Buenavidez, Billy dela Cruz, Jr. y Fernandez, Dante Lopez y Enriquez, Teodulo dela Cruz y Mendoza, Edwin
Enriquez y Panganiban and Gary Bustillos y de Guzman by recruiting and promising them job placement abroad, more particularly in Guam, which did not
materialize, without first having secured the required license or authority from the Department of Labor and Employment.

That the crime is committed in a large scale tantamount to economic sabotage as the aforementioned seven persons were [recruited] individually or as a
group.

Contrary to law.

The charge stemmed from the following set of facts.

Sometime during the second week of March 2000, Susan invited several individuals including six of the seven complainants – namely, Teodulo dela Cruz,
Billy dela Cruz, Jr., Dante Lopez, Edwin Enriquez, Rogelio Enriquez, and Gary Bustillos – to her house in Bulacan, Bulacan to celebrate the town fiesta.
Appellant was among the several guests in Susan’s house during the said occasion.

According to Teodulo dela Cruz, during the fiesta, Gary Bustillos introduced him to Susan as somebody who could help him find work abroad. Since Susan
was Gary’s aunt, Teodulo immediately trusted Susan. Susan told him he can apply as assistant cook and can work in Guam, USA. Upon Susan’s
instruction, Teodulo filled up an application form4 and gave her ₱3,000.00 after the latter promised to process his application to work abroad. 5 On May 22,
2000, Susan accompanied Teodulo to appellant’s travel agency office in Ermita where he paid an additional ₱15,000.00 for his placement fee. 6 A receipt
bearing the logo and name of Laogo Travel Consultancy was issued to him signed by Susan. 7 Months later, when Susan’s promise to send him abroad
remained unfulfilled, Teodulo, along with several other applicants, went to appellant’s office and to Susan’s house to follow up their application, but the two
always told them that their visas have yet to be released. 8

Similarly, Billy dela Cruz, Jr. also met Susan through Gary, who himself was seeking help from Susan to work in Guam. At Susan’s house, Billy saw Dante
Lopez, Edwin Enriquez, and Rogelio Enriquez. Like him, the three were also seeking Susan’s help to work abroad. 9 Susan introduced Billy to appellant,
who promised him that she will send them abroad within three months. 10 After the meeting, Billy issued to Susan two Metrobank checks, dated March 11
and May 10, 2000, bearing the amounts ₱23,000.00 and ₱44,000.00, respectively, as partial payment for his placement fee. 11 On May 19, 2000, Billy also
went to appellant’s travel agency in Ermita and personally handed an additional cash of ₱6,000.00 to Susan, who thereafter gave the money to appellant.
Appellant issued a corresponding receipt 12 for the ₱6,000.00 cash bearing her signature and the name and logo of Laogo Travel Consultancy. After several
months, no word was heard from either Susan or appellant. Sensing that something was wrong, Billy decided to report the matter to the authorities in
Bulacan, Bulacan and filed the complaint against Susan and appellant. 13

Dante Lopez testified that he was also introduced by Gary Bustillos to appellant and Susan. Susan identified herself as an employee of appellant’s travel
agency. The two told him that they can send him and his companions to Guam within the span of three months. 14 Lopez paid both accused ₱6,000.00 to
process his papers, covered by a receipt dated May 19, 2000 showing appellant’s signature. 15 Appellant’s promise, however, turned sour after three
months. When he confronted appellant, the latter told him that he would be sent to a different country. Left without a choice, Lopez waited. Again, the
promise remained unfulfilled.16

According to Rogelio Enriquez, he also met appellant during the town fiesta when Susan invited him to cook for her guests. Susan introduced appellant as
someone who could send him to work abroad. Eager about the prospect, Rogelio immediately gave his ₱3,000.00 cash to Susan for the processing of his
visa and employment documents.17 He saw Susan hand the money to appellant. 18 A week later, Rogelio gave an additional ₱900.00 to Susan. 19 No receipts
were issued on both payments since Rogelio failed to complete the required ₱6,000.00 placement fee. 20 Months passed but Rogelio heard nothing from
either Susan or appellant. Apprehensive, Rogelio verified the status of the Laogo Travel Consultancy with the Philippine Overseas Employment
Administration (POEA). From the POEA, Rogelio learned that neither of the accused nor Laogo Travel was licensed to recruit workers for employment
abroad. Aggrieved, Rogelio, together with his six companions, filed the complaint against Susan and appellant.

Edwin Enriquez also paid ₱12,000.00 to Susan as processing fee for his application to work in Guam. According to him, Susan’s husband and appellant
were present when he gave the money to Susan during the town fiesta. 21 Susan issued a receipt dated May 16, 2000 to Edwin. The receipt contained the
logo of Laogo Travel Consultancy and was signed by Susan with a description which says "Payment was for Placement Fee." 22

Two other persons, namely Edith Bonifacio-Ulanday and Gary Bustillos, Susan’s nephew, were among the seven who filed the complaint against Susan
and appellant. The two, however, later decided to withdraw their complaints after executing their respective affidavits of desistance. 23

On March 15, 2001, warrants of arrest24 were issued against Susan and appellant. When arraigned, appellant pleaded not guilty. 25 Susan, meanwhile,
remained at large. An alias warrant of arrest26 was issued by the trial court against her but to no avail.

