FIRST DIVISION

[G.R. No. 110017. January 2, 1997.]

RODOLFO FUENTES, RAINERIO DURON, JULIET VISTAL, ELENA DELLOMES, LEODEGARIO

BALHINON, ROGELIO MALINAO, LILY BASANEZ, MALIZA ELLO, VILMA NOQUERA, JESSICA
CASTILLO, ROGELIO TABLADILLO, REMELDA VISCAYA, MELANIA VISCAYA, CELIA LUBRICO,
EDITH LLACUNA, ELPIDIO FERRER, NORBERTO MIRANDA, FERNANDO MIRANDA, CORDIO
DUMAY, LEONARDO DELA VEGA, ISIDRO ALIDO, AQUINO MACABEHA, LEOPOLDO ABAA,
PAULINO ASIS, JR., REYNALDO BLANCO, MADILYN FABON, MARCIANA OSOK, BEBIANO OSOK,
FRANCISCO SEMULTA, MARCIA LLAMES, PRINCIPE DANIEL, MARIA BAYA, NENITA RASONABLY,
SORIANO PENALOSA, JOSE PENALOSA, RODOLFO VILLAR, REMEGIAS DEMINGOY, TEODORO
TUGOGON, DIONISIO APOLINARIO, EDYING DE LA CRUZ, RODOLFO BUTAUAN, CRISPIN FABON,
ARCADIO FABON, NENITA SARDINOLA, ALEX LICAYAN, MARIO DAL, BADON EDUARDO, FELISA
VILLAREL, EMILY GARAN, ROGELIO GARAN, RODOLFO COLITE, RODOLFO MENIANO, ROMERO
TERRY, ZOILO VALLEJOS, VIRGINIA BANDERA, BLANDINA LUNA, FLAXIANA CARLON,
CRESENCIO CARLON, NOTARTE LEONARDA, EFREN CANTERE, ROWENA CAGUMAY, ALFONSO
PARAJES, VIOLETA MONTECLAR, NESTOR ALLADO, JR., APOLONIO CULATAS, LANNIE
CAPARAS, ANGELICO NUNEZ, JR., NICOLAS CANAL, HERMOGENA TAGLOCOP, ALEJO
BAUMBAD, CARLITO DE LA PENA, AMANCIO ABOYLO, JERRY PARALES, LYDIA ALLADO,
AGAPITO ODAL, MAGNO BARIOS, FLORENDO MARIANO, SOLATORIO BONIFACIO, RENE
DEMINGOY, FELIMON ADORNO, VIRGILLO INOCENCIO, RUEL INOCENCIO, AVELINO LUNA,
ALLAN MARCELLANA, FELIX SANCHEZ, AVELINO PANDI, VILLA SORIO, NOEL LAS PENAS,
FRANCISCO GARDO, ROGELIO CULLABA, GEORGE RAGAR, CARMELITO CABRIADAS, ANANIAS
MELLORIA, ALFONSO ALLADO, MARLINO MARTINEZ, LINO MARTINEZ, ERNESTO OLARAN,
JOHNNY JOSAYAN, ANECITO SOBIONO, MARGARITO DUMALAGAN, FRANCISCO CABALES,
FELIX ROCERO, PABLITO DAPAR, FRANCISCA CABALHIN, FORTUNATA BAUMBAD, CARMEN
RADAY, NICOLAS TAMON, REYNALDO CANTORIA, ELMER NAPONE, ANTONIO VALLAR,
BERNADITH TOLOZA, EMETERIA FERRER, CLANICA CABALES, CLAUDIO OJUYLAN, ERLINDA
BLANCO, ROSITA DURON, FRANCISCA ADLAWON, CARDINAL MAGLISANG, JOVEN ASIS, JOSE
FLORES, ALICIA FLORES, JULIETO ADORNO, LORENZO CANINES, ISAAC CELLASAY, ANDRES
INDIABLE, ARSENIO DURON, NARCISA MALASPINA, ROQUE SUBAAN, GRACE DURON, JAIME
BALMORIA, PEDRO PECASALES, PRIMITORAGAS and GRACE GOMA, Petitioners, v. NATIONAL
LABOR RELATIONS COMMISSION, 5TH DIVISION, CAGAYAN DE ORO CITY, AGUSAN
PLANTATION INC., AND/OR CHANG CHEE KONG, Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; RETRENCHMENT;
REQUISITES FOR VALIDITY. � Under Art. 283 retrenchment may be valid only when the following
requisites are met: (a) it is to prevent losses; (b) written notices were served on the workers and the
Department of Labor and Employment (DOLE) at least one (1) month before the effective date of
retrenchment; and (c) separation pay is paid to the affected workers.

2. ID.; ID.; ID.; ID.; BUSINESS LOSSES, MUST BE SUFFICIENTLY PROVED; CLAIM NOT PROVED IN
CASE AT BAR. � The closure of a business establishment is a ground for the termination of the
services of an employee unless the closing is for the purpose of circumventing pertinent provisions of the
Labor Code. But while business reverses can be a just cause for terminating employees, they must be
sufficiently proved by the employer. There is no question that an employer may reduce its work force to
prevent losses. However, these losses must be serious, actual and real. Otherwise, this ground for
termination of employment would be susceptible to abuse by scheming employers who might be merely
feigning losses in their business ventures in order to ease out employees. Indeed, private respondents
failed to prove their claim of business losses. What they submitted to the Labor Arbiter were mere self-
serving documents and allegations. Private respondents never adduced evidence which would show
clearly the extent of losses they suffered as a result of lack of capital funding, which failure is fatal to their
cause.

3. ID.; ID.; ID.; ID.; ID.; ONE MONTH NOTICE, MANDATORY; REQUIREMENT NOT COMPLIED WITH
IN CASE AT BAR. � The one- month notice of retrenchment filed with the DOLE and served on the
workers before the intended date thereof is mandatory. Private respondents failed to comply with this
requisite. The earliest possible date of termination should be 12 October 1990 or one (1) month after
notice was sent to DOLE unless the notice of termination was sent to the workers later than the notice to
DOLE on 12 September 1990, in which case, the date of termination should be at least one (1) month
from the date of notice to the workers. Petitioners were terminated less than a month after notice was
sent to DOLE and to each of the workers.

4. ID.; ID.; ID.; ID.; MONETARY AWARDS AVAILABLE. � We uphold the monetary award of the Labor
Arbiter for: (a) the balance of the separation pay benefits of petitioners equivalent to fifteen (15) days for
every year of service after finding that reinstatement is no longer feasible under the circumstances, and
(b) the salary differentials for complainants who were relieved during the pendency of the case before the
Labor Arbiter and full back wages for the rest of the complainants. This is in accord with Art. 279 of the
Labor Code as amended by R.A. 6715 under which petitioners who were unjustly dismissed from work
shall be entitled to full back wages inclusive of allowances and other benefits or their monetary equivalent
computed from the time their compensation was withheld up to the date of this decision.

DECISION

BELLOSILLO, J.:

The State is bound under the Constitution to afford full protection to labor and when conflicting
interests of labor and capital are to be weighed on the scales of social justice the heavier influence of the
latter should be counterbalanced with the sympathy and compassion the law accords the less privileged
workingman. This is only fair if the worker is to be given the opportunity and the right to assert and defend
his cause not as a subordinate but as part of management with which he can negotiate on even plane.
Thus labor is not a mere employee of capital but its active and equal partner. 1

Petitioners, numbering seventy-five (75) in all, seek to set aside the decision of respondent
National Labor Relations Commission dated 27 November 1992 reversing that of the Labor Arbiter which
granted their claims, for having been rendered with grave abuse of discretion amounting to lack or excess
of jurisdiction. Petitioners were regular employees of private respondent Agusan Plantations, Inc., which
was engaged in the operation of a palm tree plantation in Trento, Agusan del Sur, since September 1982.
Claiming that it was suffering business losses which resulted in the decision of the head office in
Singapore to undertake retrenchment measures, private respondent sent notices of termination to
petitioners and the Department of Labor and Employment (DOLE).

On 31 October 1990 petitioners filed with the DOLE office in Cagayan de Oro City a complaint for
illegal dismissal with prayer for reinstatement, backwages and damages against private respondent
Agusan Plantation, Inc., and/or Chang Chee Kong. In their answer respondents denied the allegations of
petitioners and contended that upon receipt of instructions from the head office in Singapore to implement
retrenchment, private respondents conducted grievance conferences or meetings with petitioners’
representative labor organization, the Association of Trade Unions through its national president Jorge
Alegarbes, its local president and its board of directors. Private respondents also contended that the 30-
day notices of termination were duly sent to petitioners.
 After both parties submitted their position papers articulating their respective theses, the Labor
Arbiter rendered a decision on 27 May 1992 in favor of petitioners ordering private respondents to pay the
former separation pay equivalent to fifteen (15) days pay for every year of service plus salary differentials
and attorney’s fees.

On appeal by respondents to the National Labor Relations Commission, the decision of the Labor
Arbiter was reversed on 27 November 1992. Petitioners elevated their plight to this Court on a special civil
action for certiorari under Rule 65 of the Rules of Court alleging that respondent NLRC gravely abused its
discretion amounting to lack or excess of jurisdiction in ruling that petitioners were legally terminated from
their employment. They argued that their dismissal or retrenchment did not comply with the requirements
of Art. 283 of the Labor Code. We sustain petitioners. The ruling of the Labor Arbiter that there was no
valid retrenchment is correct. Article 283 of the Labor Code clearly states:chanrob1es virtual 1aw library

Art 283. Closure of establishment and reduction of personnel. � The employer may also
terminate the employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of the title, by serving a
written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy,
the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month
pay or to at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in case of closure or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever
is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

Under Art. 283 therefore retrenchment may be valid only when the following requisites are met:
(a) it is to prevent losses; (b) written notices were served on the workers and the Department of Labor
and Employment (DOLE) at least one (1) month before the effective date of retrenchment; and, (c)
separation pay is paid to the affected workers. The closure of a business establishment is a ground for
the termination of the services of an employee unless the closing is for the purpose of circumventing
pertinent provisions of the Labor Code. But while business reverses can be a just cause for terminating
employees, they must be sufficiently proved by the employer. 2

In the case before us, private respondents merely alleged in their answer and position paper that
after their officials from the head office had visited the plantation respondent manager Chang Chee Kong
received a letter from the head office directing him to proceed immediately with the termination of
redundant workers and staff, and change the operations to contract system against direct employment.
They also alleged that after five (5) years of operations, the return of investments of respondent company
was meager; that the coup attempt in August 1987 as well as that of December 1989 aggravated the
floundering financial state of respondent company; that the financial losses due to lack of capital funding
resulted in the non-payment of long-overdue accounts; that the untimely cut in the supply of fertilizers and
manuring materials and equipment parts delayed the payment of salaries and the implementation of
weekly job rotations by the workers. Except for these allegations, private respondents did not present any
other documentary proof of their alleged losses which could have been easily proven in the financial
statements which unfortunately were not shown.

There is no question that an employer may reduce its work force to prevent losses. However,
these losses must be serious, actual and real. 3 Otherwise, this ground for termination of employment
would be susceptible to abuse by scheming employers who might be merely feigning losses in their
business ventures in order to ease out employees. Indeed, private respondents failed to prove their claim
of business losses. What they submitted to the Labor Arbiter were mere self-serving documents and
allegations. Private respondents never adduced evidence which would show clearly the extent of losses
they suffered as a result of lack of capital funding, which failure is fatal to their cause.
 As regards the requirement of notices of termination to the employees, it is undisputed that the
Notice of Retrenchment was submitted to the Department of Labor and Employment on 12 September
1990. 5 The findings of both the Labor Arbiter and NLRC show that petitioners were terminated on the
following dates in 1990 after they received their notices of termination, to wit:

Name of Employee Date of Notice of Effectivity of Termination Termination

1. Noquera, Vilma 22 Sept. 25 Sept.

25. Cabriades, Carmelito 22 Aug. 30 Sept.
2. Dumalagan, Margarito 22 Sept. 30 Sept.
26. Dellomes, Elma 22 Aug. 30 Sept.
3. Osok, Marciano 20 Sept. 30 Sept.
27. Fabon, Arcadio 22 Aug. 30 Sept.
4. Abaa, Leopoldo 01 Sept. 30 Sept.
28. Gordo, Francisco 22 Aug. 30 Sept.
5. Aboylo, Amancio 01 Sept. 30 Sept.
29. Inocencio, Virgilio 22 Aug. 30 Sept.
6. Allado, Nestor Jr. 01 Sept. 30 Sept.
30. Inocencio, Ruel 22 Aug. 30 Sept.
7. Bandera, Verginia 01 Sept. 30 Sept.
31. Luna, Blandina 22 Aug. 30 Sept.
8. Basanez, Lily 01 Sept. 30 Sept.
32. Luna, Avelino 22 Aug. 30 Sept.
9. Baumbad, Alejo 01 Sept. 30 Sept.
33. Lubrico, Celia 22 Aug. 30 Sept.
10. Blanco, Myrna 01 Sept. 30 Sept.
34. Monteclar, Violeta 22 Aug. 25 Sept.
11. Blanco, Reynaldo 01 Sept. 30 Sept.
35. Macabecha, Aquino 22 Aug. 25 Sept.
12. Canal, Marieto 01 Sept. 30 Sept.
36. Melloria, Ananian 22 Aug. 25 Sept.
13. Fabon, Madilyn 01 Sept. 30 Sept.
37. Malinao, Rogelio 22 Aug. 25 Sept.
14. Ferrer, Elpidio 01 Sept. 30 Sept.
38. Leonarda, Notarte 22 Aug. 25 Sept.
15. Meniano, Rodolfo 01 Sept. 30 Sept.
39. Parejas, Jerry 22 Aug. 25 Sept.
16. Nunez, Angelico 01 Sept. 30 Sept.
40. Parejas, Alfonso 22 Aug. 25 Sept.
17. Osok, Bebiano 01 Sept. 30 Sept.
41. Sardinola, Alfonso 22 Aug. 25 Sept.
18. Penaloga, Jose Jr. 01 Sept. 30 Sept.
42. Solaterio, Bonifacio 22 Aug. 25 Sept.
19. Taglocop, Hermogena 01 Sept. 30 Sept.

20. Allado, Lydio 22 Aug. 30 Sept.

21. Baya, Maria 22 Aug. 30 Sept.

22. Carlon, Flaviana 22 Aug. 30 Sept.

23. Carlon, Cresencio 22 Aug. 30 Sept.

24. Culaba, Rogelio 22 Aug. 30 Sept.

 Culled from the above data, the termination of petitioners could not have validly taken effect
either on 25 or 30 September 1990. The one-month notice of retrenchment filed with the DOLE and
served on the workers before the intended date thereof is mandatory. Private respondents failed to
comply with this requisite. The earliest possible date of termination should be 12 October 1990 or one (1)
month after notice was sent to DOLE unless the notice of termination was sent to the workers later than
the notice to DOLE on 12 September 1990, in which case, the date of termination should be at least one
(1) month from the date of notice to the workers. Petitioners were terminated less than a month after
notice was sent to DOLE and to each of the workers.

We agree with the conclusion of the Labor Arbiter that the termination of the services of
petitioners was illegal as there was no valid retrenchment. Respondent NLRC committed grave abuse of
discretion in reversing the findings of the Labor Arbiter and ruling that there was substantial compliance
with the law. This Court firmly holds that measures should be strictly implemented to ensure that such
constitutional mandate on protection to labor is not rendered meaningless by an erroneous interpretation
of applicable laws.

We uphold the monetary award of the Labor Arbiter for: (a) the balance of the separation pay
benefits of petitioners equivalent to fifteen (15) days for every year of service after finding that
reinstatement is no longer feasible under the circumstances, and (b) the salary differentials for
complainants who were relieved during the pendency of the case before the Labor Arbiter and full back
wages for the rest of the complainants. This is in accord with Art. 279 of the Labor Code as amended by
R.A. 6715 under which petitioners who were unjustly dismissed from work shall be entitled to full back
wages inclusive of allowances and other benefits or their monetary equivalent computed from the time
their compensation was withheld up to the date of this decision.chanroblesvirtuallawlibrary:red

WHEREFORE, the Petition is GRANTED. The decision of the Labor Arbiter of 27 March 1992 granting
petitioners their claim for the balance of their separation pay benefits equivalent to fifteen (15) days for
every year of service, and salary differentials for complainants who were relieved during the pendency of
the case before the Labor Arbiter, and full back wages for the rest of the complainants is REINSTATED.
Consequently, the decision of the National Labor Relations Commission dated 27 September 1992 is
REVERSED and SET ASIDE.

SO ORDERED.

Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.

G.R. No. L-53515 February 8, 1989
SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,
vs. HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents.

Lorenzo F. Miravite for petitioner.

Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

GRIÑO-AQUINO, J.:

This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor
Case No. AJML-069-79, approving the private respondent's marketing scheme, known as the
"Complementary Distribution System" (CDS) and dismissing the petitioner labor union's complaint for
unfair labor practice.

On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31,
1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the
private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as follows:

Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic
monthly compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113, Rollo.) In
September 1979, the company introduced a marketing scheme known as the "Complementary
Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers
through San Miguel's sales offices.

The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of
Labor, with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme
whereby the Route Salesmen were assigned specific territories within which to sell their stocks of beer,
and wholesalers had to buy beer products from them, not from the company. It was alleged that the new
marketing scheme violates Section 1, Article IV of the collective bargaining agreement because the
introduction of the CDS would reduce the take-home pay of the salesmen and their truck helpers for the
company would be unfairly competing with them.

The complaint filed by the petitioner against the respondent company raised two issues: (1)
whether the CDS violates the collective bargaining agreement, and (2) whether it is an indirect way of
busting the union.

In its order of February 28, 1980, the Minister of Labor found:

... We see nothing in the record as to suggest that the unilateral action of the employer in
inaugurating the new sales scheme was designed to discourage union organization or diminish its
influence, but rather it is undisputable that the establishment of such scheme was part of its overall plan
to improve efficiency and economy and at the same time gain profit to the highest. While it may be
admitted that the introduction of new sales plan somewhat disturbed the present set-up, the change
however was too insignificant as to convince this Office to interpret that the innovation interferred with the
worker's right to self-organization.

Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a
prejudgment of the plan's viability and effectiveness. It is like saying that the plan will not work out to the
workers' [benefit] and therefore management must adopt a new system of marketing. But what the
petitioner failed to consider is the fact that corollary to the adoption of the assailed marketing technique is
the effort of the company to compensate whatever loss the workers may suffer because of the new plan
over and above than what has been provided in the collective bargaining agreement. To us, this is one
indication that the action of the management is devoid of any anti-union hues. (pp. 24-25, Rollo.)

The dispositive part of the Minister's Order reads:

WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel
Brewery Sales Force Union-PTGWO is hereby dismissed. Management however is hereby ordered to
pay an additional three (3) months back adjustment commissions over and above the adjusted
commission under the complementary distribution system. (p. 26, Rollo.)

The petition has no merit.

Public respondent was correct in holding that the CDS is a valid exercise of management
prerogatives:

Except as limited by special laws, an employer is free to regulate, according to his own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods, time,
place and manner of work, tools to be used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of work. ... (NLU vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings Bank vs. CIR 21 SCRA
226, 235.) (Perfecto V. Hernandez, Labor Relations Law, 1985 Ed., p. 44.) (Emphasis ours.)

Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise
means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:

... Even as the law is solicitous of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of management to conduct
its own business affairs to achieve its purpose cannot be denied.

So long as a company's management prerogatives are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of
the employees under special laws or under valid agreements, this Court will uphold them (LVN Pictures
Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery and Garment Workers, 26
SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to compensate
the members of its sales force who will be adversely affected by the implementation of the CDS by paying
them a so-called "back adjustment commission" to make up for the commissions they might lose as a
result of the CDS proves the company's good faith and lack of intention to bust their union.

WHEREFORE, the petition for certiorari is dismissed for lack of merit.

SO ORDERED.

Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

G.R. No. 89920 October 18, 1990

UNIVERSITY OF STO. TOMAS, petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION, UST FACULTY UNION, respondents.

Abad, Leaño & Associates for petitioner.

Eduardo J. Mariño, Jr. for private respondent.

GUTIERREZ, JR., J.:

May a university, pending resolution by the National Labor Relations Commission (NLRC) of its labor
dispute with its union, comply with a readmission order by granting substantially equivalent academic
assignments, in lieu of actual reinstatement, to dismissed faculty members?

On June 19, 1989, the University of Sto. Tomas (UST), through its Board of Trustees, terminated
the employment of all sixteen union officers and directors of respondent UST Faculty Union on the ground
that "in publishing or causing to be published in Strike Bulletin No. 5 dated August 4, 1987, the libelous
and defamatory attacks against the Father Rector, (each of them) has committed the offenses of grave
misconduct, serious disrespect to a superior and conduct unbecoming a faculty member." (Rollo p. 41)

As a result of the dismissal of said employees, some faculty members staged mass leaves of
absence on June 28, 1989 and several days thereafter, disrupting classes in all levels at the University.
(Rollo, pp. 53, 92) On July 5, 1989, the faculty union filed a complaint for illegal dismissal and unfair labor
practice with the Department of Labor and Employment. (Rollo, p. 42) On July 7, 1989, the labor arbiter,
on a prima facie showing that the termination was causing a serious labor dispute, certified the matter to
the Secretary of Labor and Employment for a possible suspension of the effects of termination. (Rollo, p.
51)

Secretary Franklin Drilon subsequently issued an order dated July 11, 1989, the decretal portion of which
reads as follows:

WHEREFORE, ABOVE PREMISES CONSIDERED, and in the interest of industrial peace and
pursuant to Section 33 (b) of RA 6715, the effects of the termination of Ma. Melvyn Alamis, Eduardo
Marino, Jr., Urbano Agalabia, Anthony Cura, Norma Collantes, Fulvio Guerrero, Corinta Barranco, Porfirio
Jose Guico, Lily Matias, Rene Sison, Henedino Brondial, Myrna Hilario, Ronaldo Asuncion, Nilda
Redoblado, Zenaida Burgos, and Milagros Nino are hereby suspended and management is likewise
ordered to accept them back to work under the same terms and conditions prevailing prior to their
dismissal.

In furtherance of this Order, all faculty members are directed to immediately report back for work
and for management to accept them back under the same terms and conditions prevailing prior to the
strike.

Labor Arbiter Nieves de Castro is hereby directed to proceed with the case pending before her and to
expedite the resolution of the same.

Pending resolution, the parties are directed to cease and desist, from committing any and all acts
that might exacerbate the situation. (Rollo, p. 54) Petitioner UST filed a motion for reconsideration on July
12, 1989 asking the Secretary of Labor and Employment to either assume jurisdiction over the present
case or certify it to the National Labor Relations Commission (NLRC) for compulsory arbitration without
suspending the effects of the termination of the 16 dismissed faculty members. (Rollo, pp. 55-64)

On July 18, 1989, Secretary Drilon, acting on said motion for reconsideration, issued another
order modifying his previous order. The dispositive portion of the new order is quoted below:

WHEREFORE, ABOVE PREMISES CONSIDERED, the Order dated 11 July 1989 is hereby
modified. Accordingly, this Office hereby certifies the labor dispute to the National Labor Relations
Commission for compulsory arbitration pursuant to Article 263(g) of the Labor Code, as amended by
Section 27 of RA 6715.

In accordance with the above, the University of Santo Tomas is hereby ordered to readmit all its
faculty members, including the sixteen (16) union officials, under the same terms and conditions
prevailing prior to the present dispute.

The NLRC is hereby instructed to immediately call the parties and expedite the resolution of the
dispute.
 The directive to the parties to cease and desist from committing any act that will aggravate the
situation is hereby reiterated. (Rollo, p. 81) The petitioner filed a motion for clarification dated July 20,
1989 which was subsequently withdrawn. (Rollo, p. 94)

On July 27, 1989, Secretary Drilon issued another order that contained the following dispositive
portion:

WHEREFORE, ABOVE PREMISES CONSIDERED, the Order dated 18 July 1989 directing the
readmission of all faculty members, including the 16 union officials, under the same terms and conditions
prevailing prior to the instant dispute is hereby affirmed.

The NLRC is hereby ordered to immediately call the parties and ensure the implementation of this Order.

No further motion of this and any nature shall be entertained. (Rollo, p. 103) The NLRC subsequently
caned the parties to a conference on August 11, 1989 before its Labor Arbiter Romeo Go. (Rollo, p. 9)

On August 14, 1989, the respondent union filed before the NLRC a motion to implement the
orders of the Honorable Secretary of Labor and Employment dated July 11, 18 and 27, 1989 and to cite
Atty. Joselito Guianan Chan (the petitioner's in-house counsel) for contempt. (Rollo, p. 104) The
petitioner, on August 25, 1989, filed its opposition to the private respondent's motion. (Rollo, p. 112)

On September 6, 1989, the NLRC issued a resolution, which is the subject of this petition for
certiorari, set forth below:

Certified Case No. 0531 IN RE: LABOR DISPUTE at the University of Santo Tomas. — Acting on
the Motion to Implement the Orders of the Honorable Secretary of Labor and Employment dated July 11,
18, and 27, 1989 and to cite Joselito Guianan Chan for Contempt dated August 14, 1989 and the Urgent
Ex-parte Motion to Implement Certification Orders of the Honorable Secretary of Labor and Employment
dated July 18 and 17, (Sic) 1989 and the subsequent Manifestation dated September 4, 1989, all filed by
the UST Faculty Union; and considering the Opposition to Union's Motion to Cite Atty. Joselito Guianan
Chan for Contempt and Comments on its Motion to Implement the Orders of the Honorable Secretary of
Labor and Employment dated July 11, 18 and 27, 1989 filed on August 25, 1989 by UST through its
counsel, the Commission, after deliberation, resolved, to wit:

a) The University is hereby directed to comply and faithfully abide with the July 11, 18 and 27, 1989
Orders of the Secretary of Labor and Employment by immediately reinstating or readmitting the following
faculty members under the same terms and conditions prevailing prior to the present dispute or merely
reinstate them in the payroll:

a) Ronaldo Asuncion

b) Lily Matias

c) Nilda Redoblado

d) Zenaida Burgos

e) Eduardo Marino, Jr.

f) Milagros Nino

g) Porfirio Guico

b) To fully reinstate, by giving him additional units or through payroll reinstatement, Prof. Urbano Agalabia
who was assigned only six (6) units;

c) To fully reinstate or reinstate through payroll, Prof. Fulvio Guerrero, who was assigned only three (3)
units;

d) The University is directed to pay the above-mentioned faculty members full backwages starting from
July 13, 1989, the date the faculty members presented themselves for reinstatement up to the date of
actual reinstatement or payroll reinstatement.
e) The payroll reinstatement of the above-named faculty members is hereby allowed only up to the end of
the First semester 1989; Next semester, the University is directed to actually reinstate the faculty
members by giving them their normal teaching loads;

f) The University is directed to cease and desist from offering the aforementioned faculty members
substantially equivalent academic assignments as this is not compliance in good faith with the Orders of
the Secretary of Labor and Employment. (Rollo, pp. 30-31)

Acting on an urgent motion for the issuance of a writ of preliminary injunction and/or restraining order, the
Court resolved to issue a temporary restraining order dated October 25, 1989 enjoining respondents from
enforcing or executing the assailed NLRC resolution. (Rollo, p. 160)

The petitioner assigns the following errors:

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (NLRC) GRAVELY ABUSED ITS
DISCRETION IN A MANNER AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
ISSUED THE ASSAILED RESOLUTION WHICH ORDERS THE ALTERNATIVE REMEDIES OF
ACTUAL REINSTATEMENT OR PAYROLL REINSTATEMENT OF THE DISMISSED FACULTY
MEMBERS.

II

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DIRECTED THE
UNIVERSITY TO PAY SOME OF THE DISMISSED FACULTY MEMBERS ASSIGNED TO HANDLE
SUBSTANTIALLY EQUIVALENT ACADEMIC ASSIGNMENTS, 'FULL BACKWAGES STARTING FROM
JULY 13, 1989, THE DATE THE FACULTY MEMBERS PRESENTED THEMSELVES FOR
REINSTATEMENT UP TO THE DATE OF ACTUAL REINSTATEMENT OR PAYROLL
REINSTATEMENT.

III

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNT ING TO LACK OR EXCESS OF JURISDICTION WHEN IT CONSIDERED AS
'NOT COMPLIANCE IN GOOD FAITH WITH THE ORDERS OF THE SECRETARY OF LABOR AND
EMPLOYMENT' THE UNIVERSITY'S ACT OF GRANTING TO SOME OF THE DISMISSED FACULTY
MEMBERS, SUBSTANTIALLY EQUIVALENT ACADEMIC ASSIGNMENTS.

IV

THE HONORABLE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT ARROGATED UPON
ITSELF THE EXERCISE OF THE RIGHT AND PREROGATIVES REPOSED BY LAW TO THE
PETITIONER UNIVERSITY IN THE LATTER'S CAPACITY AS EMPLOYER. (Rollo, pp. 9-10)

We shall deal with the first and third assignment of errors jointly because they are interrelated.

The petitioner states in its petition that: a) It has already actually reinstated six of the dismissed faculty
members, namely: Professors Alamis, Collantes, Hilario, Barranco, Brondial and Cura; b) As to
Professors Agalabia and Guerrero, whose teaching assignments were partially taken over by new faculty
members, they were given back their remaining teaching loads (not taken by new faculty members) but
were likewise given substantially equivalent academic assignments corresponding to their teachings
loads already taken over by new faculty members; c) The remaining seven faculty members, to wit:
Professors Asuncion, Marino Jr., Matias, Redoblado, Burgos, Nino and Guico, were given substantially
equivalent academic assignments in lieu of actual teaching loads because all of their teaching loads
originally assigned to them at the start of the first semester of school year 1989-1990 were already taken
over by new faculty members; d) One dismissed faculty member Rene Sison, had been "absent without
official leave" or AWOL as early as the start of the first semester. (Rollo, pp. 11-12).

The petitioner advances the argument that its grant of substantially equivalent academic assignments to
some of the dismissed faculty members, instead of actual reinstatement, is well-supported by just and
valid reasons. It alleges that actual reinstatement of the dismissed faculty members whose teaching
assignments were previously taken over by new faculty members is not feasible nor practicable since this
would compel the petitioner university to violate and terminate its contracts with the faculty members who
were assigned to and had actually taken over the courses. The petitioner submits that it was never the
intention of the Secretary of Labor to force it to break employment contracts considering that those
ordered temporarily reinstated could very well be accommodated with substantially equivalent academic
assignments without loss in rank, pay or privilege. Likewise, it claims that to change the faculty member
when the semester is about to end would seriously impair and prejudice the welfare and interest of the
students because dislocation, confusion and loss in momentum, if not demoralization, will surely ensue
once the change in faculty is effected. (Rollo, pp. 13-14)

The petitioner also avers that the faculty members who were given substantially equivalent academic
assignments were told by their respective deans to report to the Office of Academic Affairs and Research
for their academic assignments but the said faculty members failed to comply with these instructions.
(Rollo, p. 118) Thus, the petitioner postulates, mere payroll reinstatement which would give rise to the
obligation of the University to pay these faculty members, even if the latter are not working, would
squarely run counter to the principle of "No Work, No Pay". (Rollo, p. 15)

The respondent UST Faculty Union, on the other hand, decries that the petitioner is using the supposed
substantially equivalent academic assignments as a vehicle to embarrass and degrade the union leaders
and that the refusal of the petitioner to comply with the return-to-work order is calculated to deter, impede
and discourage the union leaders from pursuing their union activities. (Rollo, pp. 246, 254)

It also claims that the dismissed faculty members were hired to perform teaching functions and, indeed,
they have rendered dedicated teaching service to the University students for periods ranging from 12 to
39 years. Hence, they maintain, their qualifications are fitted for classroom activities and the assignment
to them of non-teaching duties, such as (a) book analysis; (b) syllabi-making or revising; (c) test questions
construction; (d) writing of monographs and modules for students' use in learning "hard to understand"
topics on the lectures; (e) designing modules, transparencies, charts, diagrams for students' use as
learning aids; and (f) other related assignments, is oppressive. (Rollo, pp. 243-244)

In resolving the contentions of both parties, this Court refers to Article 263 (g), first paragraph, of the
Labor Code, as amended by Section 27 of Republic Act No. 6715, which provides:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or
impending strike or lockout as specified in the assumption or certification order. If one has already taken
place at the time of assumption or certification, all striking or locked out employees shall immediately
return to work and the employer shall immediately resume operations and readmit all workers under the
same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as with such orders as he may issue to enforce the same.
(Emphasis supplied.)

It was in compliance with the above provision that Secretary Drilon issued his July 18, 1989 order to
"readmit all its faculty members, including the sixteen (16) union officials, under the same terms and
conditions prevailing prior to the present dispute." (Rollo, p. 81) And rightly so, since the labor controversy
which brought about a temporary stoppage of classes in a university populated by approximately 40,000
students affected national interest.

After the petitioner filed a motion for clarification which, however, was subsequently withdrawn, Secretary
Drilon issued another order dated July 27, 1989 affirming his July 18 order and directing the NLRC to
immediately call the parties and "ensure the implementation of this order" (Rollo, p. 103)

The NLRC was thereby charged with the task of implementing a valid return-to-work order of the
Secretary of Labor. As the implementing body, its authority did not include the power to amend the
Secretary's order. Since the Secretary's July 18 order specifically provided that the dismissed faculty
members shall be readmitted under the same terms and conditions prevailing prior to the present dispute,
the NLRC should have directed the actual reinstatement of the concerned faculty members. It therefore
erred in granting the alternative remedy of payroll reinstatement which, as it turned, only resulted in
confusion. The remedy of payroll reinstatement is nowhere to be found in the orders of the Secretary of
Labor and hence it should not have been imposed by the public respondent NLRC. There is no showing
that the facts called for this type of alternative remedy.

For the same reason, we rule that the grant of substantially equivalent academic assignments can not be
sustained. Clearly, the giving of substantially equivalent academic assignments, without actual teaching
loads, cannot be considered a reinstatement under the same terms and conditions prevailing before the
strike. Within the context of Article 263(g), the phrase "under the same terms and conditions"
contemplates actual reinstatement or the return of actual teaching loads to the dismissed faculty
members. There are academic assignments such as the research and writing of treatises for publication
or full-time laboratory work leading to exciting discoveries which professors yearn for as badges of honor
and achievement. The assignments given to the reinstated faculty members do not fall under such
desirable categories.

Article 263(g) was devised to maintain the status quo between the workers and management in a labor
dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest,
pending adjudication of the controversy. This is precisely why the Secretary of Labor, in his July 11, 1989
order, stated that "Pending resolution, the parties are directed to cease and desist from committing any
and all acts that might exacerbate the situation." (Rollo, p. 54) And in his order of July 18, he decreed that
"The directive to the parties to cease and desist from committing any act that will aggravate the situation
is hereby reiterated." (Rollo, p. 81)

The grant of substantially equivalent academic assignments of the nature assigned by the petitioner
would evidently alter the existing status quo since the temporarily reinstated teachers will not be given
their usual teaching loads. In fact, the grant thereof aggravated the present dispute since the teachers
who were assigned substantially equivalent academic assignments refused to accept and handle what
they felt were degrading or unbecoming assignments, in turn prompting the petitioner University to
withhold their salaries. (Rollo, p. 109)

We therefore hold that the public respondent NLRC did not commit grave abuse of discretion when it
ruled that the petitioner should "cease and desist from offering the aforementioned faculty members
substantially equivalent academic assignments as this is not compliance in good faith with the order of the
Secretary of Labor and Employment."

It was error for the NLRC to order the alternative remedies of payroll reinstatement or actual
reinstatement. However, the order did not amount to grave abuse of discretion. Such error is merely an
error of judgment which is not correctible by a special civil action for certiorari. The NLRC was only trying
its best to work out a satisfactory ad hoc solution to a festering and serious problem. In the light of our
rulings on the impropriety of the substantially equivalent academic assignments and the need to defer the
changes of teachers until the end of the first semester, the payroll reinstatement will actually minimize the
petitioners problems in the payment of full backwages.

As to the second assignment of error, the petitioner contends that the NLRC committed grave abuse of
discretion in awarding backwages from July 13, 1989, the date the faculty members presented
themselves for work, up to the date of actual reinstatement, arguing that the motion for reconsideration
seasonably filed by the petitioner had effectively stayed the Secretary's order dated July 11, 1989.

The petitioner's stand is unmeritorious. A return-to-work order is immediately effective and executory
despite the filing of a motion for reconsideration by the petitioner. As pointed out by the Court in Philippine
Air Lines Employees Association (PALEA) v. Philippine Air Lines, Inc. (38 SCRA 372 [1971]):

The very nature of a return-to-work order issued in a certified case lends itself to no other construction.
The certification attests to the urgency of the matter affecting as it does an industry indispensable to the
national interest. The order is issued in the exercise of the court's compulsory power of arbitration, and
therefore must be obeyed until set aside. To say that its effectivity must wait affirmance in a motion for
reconsideration is not only to emasculate it but indeed to defeat its import, for by then the deadline fixed
for the return-to-work would, in the ordinary course, have already passed and hence can no longer be
affirmed insofar as the time element is concerned.

Additionally, although the Secretary's order of July 11 was modified by the July 18 order, the return-to-
work portion of the earlier order which states that "the faculty members should be admitted under the
same terms and conditions prevailing prior to the dispute" was affirmed.

We likewise affirm the NLRC's finding that the dismissed teachers presented themselves for
reinstatement on July 13, 1989 since the factual findings of quasi-judicial agencies like the NLRC are
generally accorded not only respect but even finality if such findings are supported by substantial
evidence. (Mamerto v. Inciong, 118 SCRA 265 [1982]; Baby Bus, Inc. v. Minister of Labor, 158 SCRA 221
[1988]; Packaging Products Corporation v. National Labor Relations Commission, 152 SCRA 210 [1987];
Talisay Employees' and Laborers Association (TELA) v. Court of Industrial Relations, 143 SCRA 213
[1986]). There is no showing that such substantial evidence is not present.

The petitioner, however, stresses that since the faculty members who were given substantially equivalent
academic assignments did not perform their assigned tasks, then they are not entitled to backwages.
(Rollo, p. 19) The petitioner is wrong. The reinstated faculty members' refusal to assume their
substantially equivalent academic assignments does not contravene the Secretary's return-to-work order.
They were merely insisting on being given actual teaching loads, on the return-to-work order being
followed. We find their persistence justified as they are rightfully and legally entitled to actual
reinstatement. Since the petitioner University failed to comply with the Secretary's order of actual
reinstatement, we adjudge that the NLRC's award of backwages until actual reinstatement is correct.

With respect to the fourth assignment of error, the petitioner expostulates that as employer, it has the sole
and exclusive right and prerogative to determine the nature and kind of work of its employees and to
control and manage its own operations. Thus, it objects to the NLRC's act of substituting its judgment for
that of the petitioner in the conduct of its affairs and operations. (Rollo, pp. 23-24)

Again, we cannot sustain the petitioner's contention. The hiring, firing, transfer, demotion and promotion
of employees are traditionally Identified as management prerogatives. However, these are not absolute
prerogatives. They are subject to limitations found in law, a collective bargaining agreement, or general
principles of fair play and justice. (Abbott Laboratories [Phil.] Inc. v. NLRC, 154 SCRA 713 [1987])

Article 263(g) is one such limitation provided by law. To the extent that Art. 263(g) calls for the admission
of all workers under the same terms and conditions prevailing before the strike, the petitioner University is
restricted from exercising its generally unbounded right to transfer or reassign its employees. The public
respondent NLRC is not substituting its own judgment for that of the petitioner in the conduct of its own
affairs and operations; it is merely complying with the mandate of the law.

The petitioner manifests the fear that if the temporarily reinstated faculty members will be allowed to
handle actual teaching assignments in the classroom, the latter would take advantage of the situation by
making the classroom the forum not for the purpose of imparting knowledge to the students but for the
purpose of assailing and lambasting the administration. (Rollo, p. 330) There may be a basis for such a
fear. We can even state that such concern is not entirely unfounded nor farfetched. However, such a fear
is speculative and does not warrant a deviation from the principle that the dismissed faculty members
must be actually reinstated pending resolution of the labor dispute. Unpleasant situations are sometimes
aftermaths of bitter labor disputes. It is the function of Government to fairly apply the law and thereby
minimize the dispute's harmful effects. It is in this light that the return to work order should be viewed and
obeyed.

One thing has not escaped this Court's attention. Professors Alamis, Cura, Collantes, Barranco, Brondial
and Hilario were already reinstated by the petitioner in compliance with the Secretary's return-to-work
order. Knowing this to be a fact, the NLRC, in its assailed resolution, dealt only with the fate of the
remaining faculty members who were given substantially equivalent academic assignments. The names
of the aforementioned faculty members appear nowhere in the disputed NLRC order. Inasmuch as these
faculty members actually reinstated were not covered by the NLRC resolution, then it follows that they
were likewise not covered by the Court's temporary restraining order enjoining respondents from
enforcing or executing the NLRC resolution. The effects of the temporary restraining order did not extend
to them. Yet, after the Court issued the temporary restraining order, the petitioner lost no time in recalling
their actual teaching assignments and giving them, together with the rest of the dismissed faculty
members, substantially equivalent academic assignments.

The petitioner's dogmatic insistence in issuing substantially equivalent academic assignments stems from
the fact that the teaching loads of the dismissed professors have already been assigned to other faculty
members. It wants us to accept this remedy as one resorted to in good faith. And yet, the petitioner's
employment of the temporary restraining order as a pretext to enable it to substitute substantially
equivalent academic assignments even for those who were earlier already reinstated to their actual
teaching loads runs counter to the dictates of fair play.

With respect to the private respondent's allegation of union busting by the petitioner, we do not at this
time pass upon this issue. Its determination falls within the competence of the NLRC, as compulsory
arbitrator, before whom the labor dispute is under consideration. We are merely called upon to decide the
propriety of the petitioner University's grant of substantially equivalent academic assignments pending
resolution of the complaint for unfair labor pratice and illegal dismissal filed by the private respondent.