During the trial, appellant denied any participation in the illegal activities undertaken by Susan. She insisted that Susan was not in any way connected with
her travel agency and that she confronted the latter when she came to know of Susan’s recruitment activities. Appellant claimed that she even had to
rename her travel agency to Renz Consultancy and Employment Services to avoid being associated with Susan’s recruitment activities. 27

Appellant admitted having met Rogelio at Susan’s house during the town fiesta, but denied knowing the other complainants. According to appellant, she
came to know Rogelio when Susan specifically identified him as the one who cooked the dishes after some guests prodded Susan. 28

Unsatisfied with appellant’s explanation, the trial court promulgated a Decision 29 finding her guilty of large scale illegal recruitment. The fallo of the trial
court’s July 16, 2002 Decision reads:

WHEREFORE, finding herein accused Teresita (Tessie) Laogo y Villamor guilty as principal beyond reasonable doubt of the crime of illegal recruitment in
large scale, she is hereby sentenced to suffer the penalty of life imprisonment and pay a fine of ₱500,000.00 as imposed by law[;] to indemnify the private
offended parties x x x actual damages, as follows: Teodulo dela Cruz – ₱15,000.00, Billy dela Cruz – ₱73,000.00, Dante Lopez – ₱6,000.00, Rogelio
Enriquez – ₱3,000.00, and Edwin Enriquez – ₱12,000.00[;] and to pay the costs of the proceedings.

In the service of her sentence the said accused, a detention prisoner, shall be credited with the full time during which she had undergone preventive
imprisonment, pursuant to the provisions of Art. 29 of the Revised Penal Code.

Pending the actual apprehension of the other accused Susan Navarro, [who is] still at-large, on the strength of the warrant of arrest earlier issued, let the
record be committed to the archives subject to recall and reinstatement, should circumstances so warrant for due prosecution against her of this case.

SO ORDERED.30
Appellant filed an appeal before this Court, but said appeal was transferred to the CA following our pronouncement in People v. Mateo. 31

In her Appellant’s Brief32 before the CA, appellant insisted that she had no hand in the recruitment of the complainants and maintains that the recruitment
activities were made solely upon the initiative of accused Susan Navarro. 33 Appellant anchored her defense on the testimonies of the complainants who
declared that the transactions and the payments were made not with her but with Susan. 34 Appellant admitted that her consultancy firm was merely
engaged in the business of assisting clients in the procurement of passports and visas, and denied that her agency was involved in any recruitment activity
as defined under the Labor Code, as amended.35

On July 31, 2006, the appellate court rendered the assailed decision affirming appellant’s conviction. 36 The CA noted that although at times, it was Susan
with whom the complainants transacted, the records nevertheless bear that appellant had a hand in the recruitment of the complainants. The CA pointed
out that appellant, together with Susan, repeatedly assured the private complainants that her consultancy firm could deploy them for overseas
employment,37 leading the appellate court to conclude that appellant consciously and actively participated in the recruitment of the complainants. 38

Aggrieved, appellant brought the case to us on appeal, raising the same arguments she had raised at the CA.

We affirm appellant’s conviction.

Recruitment and placement refers to the act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad, whether for profit or not. When a person or entity, in any manner, offers or
promises for a fee employment to two or more persons, that person or entity shall be deemed engaged in recruitment and placement. 39

Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by non-licensees or non-holders of authority are deemed
illegal and punishable by law. And when the illegal recruitment is committed against three or more persons, individually or as a group, then it is deemed
committed in large scale and carries with it stiffer penalties as the same is deemed a form of economic sabotage. 40 1avvphi1

But to prove illegal recruitment, it must be shown that the accused, without being duly authorized by law, gave complainants the distinct impression that he
had the power or ability to send them abroad for work, such that the latter were convinced to part with their money in order to be employed. 41 It is important
that there must at least be a promise or offer of an employment from the person posing as a recruiter, whether locally or abroad. 42

Here, both the trial court and the CA found that all the five complainants were promised to be sent abroad by Susan and herein appellant 43 as cooks and
assistant cooks. The follow up transactions between appellant and her victims were done inside the said travel agency. Moreover, all four receipts issued
to the victims bear the name and logo of Laogo Travel Consultancy, 44 with two of the said receipts personally signed by appellant herself. 45 Indubitably,
appellant and her co-accused acting together made complainants believe that they were transacting with a legitimate recruitment agency and that Laogo
Travel Consultancy had the authority to recruit them and send them abroad for work when in truth and in fact it had none as certified by the
POEA.46 Absent any showing that the trial court and the CA overlooked or misappreciated certain significant facts and circumstances, which if properly
considered, would change the result, we are bound by said findings. 47

Appellant’s contention that she had to change the name of her travel agency to disassociate herself with Susan’s recruitment activities is too lame to
deserve serious consideration. In light of the testimonies of the complainants that appellant with her co-accused promised them employment abroad, we
find appellant’s act of closing Laogo Travel Consultancy and establishing a new one under her husband’s name 48 as just an afterthought, a belated
decision which cannot undo the damage suffered by the private offended parties. It could indeed hardly be construed as a simple reaction of an innocent
person, as it in fact smacks of a desperate attempt of a guilty individual to escape liability or to confuse and dishearten her victims.

WHEREFORE, the appeal is DENIED. The Decision dated July 31, 2006 of the Court of Appeals in CA-G.R. CR.-H.C. No. 01664 is AFFIRMED in toto.

With costs against the accused-appellant.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice
Chairperson

ARTURO D. BRION LUCAS P. BERSAMIN

Associate Justice Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s
Division.

CONCHITA CARPIO MORALES

Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA
Chief Justice

2. Consequence of Conviction

3. Illegal Recruitment v. Estafa

b. Employment Permit of Non-Resident Aliens

i. Definition and Exceptions