Although we pronounce that the dismissed faculty members must be actually reinstated while the labor
dispute is being resolved, we have to take into account the fact that at this time, the first semester for
schoolyear 1990-1991 is about to end. To change the faculty members around the time of final
examinations would adversely affect and prejudice the students whose welfare and interest we consider
to be of primordial importance and for whom both the University and the faculty union must subordinate
their claims and desires. This Court therefore resolves that the actual reinstatement of the non-reinstated
faculty members, pending resolution of the labor controversy before the NLRC, may take effect at the
start of the second semester of the schoolyear 1990-1991 but not later. With this arrangement, the
petitioner's reasoning that it will be violating contracts with the faculty members who took over the
dismissed professors' teaching loads becomes moot considering that, as it alleges in its petition, it
operates on a semestral basis.

Under the principle that no appointments can be made to fill items which are not yet lawfully vacant, the
contracts of new professors cannot prevail over the right to reinstatement of the dismissed personnel.
However, we apply equitable principles for the sake of the students and order actual reinstatement at the
start of the second semester.

WHEREFORE, the petition is hereby DISMISSED. However, the NLRC resolution dated September 6,
1989 is MODIFIED and the petitioner University of Sto. Tomas is directed to temporarily reinstate,
pending and without prejudice to the outcome of the labor dispute before the National Labor Relations
Commission, the sixteen (16) dismissed faculty members to their actual teaching assignments, at the start
of the second semester of the schoolyear 1990-1991. Prior to their temporary reinstatement to their actual
teaching loads, the said faculty members shall be entitled to fall wages, backwages, and other benefits.
The Temporary Restraining Order dated October 25, 1989 is hereby LIFTED.

SO ORDERED.

Fernan, C.J., (Chairman), Bidin and Cortes, JJ., concur.

Feliciano, J., is on leave.

THIRD DIVISION

G. R. No. 146650 - January 13, 2003

DOLE PHILIPPINES, INC., Petitioner, vs. PAWIS NG MAKABAYANG OBRERO (PAMAO-NFL),

Respondent.

CORONA, J.:

Before us is a petition for review filed under Rule 45 of the 1997 Rules of Civil Procedure, assailing the
January 9, 2001 resolution of the Court of Appeals which denied petitioners motion for reconsideration of
its September 22, 2000 decision1 which in turn upheld the Order issued by the voluntary arbitrator2 dated
12 October 1998, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant.

Respondent is hereby directed to extend the "free meal" benefit as provided for in Article XVIII, Section 3
of the collective bargaining agreement to those employees who have actually performed overtime works
even for exactly three (3) hours only.

SO ORDERED. 3

The core of the present controversy is the interpretation of the provision for "free meals" under Section 3
of Article XVIII of the 1996-2001 Collective Bargaining Agreement (CBA) between petitioner Dole
Philippines, Inc. and private respondent labor union PAMAO-NFL. Simply put, how many hours of
overtime work must a Dole employee render to be entitled to the free meal under Section 3 of Article XVIII
of the 1996-2001 CBA? Is it when he has rendered (a) exactly, or no less than, three hours of actual
overtime work or (b) more than three hours of actual overtime work?

The antecedents are as follows:

On February 22, 1996, a new five-year Collective Bargaining Agreement for the period starting February
1996 up to February 2001, was executed by petitioner Dole Philippines, Inc., and private respondent
Pawis Ng Makabayang Obrero-NFL (PAMAO-NFL). Among the provisions of the new CBA is the disputed
section on meal allowance under Section 3 of Article XVIII on Bonuses and Allowances, which reads:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of TEN PESOS
(P10.00) to all employees who render at least TWO (2) hours or more of actual overtime work on a
workday, and FREE MEALS, as presently practiced, not exceeding TWENTY FIVE PESOS (P25.00) after
THREE (3) hours of actual overtime work.4

Pursuant to the above provision of the CBA, some departments of Dole reverted to the previous practice
of granting free meals after exactly three hours of actual overtime work. However, other departments
continued the practice of granting free meals only after more than three hours of overtime work. Thus,
private respondent filed a complaint before the National Conciliation and Mediation Board alleging that
petitioner Dole refused to comply with the provisions of the 1996-2001 CBA because it granted free meals
only to those who rendered overtime work for more than three hours and not to those who rendered
exactly three hours overtime work.
The parties agreed to submit the dispute to voluntary arbitration. Thereafter, the voluntary arbitrator,
deciding in favor of the respondent, issued an order directing petitioner Dole to extend the "free meal"
benefit to those employees who actually did overtime work even for exactly three hours only.

Petitioner sought a reconsideration of the above order but the same was denied. Hence, petitioner
elevated the matter to the Court of Appeals by way of a petition for review on certiorari.

On September 22, 2000, the Court of Appeals rendered its decision upholding the assailed order.

Thus, the instant petition.

Petitioner Dole asserts that the phrase "after three hours of actual overtime work" should be interpreted to
mean after more than three hours of actual overtime work.

On the other hand, private respondent union and the voluntary arbitrator see it as meaning after exactly
three hours of actual overtime work.

The "meal allowance" provision in the 1996-2001 CBA is not new. It was also in the 1985-1988 CBA and
the 1990-1995 CBA. The 1990-1995 CBA provision on meal allowance was amended by the parties in the
1993-1995 CBA Supplement. The clear changes in each CBA provision on meal allowance were in the
amount of the meal allowance and free meals, and the use of the words "after" and "after more than" to
qualify the amount of overtime work to be performed by an employee to entitle him to the free meal.

To arrive at a correct interpretation of the disputed provision of the CBA, a review of the pertinent section
of past CBAs is in order.

The CBA covering the period 21 September 1985 to 20 September 1988 provided:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of FOUR (P4.00)
PESOS to all employees who render at least TWO (2) hours or more of actual overtime work on a
workday, and FREE MEALS, as presently practiced, after THREE (3) hours of actual overtime work."5

The CBA for 14 January 1990 to 13 January 1995 likewise provided:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of EIGHT
PESOS (P8.00) to all employees who render at least TWO (2) hours or more of actual overtime work on a
workday, and FREE MEALS, as presently practiced, not exceeding SIXTEEN PESOS (P16.00) after
THREE (3) hours of actual overtime work."6

The provision above was later amended when the parties renegotiated the economic provisions of the
CBA pursuant to Article 253-A of the Labor Code. Section 3 of Article XVIII of the 14 January 1993 to 13
January 1995 Supplement to the 1990-1995 CBA reads:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL SUBSIDY of NINE PESOS
(P9.00) to all employees who render at least TWO (2) hours or more of actual overtime work on a
workday, and FREE MEALS, as presently practiced, not exceeding TWENTY ONE PESOS (P21.00) after
more than THREE (3) hours of actual overtime work (Section 3, as amended)."7

We note that the phrase "more than" was neither in the 1985-1988 CBA nor in the original 1990-1995
CBA. It was inserted only in the 1993-1995 CBA Supplement. But said phrase is again absent in Section
3 of Article XVIII of the 1996-2001 CBA, which reverted to the phrase "after three (3) hours".
Petitioner asserts that the phrase "after three (3) hours of actual overtime work" does not mean after
exactly three hours of actual overtime work; it means after more than three hours of actual overtime work.
Petitioner insists that this has been the interpretation and practice of Dole for the past thirteen years.

Respondent, on the other hand, maintains that "after three (3) hours of actual overtime work" simply
means after rendering exactly, or no less than, three hours of actual overtime work.

The Court finds logic in private respondents interpretation.

The omission of the phrase "more than" between "after" and "three hours" in the present CBA spells a big
difference.

No amount of legal semantics can convince the Court that "after more than" means the same as "after".

Petitioner asserts that the "more than" in the 1993-1995 CBA Supplement was mere surplusage because,
regardless of the absence of said phrase in all the past CBAs, it had always been the policy of petitioner
corporation to give the meal allowance only after more than 3 hours of overtime work. However, if this
were true, why was it included only in the 1993-1995 CBA Supplement and the parties had to negotiate its
deletion in the 1996-2001 CBA?

Clearly then, the reversion to the wording of previous CBAs can only mean that the parties intended that
free meals be given to employees after exactly, or no less than, three hours of actual overtime work.

The disputed provision of the CBA is clear and unambiguous. The terms are explicit and the language of
the CBA is not susceptible to any other interpretation. Hence, the literal meaning of "free meals after three
(3) hours of overtime work" shall prevail, which is simply that an employee shall be entitled to a free meal
if he has rendered exactly, or no less than, three hours of overtime work, not "after more than" or "in
excess of" three hours overtime work.

Petitioner also invokes the well-entrenched principle of management prerogative that "the power to grant
benefits over and beyond the minimum standards of law, or the Labor Code for that matter, belongs to the
employer x x x". According to this principle, even if the law is solicitous of the welfare of the employees, it
must also protect the right of the employer to exercise what clearly are management prerogatives.8
Petitioner claims that, being the employer, it has the right to determine whether it will grant a "free meal"
benefit to its employees and, if so, under what conditions. To see it otherwise would amount to an
impairment of its rights as an employer.

We do not think so.

The exercise of management prerogative is not unlimited. It is subject to the limitations found in law, a
collective bargaining agreement or the general principles of fair play and justice.9 This situation
constitutes one of the limitations. The CBA is the norm of conduct between petitioner and private
respondent and compliance therewith is mandated by the express policy of the law.10

Petitioner Dole cannot assail the voluntary arbitrators interpretation of the CBA for the supposed
impairment of its management prerogatives just because the same interpretation is contrary to its own.

WHEREFORE, petition is hereby denied.

SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.

SECOND DIVISION

G.R. No. 226766, September 27, 2017

ORIENTAL SHIPMANAGEMENT CO., INC. AND/OR MOL TANKSHIP MANAGEMENT (EUROPE) LTD.
AND/OR RAMON S. HERRERA, Petitioners, v. WILLIAM DAVID P. OCANGAS, Respondent.

DECISION

REYES, JR., J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul
and set aside the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 135103 dated March 9,
2016, and its and Resolution2 dated August 31, 2016, denying the motion for reconsideration thereof. The
assailed decision granted the petition for certiorari filed by the petitioners, reversed and set aside the
Decision3 dated January 15, 2014 of the National Labor Relations Commission (NLRC) in NLRC LAC No.
(OFW-M) 09-000805-13, and reinstated the Decision4 dated July 23, 2013 issued by the Labor Arbiter
(LA) in NLRC NCR Case No. (M) 01-01253-13.

The Antecedent Facts

Respondent William David P. Ocangas was hired by Petitioner MOL Tankship Management (Europe)
Ltd., through its local manning agency in the Philippines- Petitioner Oriental Shipmanagement Co., Inc.

Under the employment contract, Respondent was hired as a Pumpman on board the vessel M/T Phoenix
Admiral, for a period of nine (9) months, with a basic monthly salary of US$599.00.5

Prior to his employment, Respondent underwent a pre-employment medical examination (PEME) and
was declared fit to work.6

Respondent was deployed on November 29, 2011. His tasks on board include the rebuild and repair of
the valves, pumps, and leaks within the cargo system and extended to the maintenance and lubrication of
all parts therein, such as glands, bearing, and the breach rods.7

On July 12, 2012, while on duty, Respondent suffered a broken spine and felt extreme pain on his lower
back and numbness on his lower extremities, as a result of him having to lift the cover of the ballast pump
manually, which he is then preparing for inspection and maintenance.8 He was then advised to rest and
given pain relievers.9

On August 16, 2012, Respondent was brought to Kozmino, Russia where he was diagnosed to be
suffering from "Osteochondrosis, Regiolumbalis." He was then given proper medication and was advised
to seek medical treatment in his home country.10

Respondent's condition did not improve despite medical attention. Thus, on August 20, 2012, Respondent
was recommended to be repatriated to obtain further medical treatment.11
Upon his repatriation on September 4, 2012, Respondent immediately reported to Petitioner Oriental
Shipmanagement Co., Inc., which then referred him to the company's accredited physician at the Marine
Medical Services of the Metropolitan Medical Center. After a series of tests, Respondent was found to be
suffering from "Central Disc Protrusions L4-L5 and L5-S1, and Minimal Osteophytes, Lumbar
vertebrae."12 Respondent then underwent a series of treatments supervised by company-designated
physicians.

On January 23, 2013, Respondent was declared by Dr. William Chuasuan, a company-designated and
accredited physician, to have reached the maximum medical cure with Grade 11 disability impediment for
1/3 loss of lifting power and per the Philippine Overseas Employment Agency Standard Employment
Contract (POEA-SEC) Schedule of Benefits, entitled to US$7,465.13

On January 24, 2013, Respondent filed a Complaint against Petitioner for recovery of permanent total
disability benefits, refund of medical expenses, sickness allowance, and claim for damages.14

On March 25, 2013, Respondent sought the medical opinion of Dr. Marcelino Cadag, orthopedic surgeon
of the Loyola International Multi Specialty Clinics. Dr. Cadag recommended that the Respondent undergo
further therapy and diagnosed him to be suffering from "Herniated Nucleus Pulposus L4-L5, L5-S1 with
Nerve Root Compression; Lumbar Spondylosis,"15 and as such no longer fit for sea duty or for any work
aboard seafaring vessel given his medical condition.

The LA's Decision

On July 23, 2013, the LA rendered his Decision16 granting the Complaint, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring the Complainant entitled to
permanent and total disability benefit, and, therefore, holding all the Respondents jointly and severally
liable to pay the Complainant his full disability benefit in the amount of US$100,000.00 or their peso
equivalent at the time of payment plus attorney's fee equivalent to 10% of the total judgment award.

All other claims are dismissed for lack of merit.

SO ORDERED..17

In his Decision, the LA held that contrary to the allegation of the Petitioners, the company-designated
physician does not have the exclusive prerogative in the determination and assessment of the illness
and/or injury of the seafarer. As such, the findings of the company-designated physician should not be
taken as the only primary consideration, especially where there is a contrary opinion as in the instant
case.18

All told, the LA ruled that the Respondent was rendered unfit to work as seaman for more than 120 days,
by itself, already constitutes permanent total disability and entitles the latter to US$ 100,000.00 pursuant
to their collective bargaining agreement (CBA).19

However, the LA denied the Respondent's claim for medical expenses for failure to substantiate the
same. Likewise, finding that the petitioners merely relied on the certification issued by the company-
designated physician, the LA denied the claim for moral and exemplary damages.20

Petitioners appealed the July 23, 2013 Decision of the LA to the NLRC, asserting that while they admit
liability for Respondent's disability, the latter is entitled only to benefits corresponding to permanent partial
disability (Grade 11) as determined by the company-designated physician.21
Petitioners insisted that under the POEA-SEC, the company-designated physician has the primary if not
the exclusive authority to assess the seafarer's disability.22

The NLRC's Decision

On January 15, 2014, the NLRC rendered its Decision23 granting the appeal, and accordingly reversed
and set aside the July 23, 2013 Decision of the LA.

The NLRC stated that initially, the Respondent's complaint for permanent and total disability should have
been dismissed for lack of cause of action as at the time it was filed the only assessment that was
existing was that of permanent partial disability (Grade 11) as determined by the company-designated
physician. It noted that the Respondent secured a certification from Dr. Marcelino Cadag attesting to his
permanent total disability two (2) months after the filing of the Complaint.24

Furthermore, the NLRC claimed that even if it considers the medical certificate issued by the
Respondent's doctor, it is still bound to uphold the Grade 11 disability assessment of the company-
designated physician, as the latter is in a far better position to assess the Respondent who has been
under his care and treatment from the time of the latter was repatriated on September 4, 2012 until
January 23, 2012 when the assessment was issued.25

The NLRC also ruled that contrary to the LA's determination, the mere fact that more than 120 days
elapsed since the Respondent's repatriation without him resuming from work as a seafarer does not
automatically warrant the award of permanent total (Grade 1) disability benefits.26

Respondent filed motion for reconsideration of the said Decision but the same was denied by the NLRC in
its March 24, 2014 Resolution27

Respondent then filed a petition for certiorari with the CA alleging that the NLRC committed grave abuse
of discretion in ruling that he has no cause of action, in finding that he is merely entitled to Grade 11
disability benefits, and in not awarding attorney's fees and damages.

The CA's Decision

On March 9, 2016, the CA rendered the herein assailed Decision28 which granted the petition for
certiorari filed by the Respondent. The CA held that the primordial consideration in determining whether
the disability is total and permanent rests on evidence establishing that the seafarer's continuous inability
to work due to a work-related illness is for a period of more than 120 days.29

According to the CA, the NLRC closed its eyes to the fact that since Respondent was repatriated on
September 4, 2012 up to the time he filed his complaint on January 24, 2013, more than 120 days has
elapsed during which the Respondent was medically treated and unable to perform his duties as
pumpman on board any sea vessel.30

Moreover, the CA declared that the NLRC erred in relying fully with the company-designated physician's
assessment, as it is settled that the latter's findings are not binding on the labor tribunals and the
courts.31

Petitioners sought a reconsideration of the March 9, 2016 Decision but the CA denied it in its
Resolution32 dated August 31, 2016.

Issues
In the instant petition, Petitioners submit the following issues for this Court's resolution:

DID THE COURT OF APPEALS COMMIT SERIOUS, GRAVE AND PATENT ERRORS IN REVERSING
AND SETTING ASIDE THE DECISION OF THE NLRC AND REINSTATING THE LA'S ERRONEOUS
AWARD IN FAVOR OF RESPONDENT OCANGAS OF FULL DISABILITY BENEFITS, CONTRARY TO
THE RELEVANT LAW, RULE AND JURISPRUDENCE?33

The Court's Ruling

The petition is meritorious.

It bears to stress at the outset that there is no issue as to the compensability of Respondent's injury as
the parties do not dispute that the same is work-related. What remains to be resolved in the instant
petition is whether Respondent is entitled to the payment of permanent total disability benefits or to that
which corresponds to Grade 11 disability in accordance with the assessment of the company-designated
physician.

The CA, in ruling that the Respondent suffered permanent total disability relied primarily on the cases of
Crystal Shipping, Inc. v. Natividad,34Philimare, Inc. v. Suganob,35Micronesia Resources v.
Cantomayor,36 and United Philippine Lines, Inc. and/or Holland America Line, Inc. v. Beseril.37 The last
three cases were decided within the purview of the doctrine laid down in Crystal Shipping that permanent
and total disability consists mainly in the inability of the seafarer to perform his customary work for more
than 120 days.

Notably, as elucidated in the case of Splash Philippines Inc., et al. v. Ruizo,38 the ruling in Crystal
Shipping has already been modified in that the doctrine laid down therein cannot simply be lifted and
applied as a general rule for all cases in all contexts.

Thus, the Court clarified and delineated in Kestrel Shipping Co. Inc. v. Munar,39 that if the complaint for
maritime disability compensation was filed prior to October 6, 2008, the 120-day rule enunciated in
Crystal Shipping applies. However, if such complaint was filed from October 6, 2008 onwards, as in the
case at bar where the Complaint was filed by the Respondent on January 24, 2013, the 240-day rule
provided in the case of Splash Philippines, Inc. and clarified in the case of Vergara v. Hammonia Maritime
Services Inc., 40 applies.

Insofar as cases covered by the 240-day rule, the Court has repeatedly emphasized that the
determination of the rights of seafarers to compensation for disability benefits depends not solely on the
provisions of the POEA-SEC but likewise by the parties' contractual obligations set forth under their CBA,
the attendant medical findings, and relevant Philippine laws and rules.41

Pertinent to the entitlement of a seafarer to permanent and total disability benefits, Section 20(A) of the
POEA-SEC provides:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of
his contract are as follows:
xxxx

3. In addition to the above obligation of the employer to provide medical attention, the seafarer shall also
receive sickness allowance from his employer in an amount equivalent to his basic wage computed from
the time he signed off until he is declared fit to work or the degree of disability has been assessed by the
company-designated physician. The period within which the seafarer shall be entitled to his sickness
allowance shall not exceed 120 days. Payment of the sickness allowance shall be made on a regular
basis, but not less than once a month.

xxxx

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a
company-designated physician within three working days upon his return except when he is physically
incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as
compliance. In the course of the treatment, the seafarer shall also report regularly to the company-
designated physician specifically on the dates as prescribed by the company-designated physician and
agreed to by the seafarer. Failure of the seafarer to comply with the mandatory reporting requirement
shall result in his forfeiture of the right to claim the above benefits. If a doctor appointed by the seafarer
disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the
seafarer. The third doctor's decision shall be final and binding on both parties.

xxxx

6. In case of permanent total or partial disability of the seafarer caused by either injury or illness the
seafarer shall be compensated in accordance with the schedule of benefits enumerated in Section 32 of
his Contract. Computation of his benefits arising from an illness or disease shall be governed by the rates
and the rules of compensation applicable at the time the illness or disease was contracted.

The disability shall be based solely on the disability gradings provided under Section 32 of this Contract,
and shall not be measured or determined by the number of days a seafarer is under treatment or the
number of days in which sickness allowance is paid. (Emphasis supplied)

The provisions of the POEA-SEC notwithstanding, in light of the definition provided for under Article
19242 of the Labor Code as well as that under Rule X, Section 243 of the Amended Rules on Employees
Compensation, the Court clarified in Alpha Shipmanagement Corporation v. Calo,44 that apart from
illnesses that are classified as Grade 1 under the POEA-SEC, an illness may be considered as
permanent and total, thus:

[W]hen so declared by the company-designated physician, or, in case of absence of such a declaration
either of fitness or permanent total disability, upon the lapse of the 120 or 240-day treatment period, while
the employee's disability continues and he is unable to engage in gainful employment during such period,
and the company-designated physician fails to arrive at a definite assessment of the employee's fitness or
disability. This is true "regardless of whether the employee loses the use of any part of his body."45
(Citations omitted)

Harmonizing the provisions of the POEA-SEC, Labor Code, and the Rules on Employee Compensation,
the Court discussed in the case of Vergara v. Hammonia Maritime Services, Inc.46 that:

As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the company-
designated physician within three (3) days from arrival for diagnosis and treatment. For the duration of the
treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally
unable to work. He receives his basic wage during this period until he is declared fit to work or his
temporary disability is acknowledged by the company to be permanent, either partially or totally, as his
condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If
the 120 days initial period is exceeded and no such declaration is made because the seafarer requires
further medical attention, then the temporary total disability period may be extended up to a maximum of
240 days, subject to the right of the employer to declare within this period that a permanent partial or total
disability already exists. The seaman may of course also be declared fit to work at any time such
declaration is justified by his medical condition.47 (Citations Omitted)

From the foregoing, it can be deduced that upon repatriation, the seafarer is regarded to be on temporary
total disability, which then becomes permanent when a) it so declared by the company-designated
physician; or b) when 120 days has elapsed from the onset of disability and there is no need for further
medical treatment, and the company-designated physician fails to make a declaration either of fitness or
permanent partial or total disability; or c) when even after the 120-day period further medical attention
becomes necessary and continues after the maximum 240-day medical treatment period without any
declaration of fitness or permanent disability.

Simply stated, a seafarer is conclusively presumed to be totally and permanently disabled when the
company-designated physician fails to make a declaration regarding the seafarer's fitness or status of
disability within the specified 120 or 240-day periods. "On the other hand, if the company-designated
physician declares the seaman fit to work within the said periods, such declaration should be respected
unless the physician chosen by the seaman and the doctor selected by both the seaman and his
employer declare otherwise."48

In this case, immediately after he was medically repatriated on September 4, 2012, Respondent reported
to Petitioner Oriental Shipmanagement, which then referred him to the company-designated and
accredited physicians. Thereupon, he was subjected to a series of tests and was initially diagnosed to be
suffering from "Central Disc Protrusions L4-L5 and L5-S1, and Minimal Osteophytes, Lumbar vertebrae"
for which he underwent medication, therapy sessions, and medical consultations, all of which under the
supervision of company-designated physicians, until he reached maximum medical cure and was
diagnosed a final disability impediment Grade 11 per Medical Report dated January 23, 2013. Clearly,
from the time of repatriation, Respondent was diagnosed within the 240-day period of treatment, as only
141 days has lapsed.

The Court is bound by the Grade 11 disability grading and assessment by the company-designated
physician rendered within the specified period, as Respondent never questioned such diagnosis in
accordance with the procedure set forth under the POEA-SEC nor contested the company-designated
physician's competence.49

Here, instead of expressing his disagreement to the findings of the company-designated physician, the
Respondent filed a Complaint for permanent total disability benefits, without any corresponding medical
certificate in support thereof but that of the Grade 11 disability assessment by the company-designated
physician. In fact, it took Respondent two (2) months after the filing of the Complaint before he submitted
himself for examination by a physician of his choice, who then issued a permanent and total disability
(Grade 1) rating.

The POEA-SEC clearly provides that when the seafarer disagrees with the findings of the company-
designated physician, he has the opportunity to seek a second opinion from the physician of his choice. If
the physician appointed by the seafarer disagrees with the assessment of the company-designated
physician, the parties may agree to jointly refer the matter to a third doctor, whose decision shall be
binding between them. Ultimately, the failure of the Respondent to follow this procedure is fatal and
renders conclusive disability rating issued by the company-designated physician.50

While it is true that the provisions of the POEA-SEC must be construed logically and liberally in favor of
Filipino seamen in pursuit of their employment on board ocean-going vessels51 consistent with the
State's policy to afford full protection to labor,52 the same must be weighed in accordance with the
prescribed laws, procedure, and provisions of contract freely agreed upon by the parties, and with utmost
regard as well of the rights of the employers.

In the instant case, compelling the Court to consider the opinion rendered by Respondent's physician of
choice, submitted two (2) months after the filing of the complaint, would undermine the right of the
Petitioners to refute the findings and avail of the option to jointly refer with the Respondent the disputed
diagnosis to a third doctor of the parties' choice, as agreed upon by the parties under the POEA-SEC.
Furthermore, the NLRC's reliance on the assessment of the company-designated physician was justified
not only by the law governing the parties under the contract, but as well by the time and resources spent
as well as the effort exerted by the company-designated physician in the examination and treatment of
the Respondent while still on board and as soon as he was repatriated in the Philippines.53

The Court's ruling in the fairly similar case of Vergara v. Hammonia Maritime Services, Inc.,54 is
enlightening. The Court therein stated:

Thus, while petitioner had the right to seek a second and even a third opinion, the final determination of
whose decision must prevail must be done in accordance with an agreed procedure. Unfortunately, the
petitioner did not avail of this procedure; hence, we have no option but to declare that the company-
designated doctor's certification is the final determination that must prevail. We do so mindful that the
company had exerted real effort to provide the petitioner with medical assistance, such that the petitioner
finally ended with a 20/20 vision. The company-designated physician, too, monitored the petitioner's case
from the beginning and we cannot simply throw out his certification, as the petitioner suggested, because
he has no expertise in ophthalmology. Under the facts of this case, it was the company-designated doctor
who referred the petitioner's case to the proper medical specialist whose medical results are not
essentially disputed; who monitored the petitioner's case during its progress; and who issued his
certification on the basis of the medical records available and the results obtained. This led the NLRC in
its own ruling to note that:

xxx more weight should be given to the assessment of degree of disability made by the company doctors
because they were the ones who attended and treated petitioner Vergara for a period of almost five (5)
months from the time of his repatriation to the Philippines on September 5, 2000 to the time of his
declaration as fit to resume sea duties on January 31, 2001, and they were privy to petitioner Vergara's
case from the very beginning, which enabled the company-designated doctors to acquire a detailed
knowledge and familiarity with petitioner Vergara's medical condition which thus enabled them to reach a
more accurate evaluation of the degree of any disability which petitioner Vergara might have sustained.
These are not mere company doctors. These doctors are independent medical practitioners who passed
the rigorous requirements of the employer and are more likely to protect the interest of the employer
against fraud.

Moreover, as between those who had actually attended to petitioner Vergara throughout the duration of
his illness and those who had merely examined him later upon his recovery for the purpose of
determining disability benefits, the former must prevail.55 (Emphasis supplied)

WHEREFORE, in consideration of the foregoing disquisitions, the instant petition for review on certiorari
is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 135103 dated March 9, 2016, and
its Resolution dated August 31, 2016, are hereby REVERSED and SET ASIDE. The Decision dated
January 15, 2014 of the National Labor Relations Commission in NLRC LAC No. (OFW-M) 09-000805-13
is hereby REINSTATED.

SO ORDERED.

Peralta,*Perlas-Bernabe, and Caguioa, JJ., concur.

Carpio, J., on official leave.

 SECOND DIVISION

[ G.R. No. 238842. November 19, 2018 ]

JON A. PASTOR, PETITIONER, V. BIBBY SHIPPING PHILIPPINES, INC./ CREW LINK INC./CSS
CRUISE SHIP SOLUTIONS LTD., AND/OR JONATHAN M. PALMA, RESPONDENTS.

DECISION

PERLAS-BERNABE, J.:

Assailed in the instant petition for review on certiorari[1] are the Decision[2] dated September 26, 2017
and the Resolution[3] dated April 18, 2018 of the Court of Appeals (CA) in CA-G.R. SP No. 146267 which
annulled and set aside the Decision[4] dated February 29, 2016 and the Resolution[5] dated April 21,
2016 of the National Labor Relations Commission (NLRC) in NLRC LAC (OFW-M)-02-000140-16, and
instead, ordered respondents to pay petitioner Jon A. Pastor (petitioner) the amount of US$9,600.00
representing his permanent partial disability benefit under the Collective Bargaining Agreement (CBA)
Compensation Scale, and 10% attorney's fees.

The Facts

On May 29, 2014, petitioner was hired as Assistant Butcher by respondent Bibby Shipping Philippines,
Inc. (Bibby)/Crewlink Inc. (Crewlink), for its principal, CSS Cruise Ship Solutions Ltd. (Cruise Ship
Solutions), on board the vessel Thomson Celebration.[6] After undergoing the required pre-employment
medical examination (PEME) where he was declared fit for duty,[7] petitioner boarded the vessel on June
18, 2014.[8]

On August 10, 2014, petitioner met an accident[9] during a general lifeboat drill when a crank handle hit
and injured his left elbow and lower back.[10] He was brought to a hospital in Turkey and was found to
have "left humerus medical epicondyle displaced fracture," for which he underwent surgery for "open
reposition and internal fixation of fracture with 2 spongiose screws."[11] As a result, petitioner was
repatriated on August 15, 2014 and referred to a company-designated physician for further treatment and
therapy.[12]

After undergoing a series of physical therapy sessions and a surgery on December 19, 2014 to remove
the metallic screws that were placed during his initial surgery in Turkey,[13] petitioner was referred to an
Occupational Therapist for work simulation evaluation, which showed that his left hand grip has not
returned to normal, and that slight pain and fatigue persisted during work simulation tasks. Consequently,
the specialist recommended that petitioner continue his physical therapy treatment,[14] while the
company-designated physician, in a Medical Report[15] dated March 3, 2015, assessed petitioner an
interim disability grading of "Grade 11 – Disturbance of the carrying angle or weakness of an arm or a
forearm due to deformity or moderate atrophy of muscles," pursuant to the 2010 Philippine Overseas
Employment Administration Standard Employment Contract (POEA-SEC).

Unsure of his true condition as he was not restored to his pre-injury health status despite surgery and
physiotherapy, petitioner consulted an independent physician, Dr. Manuel Fidel M. Magtira (Dr. Magtira),
who, in a Medical Report[16] dated April 13, 2015, declared him unfit in any capacity for further sea duties
after his physical examination revealed a limitation of flexion of the left elbow joint and muscle weakness
on the left arm that resulted in a significant reduction of his pre-injury capacity level.[17]

On the other hand, the company-designated physician, in a Medical Report[18] dated April 14, 2015
addressed to respondent Cruise Ship Solutions, reported that the Orthopedic surgeon was disappointed
with the way petitioner was recuperating as the latter still complained of pain.[19] The company-
designated physician pointed out that petitioner's condition was only temporary and that he can resume
work as seafarer "once he is pain free with continuous Physical therapy treatment."[20] For this reason,
petitioner was assessed a partial disability grading of "12 percent – Left Elbow bending reduced to 90
degrees or less," based on the CBA Compensation Scale, or equivalent to US$9,600.00.

Claiming that his injury impaired his work-efficiency and rendered him incapable of resuming work for
more than 240 days from the time he was repatriated, and that he was not furnished copies of his medical
records or post treatment assessment by the company-designated physician, petitioner filed a complaint
for total and permanent disability benefits as well as damages and attorney's fees against respondents
Bibby, its President, Jonathan M. Palma, Crewlink, and CSS Cruise Ship Solutions Ltd. (respondents),
before the NLRC.

In their defense, respondents countered that petitioner was entitled only to partial permanent disability
benefits since the company-designated physician assessed him a 12% compensation only pursuant to
the CBA Compensation Scale for "elbow bending reduced to 90 degrees or less."[21] They also
contended that petitioner failed to observe the third doctor referral procedure in case of disagreement in
the assessment as provided under Section 20 (A) (3) of the 2010 POEA-SEC, and that the claims for
damages and attorney's fees were without factual and legal bases.[22]

The Labor Arbiter's Ruling

In a Decision[23] dated November 27, 2015, the Labor Arbiter (LA) awarded petitioner permanent partial
disability benefits, holding that the latter cannot be faulted for not following the conflict resolution provision
under the 2010 POEA-SEC since respondents undeniably failed to furnish him copies of his medical
treatments and evaluation, and as such, was unaware of the conflicting assessments that needed to be
addressed.[24] Nevertheless, the LA gave more credence to the assessment of the company-designated
physician, ruling that the same was arrived at after a series of tests and close monitoring of petitioner’s
condition, unlike that of petitioner's independent physician, Dr. Magtira, whose findings were mere
presumptions and without medical basis. As such, having been assessed by the company-designated
physician a Grade 12 impediment, petitioner was entitled to partial disability benefits only in the amount of
US$5,225.00 pursuant to the 2010 POEA-SEC. Petitioner's claims for damages and attorney's fees were
denied for lack of factual basis.[25]

Aggrieved, petitioner elevated[26] the matter to the NLRC.

The NLRC Ruling

In a Decision[27] dated February 29, 2016, the NLRC set aside the LA's Decision and ordered
respondents to pay petitioner total and permanent disability benefits in the amount of US$80,000.00 in
accordance with the CBA as well as 10% attorney's fees.[28]

In ruling as such, the NLRC pointed out that since the last Medical Report dated April 14, 2015 issued by
the company-designated physician was beyond the 240-day period within which to make a final
assessment of petitioner's fitness or disability, the latter's condition was conclusively presumed by law to
be permanent and total.[29] It added that the Medical Report dated March 3, 2015 could not be deemed
as final since the assessment given therein was clearly an "interim disability grade."[30] Besides, it ruled
that even the Medical Report dated April 14, 2015 was not a definite assessment of petitioner's fitness or
disability since the latter was still incapacitated to perform his duties as he was still in pain and has to
continue physical therapy treatment.[31] Finally, it noted that since respondents admitted in their own
pleadings that petitioner was entitled to the benefits provided by the CBA, the latter was entitled to the
maximum benefits provided thereunder equivalent to US$80,000.00. It likewise awarded petitioner
attorney's fees as he was forced to protect his rights and interests in accordance with Article 111 of the
Labor Code and Article 2208 of the Civil Code.[32]

Respondents moved for reconsideration[33] which was denied in a Resolution[34] dated April 21, 2016.
Aggrieved, respondents elevated the case to the CA via a petition for certiorari.[35]

The CA Ruling

In a Decision[36] dated September 26, 2017, the CA gave due course to the petition and set aside the
NLRC's Decision, ruling that the assessment of the company-designated physician should be given more
credence having been based on medical records and close monitoring of petitioner.[37] It disagreed with
the findings of the NLRC that there was no definite assessment of petitioner's condition within the
prescribed period, holding that the Medical Report dated April 14, 2015 issued by the company-
designated physician, which assessed petitioner a grading of 12% under the CBA Compensation Scale,
was a mere reconfirmation of the previous assessment made in the Medical Report dated March 31,
2015, which, as records show was presented only before the CA.[38] It added that the company-
designated physician's disability grading was not arrived at arbitrarily, and that the mere fact that the
medical assessment was issued beyond the 240-day treatment period did not automatically merit an
award of permanent total disability, for to do so would disregard the application of the Schedule of
Disability Compensation provided under the 2010 POEA-SEC, or in this case, the CBA Compensation
Scale. Lastly, while the CA found no basis to grant petitioner's claim for attorney's fees, the dispositive
portion nonetheless awarded 10% attorney's fees. Accordingly, respondents were ordered to pay
petitioner partial disability benefits in the amount of US$9,600.00 in accordance with the CBA
Compensation Scale.[39]

Petitioner's motion for reconsideration[40] was denied in a Resolution[41] dated April 18, 2018; hence, the
petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA erred in finding that petitioner was
not entitled to permanent total disability benefits.

The Court's Ruling

The petition is meritorious.

At the outset, there is no dispute that petitioner's injury was work-related and that he is entitled to
disability compensation. The controversy, however, arises as to the degree of petitioner's disability and
the amount of compensation he is entitled to.

It is settled that the entitlement of a seafarer on overseas employment to disability benefits is governed by
law, by the parties' contracts, and by the medical findings. Section 20 (A) of the 2010 POEA-SEC, which
is the rule applicable to this case since petitioner was employed in 2014, governs the procedure for
compensation and benefits for a work-related injury or illness suffered by a seafarer on board sea-going
vessels during the term of his employment contract, to wit:

SEC. 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of
his contract are as follows:

xxxx

2. x x x However, if after repatriation, the seafarer still requires medical attention arising from said injury or
illness, he shall be so provided at cost to the employer until such time he is declared fit or the degree of
his disability has been established by the company-designated physician.

3. In addition to the above obligation of the employer to provide medical attention, the seafarer shall also
receive sickness allowance from his employer in an amount equivalent to his basic wage computed from
the time he signed off until he is declared fit to work or the degree of disability has been assessed by the
company-designated physician. The period within which the seafarer shall be entitled to his sickness
allowance shall not exceed 120 days. Payment of the sickness allowance shall be made on a regular
basis, but not less than once a month.

xxxx

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a
company-designated physician within three working days upon his return except when he is physically
incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as
compliance. In the course of the treatment, the seafarer shall also report regularly to the company-
designated physician specifically on the dates as prescribed by the company-designated physician and
agreed to by the seafarer. Failure of the seafarer to comply with the mandatory reporting requirement
shall result in his forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly
between the Employer and the seafarer. The third doctor's decision shall be final and binding on both
parties.

xxxx
Pursuant thereto, when a seafarer suffers a work-related injury or illness in the course of employment, the
employer is obligated to refer the latter to a company-designated physician[42] who, in turn, has the
responsibility to arrive at a definite assessment of the former's fitness or degree of disability within a
period of 120 days from repatriation.[43] In assessing whether a seafarer's injury is partial or permanent,
the same must be characterized not only under the Schedule of Disability found in Section 32 of the 2010
POEA-SEC, but also under the relevant provisions of the Labor Code and the Amended Rules on
Employees' Compensation (AREC), in particular, Articles 197 to 199[44] (formerly Articles 191 to 193) of
the Labor Code[45] in relation to Section 2 (a), Rule X[46] of the AREC.[47]

The responsibility of the company-designated physician to arrive at a definite assessment within the 120-
day period necessitates that the perceived disability rating has been properly established and inscribed in
a valid and timely medical report. Thus, the foremost consideration should be to determine whether the
medical assessment or report of the company-designated physician was complete and appropriately
issued; otherwise, the medical report shall be set aside and the disability grading contained therein
disregarded.[48] As case law holds, a final and definitive disability assessment is necessary in order to
truly reflect the true extent of the sickness or injuries to the seafarer and his or her capacity to resume
work as such.[49]

Failure of the company-designated physician to comply with his or her duty to issue a definite assessment
of the seafarer's fitness or unfitness to resume work within the prescribed period shall transform the
latter's temporary total disability into one of total and permanent by operation of law. As aptly ruled in the
case of Orient Hope Agencies, Inc. v. Jara,[50] without a valid final and definitive assessment from the
company-designated physician within the prescribed periods, the law already steps in to consider the
seafarer's disability as total and permanent.

Notably, during the 120-day period within which the company-designated physician is expected to arrive
at a definitive disability assessment, the seafarer shall be deemed on temporary total disability and shall
receive his basic wage until he is declared fit to work or his temporary disability is acknowledged by the
company-designated physician to be permanent, either partially or totally, as defined under the 2010
POEA-SEC and by applicable Philippine laws. However, if the 120-day period is exceeded and no
definitive declaration is made because the seafarer requires further medical attention, then the temporary
total disability period may be extended up to a maximum of 240 days, subject to the right of the employer
to declare within this period that a permanent partial or total disability already exists.[51] But before the
employer may avail of the allowable 240-day extended treatment period, the company-designated
physician must perform some significant act to justify the extension of the original 120-day period.[52]
Otherwise, the law grants the seafarer the relief of permanent total disability benefits due to such non-
compliance.[53] If this significant act is performed and an extension was duly made, the obligation of the
company-designated physician to issue a final assessment is nevertheless retained, albeit in this instance
may be discharged within the extended period of not exceeding 240 days reckoned from the seafarer's
repatriation. The consequence for non-compliance within the extended period of the required assessment
is likewise the ipso jure grant to the seafarer of permanent and total disability benefits, regardless of any
justification.

In Elburg Shipmanagement Philippines, Inc. v. Quiogue, Jr.,[54] the Court summarized the rules
regarding the company-designated physician's duty to issue a final medical assessment on the seafarer's
disability grading, as follows:

The company-designated physician must issue a final medical assessment on the seafarer's disability
grading within a period of 120 days from the time the seafarer reported to him;

If the company-designated physician fails to give his assessment within the period of 120 days, without
any justifiable reason, then the seafarer's disability becomes permanent and total;

If the company-designated physician fails to give his assessment within the period of 120 days with a
sufficient justification (e.g. seafarer required further medical treatment or seafarer was uncooperative),
then the period of diagnosis and treatment shall be extended to 240 days. The employer has the burden
to prove that the company-designated physician has sufficient justification to extend the period; and

If the company-designated physician still fails to give his assessment within the extended period of 240
days, then the seafarer's disability becomes permanent and total, regardless of any justification.[55]
(Emphases supplied)

In the case at bar, it is not disputed that petitioner required further therapy sessions even after the lapse
of 120 days from repatriation as the company-designated physician, in his Medical Report dated March 3,
2015 that was issued within the 240-day extended treatment period, noted that the former's "left hand grip
has not returned to normal yet" and has performed the simulation tasks with "slight pain and fatigue," and
that there was a need to continue his physical therapy treatment. The foregoing findings clearly constitute
a significant act that justified the extension of petitioner's treatment period to 240-days, and for which the
company-designated physician issued an "interim" assessment of "Grade 11 – Disturbance of the
carrying angle or weakness of an arm or a forearm due to deformity or moderate atrophy of muscles"
pursuant to the 2010 POEA-SEC. Unfortunately, the last assessment issued by the company-designated
physician was only on April 14, 2015, or beyond the 240-day extended treatment period, assessing
petitioner's injury and resulting disability at "12 percent – Left Elbow bending reduced to 90 degrees or
less" based on the CBA Compensation Scale. Worse, as correctly observed by the NLRC, the said
medical report could not have been a final and definite assessment as mandated by law given that
petitioner still complained of pain and has to undergo "continuous Physical therapy treatment" Thus,
based on the foregoing, the required final assessment from the company-designated physician within the
extended 240-day treatment period was not timely issued. Accordingly, the NLRC correctly adjudged that
petitioner is entitled to permanent total disability benefits by operation of law.

At this juncture, the Court deems it apt to rectify the CA's mistaken notion that the April 14, 2015
assessment was a mere reiteration of the company-designated physician's Medical Report dated March
31, 2015. Firstly, the March 31, 2015 medical report relied upon by the CA cannot be given credence as
the same was presented only for the first time on certiorari with no justification as to why respondents
failed to present the same at the earliest opportunity. Moreover, the said March 31, 2015 report cannot be
deemed as final since after its purported issuance, petitioner was still required to undergo physical
therapy as observed in the April 14, 2015 medical certificate in view of the persistent pain. Evidently, it
failed to fully assess petitioner's condition and cannot provide sufficient basis for the award of disability
benefits in his favor. To reiterate, the company-designated physician is expected to arrive at a definite
assessment of the seafarer's fitness to work or to determine his disability within a period of 120 or 240
days from repatriation. The 120-day period applies if the duration of the seafarer's treatment does not
exceed 120 days. On the other hand, the 240-day period applies in case the seafarer requires further
medical treatment after the lapse of the initial 120-day treatment period. Without a final and definite
disability assessment from the company-designated physician within the prescribed periods, the
seafarer's temporary total disability is transformed by operation of law into one of permanent and total,[56]
as in this case.
It is well to point out that in disability compensation, it is not the injury which is compensated, but rather it
is the incapacity to work resulting in the impairment of one's earning capacity.[57] Total disability refers to
an employee's inability to perform his or her usual work. It does not require total paralysis or complete
helplessness. Permanent disability, on the other hand, is a worker's inability to perform his job for more
than 120 days or 240 days, if the seafarer required further medical attention justifying the extension of the
temporary total disability period, regardless of whether or not he loses the use of any part of his body.

Anent the matter of compliance with the third doctor referral procedure, Section 20 (A) (3) of the 2010
POEA-SEC provides that if a doctor appointed by the seafarer disagrees with the assessment of the
company-designated physician, a third doctor may be agreed jointly between the employer and the
seafarer, and the third doctor's decision shall be final and binding on both.[58] In case of non-observance
by the seafarer of the third doctor referral provision in the contract, the employer can insist on the
company-designated physician's assessment even against the contrary opinion by another doctor, unless
the seafarer expresses his disagreement by asking for a referral to a third doctor who shall make a
determination and whose decision shall be final and binding on the parties.[59]

It is noteworthy to point out at this stage that in the case of Tradephil Shipping Agencies, Inc. v. Dela
Cruz,[60] the Court ruled that resort to a second opinion must be done after the assessment by the
company-designated physician precisely to dispute the said assessment.[61] Such assessment from the
company-designated physician, to reiterate, must be definite and timely issued. Otherwise, there is no
valid medical assessment to be contested and it is the law that operates to declare a seafarer's resulting
disability to be total and permanent.

Corollarily, should the seafarer signify his intent to challenge the company-designated physician's
assessment through the assessment made by his own doctor, the employer must respond by setting into
motion the process of choosing a third doctor who, as the 2010 POEA-SEC provides, can rule with finality
on the disputed medical situation.[62] In such case, no specific period is required by law within which the
parties may seek the opinion of a third doctor, and may do so even during the conciliation and mediation
stage to abbreviate the proceedings.[63]

Here, since the company-designated physician failed to timely issue a medical assessment of petitioner's
disability within the 240-day extended treatment period, there is no valid assessment to be contested and
the law steps in to transform the latter's temporary total disability into one of total and permanent, hence,
the third doctor referral provision as provided in the 2010 POEA-SEC would not find application. As aptly
ruled in the case of Kestrel Shipping Co., Inc. v. Munar,[64] absent the required final and definite
assessment from the company-designated physician, as in this case, the seafarer need not comply with
the third doctor referral provision under Section 20 (A) (3) of the 2010 POEA-SEC,[65] ratiocinating in this
wise:

In addition, that it was by operation of law that brought forth the conclusive presumption that Munar is
totally and permanently disabled, there is no legal compulsion for him to observe the procedure
prescribed under Section 20-B (3) of the POEA-SEC. A seafarer's compliance with such procedure
presupposes that the company-designated physician came up with an assessment as to his fitness or
unfitness to work before the expiration of the 120-day or 240-day periods. Alternatively put, absent a
certification from the company-designated physician, the seafarer had nothing to contest and the law
steps in to conclusively characterize his disability as total and permanent.[66] (Emphasis supplied)

In fine, as properly ruled by the NLRC, petitioner's disability is deemed to be total and permanent.
Pursuant to the CBA Compensation Scale, the maximum allowable benefit provided thereunder is
US$80,000.00. Further, with respect to petitioner's claim for attorney's fees, the Court finds that the same
is warranted as the latter was clearly compelled to litigate to satisfy his claims for disability benefits as
provided under Article 2208[67] of the Civil Code. However, the claims for moral and exemplary damages
were correctly denied for lack of substantial evidence showing that respondents acted with malice or in
bad faith in refusing petitioner's claims.[68]

WHEREFORE, the petition is GRANTED. The Decision dated September 26, 2017 and the Resolution
dated April 18, 2018 of the Court of Appeals in CA-G.R. SP No. 146267 are hereby REVERSED and SET
ASIDE. The Decision dated February 29, 2016 and the Resolution dated April 21, 2016 of the National
Labor Relations Commission in NLRC LAC (OFW-M)-02-000140-16 are REINSTATED.
SO ORDERED.

Carpio (Chairperson), Caguioa, A. Reyes, Jr., and J. Reyes, Jr.,[*] JJ., concur.

EN BANC

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

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

DECISION

LEONEN, J.:

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

We are asked to decide a petition for review1 on certiorari assailing the Court of Appeals� decision2 dated June
27, 2005. This decision partially affirmed the National Labor Relations Commission�s resolution dated March 31,
2004,3 declaring respondent�s dismissal illegal, directing petitioner to pay respondent�s three-month salary
equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from
respondent, and pay her NT$300.00 attorney�s fees.4cralawred

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

Joy�s application was accepted.7 Joy was later asked to sign a one-year employment contract for a monthly salary
of NT$15,360.00.8 She alleged that Sameer Overseas Agency required her to pay a placement fee of P70,000.00
when she signed the employment contract.9cralawred

Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997.10 She alleged that in her
employment contract, she agreed to work as quality control for one year.11 In Taiwan, she was asked to work as a
cutter.12cralawred

Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy,
without prior notice, that she was terminated and that �she should immediately report to their office to get her
salary and passport.�13 She was asked to �prepare for immediate repatriation.�14cralawred

Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of NT$9,000.15 According to
her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.16cralawred

On October 15, 1997, Joy filed a complaint17 with the National Labor Relations Commission against petitioner and
Wacoal. She claimed that she was illegally dismissed.18 She asked for the return of her placement fee, the withheld
amount for repatriation costs, payment of her salary for 23 months as well as moral and exemplary damages.19 She
identified Wacoal as Sameer Overseas Placement Agency�s foreign principal.20cralawred

Sameer Overseas Placement Agency alleged that respondent's termination was due to her inefficiency, negligence in
her duties, and her �failure to comply with the work requirements [of] her foreign [employer].�21 The agency
also claimed that it did not ask for a placement fee of ?70,000.00.22 As evidence, it showed Official Receipt No.
14860 dated June 10, 1997, bearing the amount of ?20,360.00.23 Petitioner added that Wacoal's accreditation with
petitioner had already been transferred to the Pacific Manpower & Management Services, Inc. (Pacific) as of August
6, 1997.24 Thus, petitioner asserts that it was already substituted by Pacific Manpower.25cralawred

Pacific Manpower moved for the dismissal of petitioner�s claims against it.26 It alleged that there was no
employer-employee relationship between them.27 Therefore, the claims against it were outside the jurisdiction of the
Labor Arbiter.28 Pacific Manpower argued that the employment contract should first be presented so that the
employer�s contractual obligations might be identified.29 It further denied that it assumed liability for
petitioner�s illegal acts.30cralawred

On July 29, 1998, the Labor Arbiter dismissed Joy�s complaint.31 Acting Executive Labor Arbiter Pedro C. Ramos
ruled that her complaint was based on mere allegations.32 The Labor Arbiter found that there was no excess
payment of placement fees, based on the official receipt presented by petitioner.33 The Labor Arbiter found
unnecessary a discussion on petitioner�s transfer of obligations to Pacific34 and considered the matter immaterial
in view of the dismissal of respondent�s complaint.35cralawred

Joy appealed36 to the National Labor Relations Commission.

In a resolution37 dated March 31, 2004, the National Labor Relations Commission declared that Joy was illegally
dismissed.38 It reiterated the doctrine that the burden of proof to show that the dismissal was based on a just or valid
cause belongs to the employer.39 It found that Sameer Overseas Placement Agency failed to prove that there were
just causes for termination.40 There was no sufficient proof to show that respondent was inefficient in her work and
that she failed to comply with company requirements.41 Furthermore, procedural due process was not observed in
terminating respondent.42cralawred

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

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

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

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

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

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

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

WHEREFORE, premises considered, the assailed Resolutions are hereby 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.54cralawred

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

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

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

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

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.64cralawred

Employees are not stripped of their security of tenure when they move to work in a different jurisdiction. With respect
to the rights of overseas Filipino workers, we follow the principle of lex loci contractus.

Thus, in Triple Eight Integrated Services, Inc. v. NLRC,65 this court noted:chanRoblesvirtualLawlibrary

Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since Osdana was
working in Saudi Arabia, her employment was subject to the laws of the host country. Apparently, petitioner hopes to
make it appear that the labor laws of Saudi Arabia do not require any certification by a competent public health
authority in the dismissal of employees due to illness.

Again, petitioner�s argument is without merit.

First, established is the rule that lex loci contractus (the law of the place where the contract is made) governs in this
jurisdiction. There is no question that the contract of employment in this case was perfected here in the Philippines.
Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting labor apply in this case.
Furthermore, settled is the rule that the courts of the forum will not enforce any foreign claim obnoxious to the
forum�s public policy. Here in the Philippines, employment agreements are more than contractual in nature. The
Constitution itself, in Article XIII, Section 3, guarantees the special protection of workers, to
wit:chanRoblesvirtualLawlibrary
The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.

. . . .chanrobleslaw

This public policy should be borne in mind in this case because to allow foreign employers to determine for and by
themselves whether an overseas contract worker may be dismissed on the ground of illness would encourage illegal
or arbitrary pre-termination of employment contracts.66 (Emphasis supplied, citation omitted)

Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping Philippines, Inc. v.
NLRC,67 to wit:chanRoblesvirtualLawlibrary

Petitioners admit that they did not inform private respondent in writing of the charges against him and that they failed
to conduct a formal investigation to give him opportunity to air his side. However, petitioners contend that the twin
requirements of notice and hearing applies strictly only when the employment is within the Philippines and that these
need not be strictly observed in cases of international maritime or overseas employment.

The Court does not agree. The provisions of the Constitution as well as the Labor Code which afford protection to
labor apply to Filipino employees whether working within the Philippines or abroad. Moreover, the principle of lex loci
contractus (the law of the place where the contract is made) governs in this jurisdiction. In the present case, it is not
disputed that the Contract of Employment entered into by and between petitioners and private respondent was
executed here in the Philippines with the approval of the Philippine Overseas Employment Administration (POEA).
Hence, the Labor Code together with its implementing rules and regulations and other laws affecting labor apply in
this case.68 (Emphasis supplied, citations omitted)

By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and after
compliance with procedural due process requirements.

Article 282 of the Labor Code enumerates the just causes of termination by the employer.
Thus:chanRoblesvirtualLawlibrary

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

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

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

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

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

(e) Other causes analogous to the foregoing.

Petitioner�s allegation that respondent was inefficient in her work and negligent in her duties69 may, therefore,
constitute a just cause for termination under Article 282(b), but only if petitioner was able to prove it.
The burden of proving that there is just cause for termination is on the employer. �The employer must affirmatively
show rationally adequate evidence that the dismissal was for a justifiable cause.�70 Failure to show that there was
valid or just cause for termination would necessarily mean that the dismissal was illegal.71cralawred

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

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

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

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

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

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

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

There was also no showing that respondent was sufficiently informed of the standards against which her work
efficiency and performance were judged. The parties� conflict as to the position held by respondent showed that
even the matter as basic as the job title was not clear.

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

Petitioner failed to comply 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.�79cralawred

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

II

Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired portion of the
employment contract that was violated together with attorney�s fees and reimbursement of amounts withheld from
her salary.

Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995,
states that overseas workers who were terminated without just, valid, or authorized cause �shall be entitled to the
full reimbursement of his placement fee with interest of twelve (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.�

Sec. 10. MONEY CLAIMS. � Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.

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

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

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this
section shall be paid within four (4) months from the approval of the settlement by the appropriate authority.

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

....

(Emphasis supplied)chanrobleslaw

Section 15 of Republic Act No. 8042 states that �repatriation of the worker and the transport of his [or her]
personal belongings shall be the primary responsibility of the agency which recruited or deployed the worker
overseas.� The exception is when �termination of employment is due solely to the fault of the worker,�80
which as we have established, is not the case. It reads:chanRoblesvirtualLawlibrary

SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. � The repatriation of the
worker and the transport of his personal belongings shall be the primary responsibility of the agency which recruited
or deployed the worker overseas. All costs attendant to repatriation shall be borne by or charged to the agency
concerned and/or its principal. Likewise, the repatriation of remains and transport of the personal belongings of a
deceased worker and all costs attendant thereto shall be borne by the principal and/or local agency. However, in
cases where the termination of employment is due solely to the fault of the worker, the principal/employer or agency
shall not in any manner be responsible for the repatriation of the former and/or his belongings.

....

The Labor Code81 also entitles the employee to 10% of the amount of withheld wages as attorney�s fees when
the withholding is unlawful.

The Court of Appeals affirmed the National Labor Relations Commission�s decision to award respondent
NT$46,080.00 or the three-month equivalent of her salary, attorney�s fees of NT$300.00, and the reimbursement
of the withheld NT$3,000.00 salary, which answered for her repatriation.

We uphold the finding that respondent is entitled to all of these awards. The award of the three-month equivalent of
respondent�s salary should, however, be increased to the amount equivalent to the unexpired term of the
employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc.,82 this court ruled that the clause �or
for three (3) months for every year of the unexpired term, whichever is less�83 is unconstitutional for violating the
equal protection clause and substantive due process.84cralawred

A statute or provision which was declared unconstitutional is not a law. It �confers no rights; it imposes no duties; it
affords no protection; it creates no office; it is inoperative as if it has not been passed at all.�85cralawred

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

Section 7. Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as
follows:chanRoblesvirtualLawlibrary

SEC. 10. Money Claims. � Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National
Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship
or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damage. Consistent with this mandate, the NLRC shall endeavor to update and
keep abreast with the developments in the global services industry.

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

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

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

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract,
or any unauthorized deductions from the migrant worker�s salary, the worker shall be entitled to the full
reimbursement if [sic] his placement fee and the deductions made with interest at twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the
unexpired term, whichever is less.
In case of a final and executory judgement against a foreign employer/principal, it shall be automatically disqualified,
without further proceedings, from participating in the Philippine Overseas Employment Program and from recruiting
and hiring Filipino workers until and unless it fully satisfies the judgement award.

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

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

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

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

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

Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of the clause in
Republic Act No. 8042 was not yet in effect at the time of respondent�s termination from work in 1997.86 Republic
Act No. 8042 before it was amended by Republic Act No. 10022 governs this case.

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

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

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

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

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

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

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

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

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

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

In its comment,89 petitioner argued that the clause was constitutional.90 The legislators intended a balance between
the employers� and the employees� rights by not unduly burdening the local recruitment agency.91 Petitioner is
also of the view that the clause was already declared as constitutional in Serrano.92cralawred

The Office of the Solicitor General also argued that the clause was valid and constitutional.93 However, since the
parties never raised the issue of the constitutionality of the clause as reinstated in Republic Act No. 10022, its
contention is that it is beyond judicial review.94cralawred

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

We observe that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the constitutional
rights to equal protection and due process.96 Petitioner as well as the Solicitor General have failed to show any
compelling change in the circumstances that would warrant us to revisit the precedent.

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered by an illegally
dismissed overseas worker to three months is both a violation of due process and the equal protection clauses of the
Constitution.

Equal protection of the law is a guarantee that persons under like circumstances and falling within the same class are
treated alike, in terms of �privileges conferred and liabilities enforced.�97 It is a guarantee against �undue
favor and individual or class privilege, as well as hostile discrimination or the oppression of inequality.�98cralawred

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

The equal protection clause does not infringe on this legislative power.101 A law is void on this basis, only if
classifications are made arbitrarily.102 There is no violation of the equal protection clause if the law applies equally to
persons within the same class and if there are reasonable grounds for distinguishing between those falling within the
class and those who do not fall within the class.103 A law that does not violate the equal protection clause prescribes
a reasonable classification.104cralawred

A reasonable classification �(1) must rest on substantial distinctions; (2) must be germane to the purposes of the
law; (3) must not be limited to existing conditions only; and (4) must apply equally to all members of the same
class.�105cralawred

The reinstated clause does not satisfy the requirement of reasonable classification.

In Serrano, we identified the classifications made by the reinstated clause. It distinguished between fixed-period
overseas workers and fixed-period local workers.106 It also distinguished between overseas workers with
employment contracts of less than one year and overseas workers with employment contracts of at least one
year.107 Within the class of overseas workers with at least one-year employment contracts, there was a distinction
between those with at least a year left in their contracts and those with less than a year left in their contracts when
they were illegally dismissed.108cralawred

The Congress� classification may be subjected to judicial review. In Serrano, there is a �legislative classification
which impermissibly interferes with the exercise of a fundamental right or operates to the peculiar disadvantage of a
suspect class.�109cralawred
Under the Constitution, labor is afforded special protection.110 Thus, this court in Serrano, �[i]mbued with the
same sense of �obligation to afford protection to labor,� . . . employ[ed] the standard of strict judicial scrutiny, for
it perceive[d] in the subject clause a suspect classification prejudicial to OFWs.�111cralawred

We also noted in Serrano that before the passage of Republic Act No. 8042, the money claims of illegally terminated
overseas and local workers with fixed-term employment were computed in the same manner.112 Their money claims
were computed based on the �unexpired portions of their contracts.�113 The adoption of the reinstated clause
in Republic Act No. 8042 subjected the money claims of illegally dismissed overseas workers with an unexpired term
of at least a year to a cap of three months worth of their salary.114 There was no such limitation on the money claims
of illegally terminated local workers with fixed-term employment.115cralawred

We observed that illegally dismissed overseas workers whose employment contracts had a term of less than one
year were granted the amount equivalent to the unexpired portion of their employment contracts.116 Meanwhile,
illegally dismissed overseas workers with employment terms of at least a year were granted a cap equivalent to three
months of their salary for the unexpired portions of their contracts.117cralawred

Observing the terminologies used in the clause, we also found that �the subject clause creates a sub-layer of
discrimination among OFWs whose contract periods are for more than one year: those who are illegally dismissed
with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof,
while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the
reinstated clause, and their monetary benefits limited to their salaries for three months only.�118cralawred

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

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

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

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

Likewise, the jurisdictional and enforcement issues on overseas workers� money claims do not justify a
differentiated treatment in the computation of their money claims.123 If anything, these issues justify an equal, if not
greater protection and assistance to overseas workers who generally are more prone to exploitation given their
physical distance from our government.

We also find that the classifications are not relevant to the purpose of the law, which is to �establish a higher
standard of protection and promotion of the welfare of migrant workers, their families and overseas Filipinos in
distress, and for other purposes.�124 Further, we find specious the argument that reducing the liability of
placement agencies �redounds to the benefit of the [overseas] workers.�125cralawred

Putting a cap on the money claims of certain overseas workers does not increase the standard of protection afforded
to them. On the other hand, foreign employers are more incentivized by the reinstated clause to enter into contracts
of at least a year because it gives them more flexibility to violate our overseas workers� rights. Their liability for
arbitrarily terminating overseas workers is decreased at the expense of the workers whose rights they violated.
Meanwhile, these overseas workers who are impressed with an expectation of a stable job overseas for the longer
contract period disregard other opportunities only to be terminated earlier. They are left with claims that are less than
what others in the same situation would receive. The reinstated clause, therefore, creates a situation where the law
meant to protect them makes violation of rights easier and simply benign to the violator.
As Justice Brion said in his concurring opinion in Serrano:chanRoblesvirtualLawlibrary

Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a hidden twist affecting
the principal/employer�s liability. While intended as an incentive accruing to recruitment/manning agencies, the
law, as worded, simply limits the OFWs� recovery in wrongful dismissal situations. Thus, it redounds to the benefit
of whoever may be liable, including the principal/employer � the direct employer primarily liable for the wrongful
dismissal. In this sense, Section 10 � read as a grant of incentives to recruitment/manning agencies � oversteps
what it aims to do by effectively limiting what is otherwise the full liability of the foreign principals/employers. Section
10, in short, really operates to benefit the wrong party and allows that party, without justifiable reason, to mitigate its
liability for wrongful dismissals. Because of this hidden twist, the limitation of liability under Section 10 cannot be an
�appropriate� incentive, to borrow the term that R.A. No. 8042 itself uses to describe the incentive it envisions
under its purpose clause.

What worsens the situation is the chosen mode of granting the incentive: instead of a grant that, to encourage greater
efforts at recruitment, is directly related to extra efforts undertaken, the law simply limits their liability for the wrongful
dismissals of already deployed OFWs. This is effectively a legally-imposed partial condonation of their liability to
OFWs, justified solely by the law�s intent to encourage greater deployment efforts. Thus, the incentive, from a
more practical and realistic view, is really part of a scheme to sell Filipino overseas labor at a bargain for purposes
solely of attracting the market. . . .

The so-called incentive is rendered particularly odious by its effect on the OFWs � the benefits accruing to the
recruitment/manning agencies and their principals are taken from the pockets of the OFWs to whom the full salaries
for the unexpired portion of the contract rightfully belong. Thus, the principals/employers and the recruitment/manning
agencies even profit from their violation of the security of tenure that an employment contract embodies. Conversely,
lesser protection is afforded the OFW, not only because of the lessened recovery afforded him or her by operation of
law, but also because this same lessened recovery renders a wrongful dismissal easier and less onerous to
undertake; the lesser cost of dismissing a Filipino will always be a consideration a foreign employer will take into
account in termination of employment decisions. . . .126

Further, �[t]here can never be a justification for any form of government action that alleviates the burden of one
sector, but imposes the same burden on another sector, especially when the favored sector is composed of private
businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose protection no
less than the Constitution commands. The idea that private business interest can be elevated to the level of a
compelling state interest is odious.�127cralawred

Along the same line, we held that the reinstated clause violates due process rights. It is arbitrary as it deprives
overseas workers of their monetary claims without any discernable valid purpose.128cralawred

Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in accordance with Section
10 of Republic Act No. 8042. The award of the three-month equivalence of respondent�s salary must be modified
accordingly. Since she started working on June 26, 1997 and was terminated on July 14, 1997, respondent is entitled
to her salary from July 15, 1997 to June 25, 1998. �To rule otherwise would be iniquitous to petitioner and other
OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may
violate an OFW�s security of tenure which an employment contract embodies and actually profit from such
violation based on an unconstitutional provision of law.�129cralawred

III

On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21, 2013, which revised the interest
rate for loan or forbearance from 12% to 6% in the absence of stipulation, applies in this case. The pertinent portions
of Circular No. 799, Series of 2013, read:chanRoblesvirtualLawlibrary

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the
rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series
of 1982:cralawlawlibrary

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in
judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1,
4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended
accordingly.

This Circular shall take effect on 1 July 2013.

Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines in computing legal interest in
Nacar v. Gallery Frames:130cralawred

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as follows:chanRoblesvirtualLawlibrary

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.

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.

When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be
disturbed and shall continue to be implemented applying the rate of interest fixed therein.131

Circular No. 799 is applicable only in loans and forbearance of money, goods, or credits, and in judgments when
there is no stipulation on the applicable interest rate. Further, it is only applicable if the judgment did not become final
and executory before July 1, 2013.132cralawred

We add that Circular No. 799 is not applicable when there is a law that states otherwise. While the Bangko Sentral ng
Pilipinas has the power to set or limit interest rates,133 these interest rates do not apply when the law provides that a
different interest rate shall be applied. �[A] Central Bank Circular cannot repeal a law. Only a law can repeal
another law.�134cralawred

For example, Section 10 of Republic Act No. 8042 provides that unlawfully terminated overseas workers are entitled
to the reimbursement of his or her placement fee with an interest of 12% per annum. Since Bangko Sentral ng
Pilipinas circulars cannot repeal Republic Act No. 8042, the issuance of Circular No. 799 does not have the effect of
changing the interest on awards for reimbursement of placement fees from 12% to 6%. This is despite Section 1 of
Circular No. 799, which provides that the 6% interest rate applies even to judgments.

Moreover, laws are deemed incorporated in contracts. �The contracting parties need not repeat them. They do not
even have to be referred to. Every contract, thus, contains not only what has been explicitly stipulated, but the
statutory provisions that have any bearing on the matter.�135 There is, therefore, an implied stipulation in
contracts between the placement agency and the overseas worker that in case the overseas worker is adjudged as
entitled to reimbursement of his or her placement fees, the amount shall be subject to a 12% interest per annum. This
implied stipulation has the effect of removing awards for reimbursement of placement fees from Circular No. 799�s
coverage.
The same cannot be said for awards of salary for the unexpired portion of the employment contract under Republic
Act No. 8042. These awards are covered by Circular No. 799 because the law does not provide for a specific interest
rate that should apply.

In sum, if judgment did not become final and executory before July 1, 2013 and there was no stipulation in the
contract providing for a different interest rate, other money claims under Section 10 of Republic Act No. 8042 shall be
subject to the 6% interest per annum in accordance with Circular No. 799.

This means that respondent is also entitled to an interest of 6% per annum on her money claims from the finality of
this judgment.

IV

Finally, we clarify the liabilities of Wacoal as principal and petitioner as the employment agency that facilitated
respondent�s overseas employment.

Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign employer and the
local employment agency are jointly and severally liable for money claims including claims arising out of an employer-
employee relationship and/or damages. This section also provides that the performance bond filed by the local
agency shall be answerable for such money claims or damages if they were awarded to the employee.

This provision is in line with the state�s policy of affording protection to labor and alleviating workers�
plight.136cralawred

In overseas employment, the filing of money claims against the foreign employer is attended by practical and legal
complications. The distance of the foreign employer alone makes it difficult for an overseas worker to reach it and
make it liable for violations of the Labor Code. There are also possible conflict of laws, jurisdictional issues, and
procedural rules that may be raised to frustrate an overseas worker�s attempt to advance his or her claims.

It may be argued, for instance, that the foreign employer must be impleaded in the complaint as an indispensable
party without which no final determination can be had of an action.137cralawred

The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995 assures
overseas workers that their rights will not be frustrated with these complications.

The fundamental effect of joint and several liability is that �each of the debtors is liable for the entire
obligation.�138 A final determination may, therefore, be achieved even if only one of the joint and several debtors
are impleaded in an action. Hence, in the case of overseas employment, either the local agency or the foreign
employer may be sued for all claims arising from the foreign employer�s labor law violations. This way, the
overseas workers are assured that someone � the foreign employer�s local agent � may be made to answer
for violations that the foreign employer may have committed.

The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas workers have recourse in law despite
the circumstances of their employment. By providing that the liability of the foreign employer may be �enforced to
the full extent�139 against the local agent, the overseas worker is assured of immediate and sufficient payment of
what is due them.140cralawred

Corollary to the assurance of immediate recourse in law, the provision on joint and several liability in the Migrant
Workers and Overseas Filipinos Act of 1995 shifts the burden of going after the foreign employer from the overseas
worker to the local employment agency. However, it must be emphasized that the local agency that is held to answer
for the overseas worker�s money claims is not left without remedy. The law does not preclude it from going after
the foreign employer for reimbursement of whatever payment it has made to the employee to answer for the money
claims against the foreign employer.

A further implication of making local agencies jointly and severally liable with the foreign employer is that an
additional layer of protection is afforded to overseas workers. Local agencies, which are businesses by nature, are
inoculated with interest in being always on the lookout against foreign employers that tend to violate labor law. Lest
they risk their reputation or finances, local agencies must already have mechanisms for guarding against
unscrupulous foreign employers even at the level prior to overseas employment applications.

With the present state of the pleadings, it is not possible to determine whether there was indeed a transfer of
obligations from petitioner to Pacific. This should not be an obstacle for the respondent overseas worker to proceed
with the enforcement of this judgment. Petitioner is possessed with the resources to determine the proper legal
remedies to enforce its rights against Pacific, if any.

Many times, this court has spoken on what Filipinos may encounter as they travel into the farthest and most difficult
reaches of our planet to provide for their families. In Prieto v. NLRC:141cralawred

The Court is not unaware of the many abuses suffered by our overseas workers in the foreign land where they have
ventured, usually with heavy hearts, in pursuit of a more fulfilling future. Breach of contract, maltreatment, rape,
insufficient nourishment, sub-human lodgings, insults and other forms of debasement, are only a few of the inhumane
acts to which they are subjected by their foreign employers, who probably feel they can do as they please in their own
country. While these workers may indeed have relatively little defense against exploitation while they are abroad, that
disadvantage must not continue to burden them when they return to their own territory to voice their muted complaint.
There is no reason why, in their very own land, the protection of our own laws cannot be extended to them in full
measure for the redress of their grievances.142chanrobleslaw

But it seems that we have not said enough.

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

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

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

Inevitably, their dignity is ours as well.

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

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

SO ORDERED.

Carpio, Acting C.J., Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Villarama, Jr., Perez,
Mendoza, Reyes, and Perlas-Bernabe, JJ., concur.

Sereno, C.J., on Leave.

Brion, J., see dissenting opinion.

THIRD DIVISION

G.R. No. 200811, June 19, 2019

JULITA M. ALDOVINO, JOAN B. LAGRIMAS, WINNIE B. LINGAT, CHITA A. SALES, SHERLY L.

GUINTO, REVILLA S. DE JESUS, AND LAILA V. ORPILLA, PETITIONERS, v. GOLD AND GREEN
MANPOWER MANAGEMENT AND DEVELOPMENT SERVICES, INC., SAGE INTERNATIONAL
DEVELOPMENT COMPANY, LTD., AND ALBERTO C. ALVINA, RESPONDENTS.

DECISION

LEONEN, J.:

The clause "or for three (3) months for every year of the unexpired term, whichever is less" as reinstated
in Section 7 of Republic Act No. 10022 is unconstitutional, and has no force and effect of law. It violates
due process as it deprives overseas workers of their monetary claims without any discernable valid
purpose.1

This Court resolves a Petition for Review on Certiorari2 assailing the September 29, 2011 Decision3 and
January 26, 2012 Resolution4 of the Court of Appeals. The Court of Appeals ruled that Julita M. Aldovino
(Aldovino), Joan B. Lagrimas, Winnie B. Lingat, Chita A. Sales, Sherly L. Guinto, Revilla S. De Jesus (De
Jesus), and Laila V. Orpilla were all illegally dismissed from service.

Aldovino and her co-applicants applied for work at Gold and Green Manpower Management and
Development Services, Inc. (Gold and Green Manpower), a local manning agency whose foreign principal
is Sage International Development Company, Ltd. (Sage International).5

Eventually, they were hired as sewers for Dipper Semi-Conductor Company, Ltd. (Dipper Semi-
Conductor), a Taiwan-based company. Their respective employment contracts provided an eight (8)-hour
working day, a fixed monthly salary, and entitlement to overtime pay, among others.6

Before they could be deployed for work, Gold and Green Manpower required each applicant to pay a
P72,000.00 placement fee. But since the applicants were unable to produce the amount on their own,
Gold and Green Manpower referred them to E-Cash Paylite and Financing, Inc. (E-Cash Paylite), where
they loaned their placement fees.7

Once Aldovino and her co-workers arrived in Taiwan, Gold and Green Manpower took all their travel
documents, including their passports. They were then made to sign another contract that provides that
they would be paid on a piece-rate basis instead of a fixed monthly salary.8
During their employment, Aldovino and her co-workers toiled from 8:00 a.m. to 9:00 p.m. for six (6) days a
week. At times, they were forced to work on Sundays without any overtime premium.9 Because they were
paid on a piece-rate basis, they received less than the fixed monthly salary stipulated in their original
contract. When Aldovino and her co-workers inquired, Dipper Semi-Conductor refused to disclose the
schedule of payment on a piece-rate basis. Eventually, they defaulted on their loan obligations with E-
Cash Paylite.10

On January 19, 2009, Aldovino and her co-workers, except De Jesus, filed before a local court in Taiwan
a Complaint against their employers, Dipper Semi-Conductor and Sage International.11

On March 26, 2009, the parties met before the Bureau of Labor Affairs for a dialogue. There, Dipper
Semi-Conductor ordered Aldovino and her co-workers to return to the Philippines as it was no longer
interested in their services. They were then made to immediately pack their belongings, after which they
were dropped off at a train station in Taipei. After a few hours, a friend brought them to the Manila
Economic and Cultural Office, where they stayed for a week. They were then transferred to Hope Shelter,
where they remained for four (4) months while the case was pending.12

Eventually, the parties entered into a Compromise Agreement,13 which read:

1. Event:

Reconciliation Part:

This issue is pertaining to the labor Case No. 86 of 2009 at Ban Qiao District Court, wherein Party A is
asking for the payment of salary, etc. from party B. This was caused by the differences in interpreting the
basic salary and the method in calculation of piece work salary. Both parties is hereby reach (sic) a
reconciliation.

Compensation Part:

With regard to the damages and fees incurred in the process of this controversy, Party B shall voluntarily
give monetary compensation to Party A.

2. Amount of Payment:

Amount of Reconciliation: NT$500,000.00

Amount of Compensation: On top of the fees incurred by Party A during the period Party A left the
company of Party B and waiting for going back to their home country, including board and lodging,
livelihood cost, the loss of Recruitment Agency's commission borne by Party A, airplane ticket, etc. Party
B shall pay another compensation of NT$1 Million.

Aside from this, Party A can't ask for compensation of any kind, and all the civil cases involved shall be
cancelled.

3. Mode of Payment

When this case reach (sic) reconciliation, Party B will pay to the appointed lawyer of Party A an amount of
NT$500,000 in cash in one transaction. This will be witness (sic) by the Philippine Labor Center.

Both parties will present the following civil and criminal case requests and affidavit of waiver to the related
agencies, lawyers of both will change the documents, and Party B will secure a RECEIPT AND
RELEASE/QUITCLAIM (as in attachment A) signed by TORZAR SIONY TARROZA, after which, Party B
will pay to the appointed lawyer of Party A an amount of NT$1 Million in cash in one transaction. This will
be witness (sic) by the Philippine Labor Center.

....
6. After the effectivity of this reconciliation agreement, Party A shall withdraw the case from the civil court
of the Taiwan Banqiao Local court, Party A shall bear the cost of civil proceeding.

7. After the effectivity of this reconciliation agreement, Party A shall give up all other rights of
compensation. They shall not ask for any compensation based on any other causes.14

Based on the Compromise Agreement, Aldovino and her co-workers, except De Jesus, executed an
Affidavit of Quitclaim and Release.15 On July 28, 2009, all of them returned to the Philippines.16 They
eventually filed before the Labor Arbiter a case for illegal termination, underpayment of salaries, human
trafficking, illegal signing of papers,17 and other money claims such as overtime pay, return of placement
fees, and moral and exemplary damages.18

In its April 8, 2010 Decision,19 the Labor Arbiter dismissed the Complaint for illegal dismissal but ordered
Gold and Green Manpower and Sage International to pay each of the workers P20,000.00 as financial
assistance.

On appeal, the National Labor Relations Commission, in its July 29, 2010 Decision,20 affirmed the Labor
Arbiter's Decision. It found that Aldovino and her co-workers were not illegally dismissed and that they
voluntarily returned to the Philippines. Moreover, the Compromise Agreement barred any further claims
arising from their employment.21

Additionally, the National Labor Relations Commission deleted the award of financial assistance for lack
of factual and legal bases.22

Aldovino and her co-workers moved for reconsideration, but their Motion was denied for lack of merit in
the National Labor Relations Commission August 31, 2010 Resolution.23 Hence, they filed before the
Court of Appeals a Petition for Certiorari.24

In its September 29,2011 Decision,25 the Court of Appeals reversed the labor tribunals' rulings. It not only
ruled that Aldovino and her co-workers had been illegally dismissed from service, but also declared that
the Compromise Agreement did not bar them from filing an illegal dismissal case.26

Accordingly, the Court of Appeals ordered Gold and Green Manpower and Sage International to pay the
workers their salaries "for the unexpired portion of their contract in accordance with Section 7 of [Republic
Act No.] 1002227 and pursuant to Serrano v. Gallant Maritime Services, Inc.,"28 among others. The
dispositive portion of the Court of Appeals Decision read:

WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated July 29,2010
and Order dated August 31, 2010 of the NLRC in NLRC LAC (OFW-L) 05-000409-10, are hereby
REVERSED and SET ASIDE. Respondents Gold and Green Manpower Management and Development
Services, Inc. and Sage International Development Co., Ltd. are hereby ordered to reimburse petitioners
their placement fee with interest at twelve percent (12%) per annum, and to pay the salaries of petitioners
for the unexpired portion of their respective employment contracts or for three (3) months for every year of
the unexpired term, whichever is less.

SO ORDERED.29

Aldovino and her co-workers moved for partial reconsideration,30 praying that the three (3)-month cap
stated in the Decision's dispositive portion be annulled, pursuant to Serrano.31 However, their Motion
was denied in the Court of Appeals' January 26, 2012 Resolution.32

Thus, Aldovino and her co-workers filed a Petition for Review on Certiorari.33

On June 15, 2012, respondents filed their Comment,34 to which petitioners filed a Reply on September 5,
2016.35
Petitioners again question the three (3)-month salary cap stated in the dispositive portion of the Court of
Appeals Decision. Citing Serrano, they assert that the three (3)-month cap in Section 10 of Republic Act
No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995, as reenacted in Republic Act No.
10022, has already been declared unconstitutional.36

Petitioners thus assert that they are entitled to the payment of their salaries for the unexpired portion of
their employment contracts.37

On the other hand, respondents question the legality of the monetary damages awarded to petitioners.
They assert that the Court of Appeals erred in nullifying the parities' Compromise Agreement, pointing out
that the labor tribunals had already rendered it valid.38 The agreement, they further argue, released them
from liability on petitioners' other claims.39

The chief issue for this Court's resolution is whether or not petitioners Julita M. Aldovino, Joan B.
Lagrimas, Winnie B. Lingat, Chita A. Sales, Sherly L. Guinto, Revilla S. De Jesus, and Laila V. Orpilla are
entitled to the payment of their salaries for the unexpired portion of their employment contract. Subsumed
under this is the issue of whether or not Section 7 of Republic Act No. 10022, which reinstated the three
(3)-month cap, has the force and effect of law.

To pass upon this issue, this Court must resolve the following:

First, whether or not the Compromise Agreement barred all other claims against respondents Gold and
Green Manpower Management and Development Services, Inc. and Sage International Development
Company, Ltd., and Alberto C. Alvina; and

Second, whether or not petitioners were illegally dismissed and, consequently, entitled to the
reimbursement of their placement fees and payment of moral and exemplary damages and attorney's
fees.

The Petition is meritorious.

It must be noted that this case is governed by Philippine laws. Both the Constitution40 and the Labor
Code41 guarantee the security of tenure. It is not stripped off when Filipinos work in a different
jurisdiction.42 We follow the lex loci contractus principle, which means that the law of the place where the
contract is executed governs the contract.

In Triple Eight Integrated Services, Inc. v National Labor Relations Commission:43

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. . . .

....

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.44 (Citation omitted)

Indeed, because petitioners' employment contracts were executed in the Philippines, Philippine laws
govern them. Respondents, then, must answer and be held liable under our laws.
I

Respondents claim that the Compromise Agreement barred petitioners from holding them liable for
claims. This is outright erroneous.

Waivers and quitclaims executed by employees are generally frowned upon for being contrary to public
policy. This is based on the recognition that employers and employees do not stand on equal footing.45

In Land and Housing Development Corporation v. Esquillo:46

We have heretofore explained that the reason why quitclaims are commonly frowned upon as contrary to
public policy, and why they are held to be ineffective to bar claims for the full measure of the workers'
legal rights, is the fact that the employer and the employee obviously do not stand on the same footing.
The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of
a job, he had to face the harsh necessities of life. He thus found himself in no position to resist money
proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did
not relent on their claim. They pressed it. They are deemed not [to] have waived any of their rights.
Renuntiatio non praesumitur.

Along this line, we have more trenchantly declared that quitclaims and/or complete releases executed by
the employees do not estop them from pursuing their claims arising from unfair labor practices of the
employer. The basic reason for this is that such quitclaims and/or complete releases are against public
policy and, therefore, null and void. The acceptance of termination does not divest a laborer of the right to
prosecute his employer for unfair labor practice acts.47 (Emphasis in the original)

Quitclaims do not bar employees from filing labor complaints and demanding benefits to which they are
legally entitled.48 They are "ineffective in barring recovery of the full measure of a worker's rights, and the
acceptance of benefits therefrom does not amount to estoppel."49 The law does not recognize
agreements that result in compensation less than what is mandated by law. These quitclaims do not
prevent employees from subsequently claiming benefits to which they are legally entitled.50

In Am-Phil Food Concepts, Inc. v. Padilla,51 this Court held that quitclaims do not negate charges for
illegal dismissal:

The law looks with disfavor upon quitclaims and releases by employees pressured into signing by
unscrupulous employers minded to evade legal responsibilities. As a rule, deeds of release or quitclaim
cannot bar employees from demanding benefits to which they are legally entitled or from contesting the
legality of their dismissal. The acceptance of those benefits would not amount to estoppel. The amounts
already received by the retrenched employees as consideration for signing the quitclaims should,
however, be deducted from their respective monetary awards.52

Here, the parties entered into the Compromise Agreement to terminate the case for underpayment of
wages, which petitioners had previously filed against respondents in Taiwan. The object and foundation of
the Compromise Agreement was to settle the payment of salaries and overtime premiums to which
petitioners were legally entitled. Hence, it should not be construed as a restriction on petitioners' right to
prosecute other legitimate claims they may have against respondents.

Paragraph 7 of the Compromise Agreement, which stipulates that petitioners "shall give up other rights of
compensation . . . [and] shall not ask for any compensation based on any other causes[,]"53 cannot bar
petitioners from filing this case and from being indemnified should respondents be adjudged liable.
Blanket waivers exonerating employers from liability on the claims of their employees are ineffective.54

Besides, at the time the parties' Compromise Agreement was executed, respondents had just terminated
petitioners from employment. Petitioners, therefore, had no other choice but to accede to the terms and
conditions of the agreement to recover the difference in their salaries and overtime pay. With no means of
livelihood, they signed the Compromise Agreement out of dire necessity.

II
Respondents further justify the dismissal by arguing that petitioners voluntarily severed their employment
when they signed the Compromise Agreement.

This argument is also untenable.

Under the Labor Code, employers may only terminate employment for a just or authorized cause and
after complying with procedural due process requirements. Articles 297 and 300 of the Labor Code
enumerate the causes of employment termination either by employers or employees:

ARTICLE 297. [282] Termination by employer. � An employer may terminate an employment for any of
the following causes:

(a)

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

(b)

Gross and habitual neglect by the employee of his duties;

(c)

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

(d)

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

(e)

Other causes analogous to the foregoing.

....

ARTICLE 300. [285] Termination by employee. � (a) An employee may terminate without just cause
the employee-employer relationship by serving a written notice on the employer at least one (1) month in
advance. The employer upon whom no such notice was served may hold the employee liable for
damages.

�

(b)

An employee may put an end to the relationship without serving any notice on the employer for any of the
following just causes:

Serious insult by the employer or his representative on the honor and person of the employee;

Inhuman and unbearable treatment accorded the employee by the employer or his representative;

Commission of a crime or offense by the employer or his representative against the person of the
employee or any of the immediate members of his family; and

Other causes analogous to any of the foregoing.

In illegal dismissal cases, the burden of proof that employees were validly dismissed rests on the
employers. Failure to discharge this burden means that the dismissal is illegal.55
A review of the records here shows that the termination of petitioners' employment was effected merely
because respondents no longer wanted their services. This is not an authorized or just cause for
dismissal under the Labor Code. Employment contracts cannot be terminated on a whim.

Moreover, petitioners did not voluntarily sever their employment when they signed the Compromise
Agreement, which, again, cannot be used to justify a dismissal.

Furthermore, petitioners were not accorded due process. A valid dismissal must comply with substantive
and procedural due process: there must be a valid cause and a valid procedure. The employer must
comply with the two (2)-notice requirement, while the employee must be given an opportunity to be
heard.56 Here, petitioners were only verbally dismissed, without any notice given or having been
informed of any just cause for their dismissal.

This Court cannot rest easy on respondents' insistence that petitioners voluntarily terminated their
employment. Contrary to their assertion, petitioners were left with no choice but to accept the
Compromise Agreement and to go back to the Philippines.

After accumulating a huge amount of debt to work abroad, petitioners were burdened to continue working
for respondents that they were constrained to sign the piece-rate-based contract upon arriving in Taiwan.
As a result, they were paid less than if they were paid on a monthly basis and, worse, they were deprived
of their overtime premium. Petitioners inevitably defaulted on their loan obligations. To make matters
worse, they were terminated from employment on a whim and were left homeless.

One can only imagine how all these compounded a heavy burden upon petitioners. Overseas Filipino
workers venture out into unfamiliar lands in the hope of providing a better future for their families. They
endure years of being away from their loved ones while bearing a life of toil abroad. Our laws afford
protection to our workers, whether employed locally or abroad. It is this Court's bounden duty to uphold
these laws and dispense justice for petitioners. With their right to substantive and procedural due process
denied, it is clear that petitioners were illegally dismissed from service.

As a consequence of the illegal dismissal, petitioners are also entitled to moral damages, exemplary
damages, and attorney's fees. In Torreda v. Investment and Capital Corporation of the Philippines:57

Moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or
constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs or
public policy. Exemplary damages, on the other hand, are recoverable when the dismissal was done in a
wanton, oppressive, or malevolent manner.58

Petitioners have sufficiently shown how bad faith attended respondents' actions. They were made to sign
a new employment contract on a piece-rate basis, which violates the Migrant Workers and Overseas
Filipinos Act. Under that contract, petitioners were underpaid and deprived of their overtime premium.

Moreover, petitioners' employment contracts were unilaterally terminated. After their meeting before the
Bureau of Labor, respondents told petitioners that they were no longer employed. As the Court of Appeals
noted, respondents did not refute petitioners' narration that they were immediately escorted back to the
factory, ordered to pack their possessions, and were left at a train station.59 Petitioners were forced to
stay in shelters for months without any means of livelihood. Worse, they were deprived of due process
when they were terminated without any notice or opportunity to be heard.

Being deprived of their hard-earned salaries and, eventually, of their employment, caused petitioners
mental anguish, wounded feelings, and serious anxiety. The award of moral damages is but appropriate.

Consequently, the award of exemplary damages is necessary to deter future employers from committing
the same acts.

Additionally, petitioners are also entitled to the award of attorney's fees under Article 2208 of the Civil
Code:
ARTICLE. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

....

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly
valid, just and demandable claim;

....

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers[.]

The award of attorney's fees is proper because: (1) exemplary damages is also awarded; (2) respondents
acted in gross bad faith in refusing to pay petitioners their hard-earned salaries in form of overtime
premiums; and (3) this case is also a complaint for recovery of wages.

In addition, we further sustain the Court of Appeals' ruling in having ordered the reimbursement of
petitioners' placement fees. As they were terminated without just, valid, or authorized cause, petitioners
are entitled to the full reimbursement of their placement fees with interest at 12% per annum in
accordance with Section 7 of Republic Act No. 10022.60

III

In Serrano, this Court ruled that the clause "or for three (3) months for every year of the unexpired term,
whichever is less" under Section 1061 of the Migrant Workers and Overseas Filipinos Act is
unconstitutional for violating the equal protection and substantive due process clauses.

Later, however, this clause was kept when the law was amended by Republic Act No. 10022 in 2010.
Section 7 of the new law mirrors the same clause:

SECTION 7. Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows:

"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 damages. 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 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
solidarity 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 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, or any unauthorized deductions from the migrant worker's salary, the worker shall be entitled
to the full reimbursement of 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 judgment 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 judgment
award.

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

(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;

(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 incurred under other existing laws or rules and regulations as a consequence of
violating the provisions of this paragraph. (Emphasis supplied)

In Sameer Overseas Placement Agency, Inc. v. Cabiles,62 this Court was confronted with the question of
the constitutionality of the reinstated clause in Republic Act No. 10022. Reiterating our finding in Serrano,
we ruled 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."63 In
striking down the clause, we ruled:

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.64

This case should be no different from Serrano and Sameer.

A statute declared unconstitutional "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."65 Incorporating a similarly worded
provision in a subsequent legislation does not cure its unconstitutionality. Without any discemable change
in the circumstances warranting a reversal, this Court will not hesitate to strike down the same provision.

As such, we reiterate our ruling in Sameer that the reinstated clause in Section 7 of Republic Act No.
10022 has no force and effect of law. It is unconstitutional.66
Hence, petitioners are entitled to the award of salaries based on the actual unexpired portion of their
employment contracts. The award of petitioners' salaries, in relation to the three (3)-month cap, must be
modified accordingly.

WHEREFORE, the Petition is GRANTED. The September 29, 2011 Decision of the Court of Appeals in
CA-G.R. SP No. 116953 is AFFIRMED with MODIFICATION. Respondents Gold and Green Manpower
Management and Development Services, Inc., Sage International Development Company, Ltd., and
Alberto C. Alvina are ORDERED to pay petitioners Julita M. Aldovino, Joan B. Lagrimas, Winnie B.
Lingat, Chita A. Sales, Sherly L. Guinto, Revilla S. De Jesus, and Laila V. Orpilla the following:

(a)the amount equivalent to their salary for the unexpired portion of their employment contract;

(b) the amount equivalent to their placement fee with an interest of twelve percent (12%) per annum;

(c) moral damages in the amount of Fifty Thousand Pesos (P50,000.00) each;

(d) exemplary damages in the amount of Twenty-Five Thousand Pesos (P25,000.00) each;

(e) attorney's fees equivalent to ten percent (10%) of their respective monetary awards; and

(f) legal interest of six percent (6%) per annum of the total monetary awards, except for the
reimbursement of placement fee, which has an interest of 12% per annum, computed from the finality of
this Decision until its full satisfaction.67

SO ORDERED.

A. Reyes, Jr., and Inting, JJ., concur.

Peralta, (Chairperson), J., on official leave.

Hernando, J., on official leave.

SECOND DIVISION

G.R. No. 205725, January 18, 2021

MARCELO M. CORPUZ, JR., Petitioner, v. GERWIL CREWING PHILS., INC., Respondent.

DECISION

GESMUNDO, J.:

Licensed recruitment agencies are subject to a continuing liability to ensure the welfare of the Filipino
workers they deployed abroad. Their carelessness and wanton disregard of such responsibility that result
to the substitution of employment contracts previously approved by the Department of Labor and
Employment (DOLE), through the Philippine Overseas Employment Administration (POEA), shall render
them liable for damages.

The Case

We resolve this appeal by certiorari seeking to reverse and set aside the September 28, 2012 Decision1
and January 30, 2013 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 120720, which
affirmed the March 30, 2011 Decision3 and May 30, 2011 Resolution4 of the National Labor Relations
Commission (NLRC) in NLRC LAC No. 10-000818-10. The NLRC decision reversed and set aside the
September 11, 2010 Decision5 of the Labor Arbiter (LA) that granted petitioner's claim for disability
benefits.

Antecedents

Gerwil Crewing Phils., Inc. (respondent) recruited Marcelo M. Corpuz, Jr. (petitioner) to work as an Able
Seaman for a period of twelve (12) months with Echo Cargo & Shipping LLC on board the vessel MT
Azarakhsh,6 with a monthly salary of Four Hundred Sixty-One Dollars ($461.00).7 Respondent deployed
petitioner on August 5, 2008.8
On May 17, 2009, petitioner was brought to the Sheik Khalifa Medical City in the United Arab Emirates
due to severe headache and vomiting after he allegedly sustained a fall while lifting heavy motor parts on
board the vessel. He experienced an episodic low back pain radiating to his left posterior thigh
accompanied by severe pain of the foot. This caused him to slip, hitting his chest first, followed by his
head. The diagnosis revealed that he suffered from Left Cerebellar Hemorrhage with Intraventricular
Hematoma. Aside from the medications given, he underwent an external ventricular drain (EVD) to relieve
his hydrocephalus. Petitioner was eventually recommended for repatriation to undergo further evaluation
and treatment.9

On September 9, 2009, petitioner arrived in Manila on a wheelchair. Petitioner claims to have reported to
the office of respondent the next day. However, respondent's Chief Executive Officer (CEO), Rommel S.
Valdez (Valdez), denied his request for medical assistance on the ground that his illness was not work-
related. Valdez also allegedly humiliated him in front of the people present in the agency.10

Consequently, petitioner sought medical consultation with Dr. Nune Babao-Balgomera (Dr. Balgomera), a
neurologist at Sta. Rosa Medical Center. On October 28, 2009, Dr. Balgomera issued a medical
certificate declaring petitioner as permanently unfit for sea duty in any capacity and suffering from Severe
Complex Cerebral Function Disturbance or Post Traumatic Psychoneurosis. Dr. Balgomera classified
petitioner's illness as a Grade I disability.11

Petitioner also consulted Dr. Donald S. Camero (Dr. Camero), an internist, who also gave an assessment
of POEA Disability Grade I. Armed with both medical assessments, petitioner demanded payment of
disability benefits from respondent to no avail.12

On April 20, 2010, petitioner instituted a complaint against respondent and Valdez for payment of
disability benefits, among others.13

Labor Arbiter Ruling

The Labor Arbiter (LA) promulgated a Decision on September 11, 2010, disposing as
follows:chanroblesvirtualawlibrary

WHEREFORE, judgment is hereby rendered ordering respondents to jointly and

severally:cralawlawlibrary

Pay complainant permanent disability benefit in the amount of $60,000.00;

Pay complainant sickness allowance in the amount of $1,844.00;

Pay complainant moral and exemplary damages in the total amount of [P300,000.00]; and

Pay complainant attorney's fees equivalent to 10% of the total award.

SO ORDERED.14

The LA based his decision solely on the evidence submitted by petitioner in view of respondent's failure to
file a position paper. The LA held that since respondent refused to provide petitioner with medical
attendance, the latter was justified in consulting his own personal doctors. Also, both certifications issued
by Dr. Balgomera and Dr. Camero showed that petitioner's injury was related to his exposure to toxic and
hazardous materials.15

Aggrieved, respondent appealed to the NLRC.

NLRC Ruling
On March 30, 2011, the NLRC reversed the decision of the LA and dismissed petitioner's complaint for
lack of merit.16 The NLRC noted that based on petitioner's logbook, petitioner did not report to the
agency on September 10, 2009.17 Petitioner's failure to report upon repatriation was fatal to his claim for
disability benefits.

The NLRC also held that petitioner failed to prove that his injury was work-related. As an Able Seaman,
petitioner's duties were confined only to deck and navigational work and did not include lifting of motor
parts. Furthermore, the medical certificates submitted by petitioner failed to establish that the injury he
sustained was work-related because his doctors readily concluded that he had been exposed to
hazardous materials, although the evidence on record did not support such finding.18

Petitioner filed a motion for reconsideration, which the NLRC denied in its May 30, 2011 Resolution.19
Unsatisfied, petitioner filed a petition for certiorari before the CA.

CA Ruling

In the now assailed decision, the CA dismissed the petition for certiorari for lack of merit. It agreed with
the NLRC that petitioner was not entitled to disability compensation and other benefits due to his failure to
comply with the compulsory examination upon repatriation. It noted that petitioner's name did not appear
in respondent's visitor logbook for the period of September 4, 2009 to October 6, 2009. The NLRC also
held that petitioner failed to submit evidence to support his claim that his disability was work-related.20

Petitioner filed a motion for reconsideration, which the CA denied in its January 30, 2013 Resolution.

Hence, this petition.

Issue

Petitioner attributes the sole error on the part of the CA:chanroblesvirtualawlibrary

WHETHER OR NOT THE NLRC (FIRST DIVISION) AND THE HONORABLE COURT OF APPEALS
(FOURTEENTH DIVISION) COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN RENDERING THE ASSAILED DECISIONS AND DENIED
RESOLUTIONS.21

Petitioner points to two (2) procedural defects in respondent's appeal before the NLRC: (1) that the
appeal was filed out of time because respondent received a copy of the LA Decision on September 30,
2010 but filed the notice of appeal only on October 11, 2011; and (2) that respondent did not post a cash
or surety bond.22

He also argues that the NLRC committed grave abuse of discretion in reversing the LA decision and
denying his claim for Grade 1 disability benefits and attorney's fees. Based on his medical histories,
records and physician's reports, the working conditions at MT Azarakhsh increased his risk of contracting
Severe Complex Cerebral Function Disturbance.23 Considering that his injury arose out of the
occupational conditions on board MT Azarakhsh, he should be entitled to disability compensation.24

Finally, petitioner maintains that he has the prerogative to consult a physician of his choice. Hence, the
CA and the NLRC erred in ruling that the company-designated physician is the sole authority to determine
the degree of disability of an ailing seafarer.25

The Court resolved to require respondent to comment on the petition in its June 19, 2013 Resolution.26
Despite such notice, respondent failed to file its comment. Hence, on March 3, 2014, the Court issued a
Resolution27 requiring Atty. Robertson R. Aquino (Atty. Aquino) of Atienza Madrid and Formento, to file a
comment and to show cause why he should not be disciplinarily dealt with or held in contempt. Noting that
respondent's counsel again failed to comply with the prior resolutions, the Court resolved on December
10, 2014 to impose upon Atty. Aquino a fine of P1,000.00 and to file a comment.28 Respondent counsel's
failure to comply with said resolution prompted the Court to issue another Resolution on January 11,
201629 imposing an additional fine of P1,000.00 on Atty. Aquino. Respondent's counsel once again failed
to comply with the prior resolutions, and the Court resolved to impose on him another additional fine of
P1,000.00.30

In view of the several notices sent to respondent to file the required comment which remained unheeded,
the Court deems it proper to dispense with the filing of the same and to proceed with the resolution of the
instant petition.

Our Ruling

The petition is partially meritorious.

Respondent's appeal before the NLRC is not procedurally infirm

Petitioner insists that respondent's appeal before the NLRC was defective because it was filed beyond
the reglementary period and was not accompanied by a cash or surety bond.

We find the above claim to have no basis both in fact and in law.

Section 1, Rule VI of the 2005 Revised Rules of Procedure of the NLRC, the applicable rule at the time
that respondent filed its appeal, reads:chanroblesvirtualawlibrary

Section 1. Periods of Appeal. - Decisions, resolutions or orders of the Labor Arbiter shall be final and
executory unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt thereof; and in case of decisions, resolutions or orders of the Regional Director of the Department
of Labor and Employment pursuant to Article 129 of the Labor Code, within five (5) calendar days from
receipt thereof. If the 10th or 5th day, as the case may be, falls on a Saturday, Sunday or holiday, the last
day to perfect the appeal shall be the first working day following such Saturday, Sunday or holiday.

x x x x (emphasis supplied)

Respondent received a copy of the LA Decision on September 30, 2010 and therefore had until October
10, 2010 to file an appeal to the same. Since October 10, 2010 fell on a Sunday, it had until October 11,
2010 to file its appeal. Hence, respondent submitted its appeal within the reglementary period.

As regards respondent's alleged failure to secure a bond, We find the same to be without basis. The
records show that it had secured a supersedeas bond covering the monetary award from CAP General
Insurance Corporation to which the latter issued CGI Bond No. JCL (15) 00001/00242.31 Accordingly,
respondent had perfected its appeal before the NLRC.

Petitioner is not entitled to disability benefits; Failure to submit to postemployment medical examination
was fatal to his cause

The main thrust of the instant petition anchors on petitioner's claim for disability benefits. As the one
claiming entitlement to benefits under the law, petitioner must establish his right thereto by substantial
evidence.32

Petitioner's right to receive disability benefits is determined by his employment contract. Deemed written
in his contract is a set of standard provisions established and implemented by the POEA called the
Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board
Ocean-Going Vessels, which are the mm1mum requirements acceptable to the government for the
employment of Filipino seafarers.33 In petitioner's case, the 2000 POEA Standard Employment Contract
(2000 POEA-SEC) governs his relationship with respondent.

Under the 2000 POEA-SEC, two elements must concur for an injury or illness to be compensable. First,
the injury or illness must be workrelated; and second, the work-related injury or illness must have existed
during the term of the seafarer's employment contract.34 Paragraph 3, Sec. 20(8) of the same contract
also requires him to submit to a post-employment medical examination within three (3) days from
repatriation, viz.:chanroblesvirtualawlibrary

3. Upon sign off from the vessel for medical treatment, the seafarer is entitled to sickness allowance
equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been
assessed by the company-designated physician but in no case shall this period exceed one-hundred
twenty (120) days.

For this purpose, the seafarer shall submit himself to a post employment medical examination by a
company-designated physician within three working days upon his return except when he is physically
incapacitated to do so, in which case a written notice to the agency within the same period is deemed as
compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his
forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly
between the employer and the seafarer. The third doctor's decision shall be final and binding on both
parties. (emphases and underscoring supplied)

Dionio v. ND Shipping Agency and Allied Services, Inc.35 succinctly laid down the rules relating to the
mandatory post-employment medical examination under paragraph 3, Sec. 20 as
follows:chanroblesvirtualawlibrary

[A] seafarer claiming disability benefits is required to submit himself to a post-employment medical
examination by a company designated physician within three (3) working days from repatriation. Failure to
comply with such requirement results in the forfeiture of the seafarer's claim for disability benefits. There
are, however, exceptions to the rule: (1) when the seafarer is incapacitated to report to the employer upon
his repatriation; and (2) when the employer inadvertently or deliberately refused to submit the seafarer to
a post employment medical examination by a company-designated physician. Moreover, it is the burden
of the employer to prove that the seafarer was referred to a company-designated doctor.36 (emphases
supplied; citation omitted)

Herein petitioner claims that he went to respondent's office on September 10, 2009, the day following his
repatriation, but respondent, through CEO Valdez, refused to refer him to the company-designated
physician.

We are unconvinced.

While the rule vests in the employer the burden to prove that the seafarer was referred to the company-
designated physician for a post employment examination, the same presupposes that the seafarer had
first reported to the employer's office.

In here, respondent submitted copies of its visitor logbook to disprove petitioner's claim that he visited
their office immediately after his repatriation. Notable that petitioner's name does not appear in the entries
of said logbook from September 4, 2009 until October 6, 2009.37 Faced with this evidence, petitioner
remained silent and did not rebut or address the same in his pleadings. Between petitioner's bare and
unsupported allegations and the documentary evidence submitted by respondents, We are more inclined
to accord weight to the latter. Thus, We find petitioner's failure to comply with the mandatory post-
employment medical examination to be due to his own omission and not through respondent's fault.

In this regard, We likewise reject petitioner's assertion that he has the prerogative to consult a physician
of his choice. In Coastal Safeway Marine Services, Inc. v. Esguerra,38 We explained that despite having
a choice to consult his own doctor for a second opinion, the seafarer still has to comply with the three-day
mandatory post-employment medical examination, thus:chanroblesvirtualawlibrary
[Section 20-B(3) of the 2000 POEA-SEC] has been interpreted to mean that it is the company-designated
physician who is entrusted with the task of assessing the seaman's disability, whether total or partial, due
to either injury or illness, during the term of the latter's employment. Concededly, this does not mean that
the assessment of said physician is final, binding or conclusive on the claimant, the labor tribunal or the
courts. Should he be so minded, the seafarer has the prerogative to request a second opinion and to
consult a physician of his choice regarding his ailment or injury, in which case the medical report issued
by the latter shall be evaluated by the labor tribunal and the court, based on its inherent merit. For the
seaman's claim to prosper, however, it is mandatory that he should be examined by a company-
designated physician within three days from his repatriation. Failure to comply with this mandatory
reporting requirement without justifiable cause shall result in forfeiture of the right to claim the
compensation and disability benefits provided under the POEA-SEC.39 (emphasis supplied; citations
omitted)

To reiterate, the three-day period from return of the seafarer or signoff from the vessel, whether to
undergo a post-employment medical examination or report the seafarer's physical incapacity, should
always be complied with to determine whether the injury or illness is work-related.40 Hence, petitioner's
failure to comply with the mandatory reporting requirement resulted in the forfeiture of his right to claim
disability benefits and proved fatal to his cause.

Respondent is liable to pay moral and exemplary damages, and attorney's fees

While petitioner may have forfeited his right to claim disability benefits, We find it proper to award him with
moral damages, exemplary damages, and attorney's fees.

Sec.18, Article II and Sec. 3, Article XIII of the 1987 Constitution accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare.41 Republic Act
(R.A.) No. 8042 (The Migrant Workers and Overseas Filipinos Act of 1995) confirms this State policy by
declaring that the rights and interest of distressed overseas Filipinos, in general, and Filipino migrant
workers, in particular, documented or undocumented, are adequately protected and safeguarded.42
Evidently, Congress enacted R.A. No. 8042 to institute the policies on overseas employment and to
establish a higher standard of protection and promotion of the welfare of migrant workers.43

One of the safeguards incorporated in R.A. No. 8042 is found in Sec. 10 which provides for the solidary
and continuing liability of recruitment agencies against monetary claims of migrant workers. These
pecuniary claims may arise from employer-employee relationship or by virtue of law or contract, and may
include claims of overseas workers for damages. Sec. 10 reads:chanroblesvirtualawlibrary

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 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 provision 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.

x x x x (emphases supplied)

The cases of Interorient Maritime Enterprises, Inc. v. National Labor Relations Commission (Interorient)44
and Becmen Service Exporter and Promotion, Inc. v. Spouses Cuaresma (Becmen)45 affirm the
continuing responsibility of recruitment agencies in ensuring the welfare and safety of overseas Filipino
workers. In Interorient, the Court held that the employer has the obligation to ensure the safe return of a
distressed worker.46 In Becmen, the Court stressed that recruitment agencies are expected to extend
assistance to migrant workers, especially those who are in distress.47 We
explained:chanroblesvirtualawlibrary

Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers and Overseas Filipinos Act of 1995, the
State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in general, and
Filipino migrant workers, in particular. The State shall provide adequate and timely social, economic and
legal services to Filipino migrant workers. The rights and interest of distressed overseas Filipinos, in
general, and Filipino migrant workers, in particular, documented or undocumented, are adequately
protected and safeguarded.

xxxx

Thus, more than just recruiting and deploying OFWs to their foreign principals, recruitment agencies have
equally significant responsibilities. In a foreign land where OFWs are likely to encounter uneven if not
discriminatory treatment from the foreign government, and certainly a delayed access to language
interpretation, legal aid, and the Philippine consulate, the recruitment agencies should be the first to come
to the rescue of our distressed OFWs since they know the employers and the addresses where they are
deployed or stationed. Upon them lies the primary obligation to protect the rights and ensure the welfare
of our OFWs, whether distressed or not. Who else is in a better position, if not these recruitment
agencies, to render immediate aid to their deployed OFWs abroad?48 (emphasis supplied; citations
omitted)

We also ruled in Becmen that the acts and omissions of the foreign principal and the recruitment agencies
on the plight of the migrant workers and their families ran against public policy. Their indifference
undermined and subverted the interest and general welfare of our Filipino workers abroad who are
entitled to full protection under the law. As such, they shall be liable to pay moral and exemplary
damages, as well as attorney's fees.

Verily, R.A. No. 8042 did not limit the responsibility of recruitment agencies to the recruitment and
deployment of Filipino workers to foreign countries. As DOLE-accredited agencies, they entered into a
covenant with the State to promote the safety and welfare of Filipino workers. They have, in fact,
undertaken to ensure that the "contracts of employment are in accordance with the standard employment
contract and other applicable laws, regulations and collective bargaining agreements."49 This
responsibility exists during the lifetime of the employment contract and shall continue despite substitution,
amendment or modification of the agreement.50

Hence, We turn our attention to the averments made by respondent in its Notice of Appeal with
Memorandum of Appeal51 dated October 11, 2010 before the NLRC. Respondent laid down the following
factual antecedents as follows:chanroblesvirtualawlibrary

Respondents-appellants GERWIL CREWING PHILS., INC. and MR. ROMMEL S. VALDEZ, ET AL., the
former a domestic corporation, are engaged in the business of manning and crewing seafarers.

Complainant-appellee Corpuz was hired as Able Seaman and was deployed last August 5, 2009 through
respondent agency, Gerwil under the principal, Echo Cargo & Shipping LLC, represented by Ms. Rosalie
S. Cortes.

During that time of hiring and deployment of appellee Corpuz, the principal Echo Cargo was under
probationary standing with appellant Gerwil. The extension of the accreditation of Echo Cargo was not
granted for its failure to submit the required documents. For which reason, its agent Ms. Cortes decided to
pull out Echo Cargo with Gerwil and transfer the same to other local agencies.

Appellants Gerwil and Valdez have not heard any news from appellee in regard to his status on board. In
fact, they were never notified about the events that transpired until such time that they received a copy of
the complaint with the NLRC.

x x x x52
Notably, respondent deployed petitioner to work on board MT Azarakhsh while the foreign principal, Echo
Cargo, was under probationary status and under an extended accreditation. However, the Court finds it
disturbing that after petitioner's deployment on August 5, 2008 until sometime after the filing of the
complaint on April20, 2010, respondent did not even have an iota of information regarding his status. It
did not even attempt or seek out information about the worker that it recruited and deployed after the
foreign principal failed to complete its accreditation. Palpably, this fell short of the agency's responsibility
to continuously ensure petitioner's welfare and safety while deployed overseas.

Respondent's apparent carelessness became more glaring by the details disclosed in the Sea Service
Certificate (certificate)53 dated August 13, 2009 presented by petitioner. The certificate showed that
petitioner worked with Al Mansoori Production Services Co. (LLC) as an Oiler on board M.V. Alshaheen
MPS (DPS2), a production well testing and supply vessel, from August 6, 2008 to August 10, 2009.54
The entries in the certificate, which respondent did not refute, were completely different from those in the
Contract of Employment55 that it executed on May 28, 2008. The pertinent entries in the said contract
read:chanroblesvirtualawlibrary

Name of Agent: GERWIL CREWING PHILIPPINES, INC.

For and in behalf of: ECHO CARGO AND SHIPPING LLC

xxxx

Name of vessel:MT AZARAKHSH

xxxx

1.1. Duration of Contract: 12 MONTHS

1.2. Position: ABLE SEAMAN[56 (emphases supplied)

The Seabased Overseas Filipino Worker (OFW) Information57 also contained similar entries with further
information that petitioner was deployed on August 5, 2008.

A simple scrutiny of the terms and conditions of the Contract of Employment vis-a-vis the Sea Service
Certificate readily reveals respondent's overwhelming inaction in ensuring the welfare of petitioner. In the
POEA-approved contract, Echo Cargo appeared as petitioner's foreign employer while the certificate
referred to a certain Al Mansoori Production Services Co. (LLC). Based on the contract, petitioner was
recruited as an Able Seaman but the certificate showed him to have worked as an Oiler. Even the vessel
assignment of petitioner appeared to be different. Furthermore, petitioner was deployed on August 5,
200858 while the certificate showed that petitioner worked as Oiler on board M.V. Alshaheen MPS
(DPS2) from August 6, 2008 to August 10, 2009. Evidently, petitioner rendered his services to Al
Mansoori within the same 12-month period covered by the POEA Contract executed by respondent with
Echo Cargo as the foreign principal.

Evidently, the salient terms of the Contract of Employment were altered or changed without the approval
of the DOLE through the POEA. Respondent cannot feign ignorance of the same, considering that such
was done well within the stipulated period of the POEA approved contract. As a licensed recruitment
agency, respondent had full knowledge of the requirement of prior review and approval by the POEA in
the event of any alterations or changes to the Contract. Only after gaining this approval shall the
amendments, modifications or alterations be deemed an integral part of the POEA Standard Employment
Contract.59

In here, respondent had been complacent with the fact that it was able to deploy petitioner abroad without
ensuring his status and his whereabouts despite the non-accreditation of the foreign principal Echo
Cargo. Respondent seemed to have delighted in its own inaction, misguidedly secured in its flawed notion
that once deployed, it no longer has any responsibility to petitioner. This nonchalant attitude cannot be
countenanced. Respondent's seeming indifference cannot be ascribed as a simple case of negligence as
it possessed full knowledge of its responsibilities as a licensed recruitment agency.
Needless to state that respondent's omission resulted in the change of petitioner's foreign employer on
board a different vessel, and service in a totally different capacity which working conditions may have led
to his medical repatriation. Indubitably, the substitution or alteration of the POEAapproved contract had
relegated petitioner to the unfavorable situation which R.A. No. 8042 specifically seeks to avoid. Sec. 6(i)
of the law provides:chanroblesvirtualawlibrary

SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract
services, promising or advertising for employment abroad, whether for profit or not, when undertaken by
non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442,
as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-
licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or
more persons shall be deemed so engaged. It shall likewise include the following acts, whether
committed by any person, whether a non-licensee, non holder, licensee or holder of authority:

xxxx

(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the
Department of Labor and Employment from the time of actual signing thereof by the parties up to and
including the period of the expiration of the same without the approval of the Department of Labor and
Employment;

x x x x (emphases supplied)

Clearly, respondent's inaction or omission was against existing law and public policy as it perpetrated the
illegal and pernicious practice of substituting the POEA-approved contract to the detriment of the Filipino
worker. Having knowingly reneged on its obligation to ensure the welfare of petitioner while deployed
abroad, and in allowing the substitution of a previously approved POEA contract, respondent should be
held liable.

To reiterate, Sec. 10 of R.A. No. 8042 allows the migrant worker to claim moral and exemplary damages
in connection with the employment contract or as provided by law. In Becmen,60 the Court imposed
moral damages by reason of misconduct on the part of the employer under Article 2219(10) of the Civil
Code, which allows recovery of such damages in actions referred to in Article 21.61 The Court also
ordered the payment of exemplary damages to set an example to foreign employers and recruitment
agencies on how to treat and act on the plight of distressed Filipino migrant workers.

In view of the foregoing, the Court holds that respondent should be liable to pay the following: moral
damages in the amount of P100,000.00; exemplary damages in the amount of P100,000.00, due to its
wanton behavior and by way of example for the public good;62 and attorney's fees equal to ten percent
(10%) of the total monetary award.63 Finally, the total monetary awards shall earn legal interest at the
rate of six percent (6%) per annum from finality of this judgment until fully satisfied.64

WHEREFORE, the petition is PARTIALLY GRANTED. The September 28, 2012 Decision and January
30, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 120720 are AFFIRMED with
MODIFICATION.

Gerwil Crewing Phils., Inc. is hereby ORDERED to indemnify Marcelo M. Corpuz, Jr. the following
amounts:cralawlawlibrary

Moral damages in the amount of One Hundred Thousand Pesos (P100,000.00);

Exemplary damages m the amount of One Hundred Thousand Pesos (P100,000.00);

Attorney's fees equal to ten percent (10%) of the total monetary award; and

Costs of suit.
All monetary awards shall earn legal interest at the rate of six percent (6%) per annum from finality of this
Decision until fully satisfied.chanroblesvirtualawlibrary

SO ORDERED.

Perlas-Bernabe, Senior Associate Justice, (Chairperson), Lazaro-Javier, and M. Lopez, JJ.,

concur.chanrobleslawlibrary

Rosario,*J., on official leave.

SECOND DIVISION

G.R. No. 124439 February 5, 2004

PEOPLE OF THE PHILIPPINES, appellee

vs.

FLOR GUTIERREZ Y TIMOD, appellant.

DECISION

TlNGA, J.:

In its decision dated 22 March 1996, the Regional Trial Court (RTC) of Pasay City, Branch 1081 found
accused Flor Gutierrez y Timod guilty beyond reasonable doubt of Illegal Recruitment in Large Scale and
sentenced her to suffer the penalty of life imprisonment and to pay a fine of P100,000.00.

The Information in Criminal Case No. 95-6796 reads as follows:

That from the months of April to August 1994 in Pasay City, Philippines, and within the jurisdiction of this
Honorable Court, accused FLOR GUTIERREZ Y TIMOD conspiring and confederating with CECILIA
BAUTISTA, ESTHER GAMILDE, LINDA RABAINO and MARILYN GARCIA (whose present whereabouts
are unknown) and mutually helping one another, acting in common accord, did then and there, willfully,
unlawfully and feloniously, engage in recruitment activities for overseas job placement and actually
contract, enlist and recruit EVELYN V. RAMOS, ROSEMARIE I. TUGADE, GENEROSA G. ASUNCION
and ROSALYN B. SUMAYO as domestic helpers in Dubai, United Arab Emirates, for a fee of various
amounts ranging from P10,000.00 to P15,000.00 each, without first obtaining the required license and/or
authority from the Philippine Overseas Employment Administration (POEA).

CONTRARY TO LAW.2

Arraigned on April 24, 1995, the accused entered a plea of not guilty. The version of the prosecution is as
follows:

On April 18, 1994, Rosemarie Tugade went to the house of one Celia Bautista, a "recruiter-agent" of the
accused, at Brgy. Bulala, Vigan, Ilocos Sur.3 Celia told Rosemarie that she had to submit the following
requirements for her application to work in Dubai as a domestic helper: P4,000.00 as placement fee,
P1,200.00 for passport, P850.00 for "medical," six (6) 2x2 pictures and her original birth certificate.4

The next day, Rosemarie, together with "recruiter-agent" Celia Bautista and fellow applicant Evelyn
Ramos, traveled to Manila to the house of one Esther Gamilde, another of the accused's "recruiter-
agents."5 There, Rosemarie and Evelyn filled out their bio-data forms. The two then underwent a medical
examination before having their whole-body picture taken. Esther told them that they would know the
results of their application from Celia.6

Two weeks later, Celia told Rosemarie that her application for Dubai was already approved and that she
will be receiving $150.00-dollars per month. For the first three (3) months, however, there will be salary
deductions.7

On August 27, 1994, Rosemarie and Evelyn, along with Celia and Esther, went to the accused's office at
Sarifudin Manpower and General Services at EDSA Extension, Pasay City.8 The accused told Rosemarie
that she needed to pay P2,000.00 more.9 The accused said she had received all of Rosemarie's
documents and the money paid to Celia.10 Trusting in Celia, Rosemarie did not demand a receipt from
the accused.

On August 31, 1994, the accused asked Rosemarie to give P500.00 as terminal fee for her departure in a
week's time.11 Rosemarie paid the amount, as evidenced by a receipt.12 The scheduled departure did
not push through, however. Instead, Rosemarie was told that she was to leave on September 15, 1994,
but, again, this did not materialize.13 A series of postponements followed until finally she was told that
she would be leaving before Christmas 1994. Almost predictably, her trip never came to pass.14

Private complainant Evelyn Ramos was with Rosemarie when she went to Celia Bautista's house on April
19, 1994.15 Celia told Evelyn that for P4,000.00 she could leave for Dubai to work as a domestic
helper.16 Like Rosemarie, Evelyn gave all her documents and paid the fees to Celia, who in turn handed
them to Esther Gamilde in Tondo.17 On June 10, 1994, Ramos gave Bautista P8,000.00, which was also
turned over to Gamilde.18

On August 22, 1994, Celia told Evelyn that she only had to wait one more week before she left for
Dubai.19 On August 27, 1994, Esther brought Evelyn to the accused's office,20 where the accused asked
for an additional P2,000.00 as processing fee for the Philippine Overseas Employment Agency
(POEA).21 Evelyn paid the amount on August 31, 1994,22 including a terminal fee of P500.00. Like
Rosemarie, Evelyn was not able to leave the country despite the accused's promises.

Another complainant, Rosalyn D. Sumayo, also applied for overseas job placement as a domestic helper
in Dubai. Her experience was more agonizing. In her case, it was one Marilyn Garcia who assisted
Rosalyn.23 She submitted a copy of her birth certificate, six (6) copies of 2 x 2 pictures, two (2) copies of
her whole-body picture, passport, and medical certificate.24 Marilyn also asked Rosalyn to pay: a
processing fee of P7,500.00, P2,620.00 as full tax, P500.00 as terminal fee, and P3,000.00 as service
charge.25
All the documents and money given by Rosalyn to Marilyn were subsequently remitted to the accused at
her office on June 28, 1994.26 The accused told Rosalyn that she would be leaving anytime, but after
three months, Rosalyn's departure did not push through.27

Despite the setback, the accused kept assuring Rosalyn that she would still be able to leave.28 One time,
the accused brought her to the airport and instructed her to hide in the airport restroom.29 After fifteen
minutes, the accused told her that they had to leave the airport because "mahigpit sa immigration."30 On
another occasion, the accused directed Rosalyn to hide inside the Kayumanggi Restaurant for fifteen (15)
minutes.31 Nothing happened after, though, and they went home.

On November 14, 1994, Rosalyn was again at the airport.32 The accused warned her, though, that if the
Immigration Officer insisted on seeing her papers, it would be better for her to leave.33 As directed, she
left the airport when she was asked to produce her documents.34

Exasperated, Rosalyn went to the accused's house and demanded the return of her money and her
documents. Instead of acceding to Rosalyn's demands, the accused shouted at her and warned her that
she had to pay a cancellation fee of $300.00.35 Rosalyn was not able to give the amount so she stayed
with the accused, who assured her that she would still be able to leave the country and that she would
receive a monthly salary of $150 to $200.36 These promises were never fulfilled. Rosalyn thus went to
the POEA, where POEA Administrator Felicisimo Joson, Jr. informed her that the accused did not have a
license to recruit.37

Generosa Asuncion suffered the same fate as her co-applicants. In August 1994, she applied for
overseas job placement with one Linda Rabaino.38 Generosa submitted her passport, medical certificate,
clearance from the National Bureau of Investigation (NBI), birth certificate, bio-data and pictures.39 She
also paid P15,000.00 in two installments on September 9 and 12, 1994,40 which payments were not
receipted.

Linda told Generosa she would be leaving on September 13, 1994.41 However, she was not able to leave
because, according to Linda, at 25, Generosa was under-aged.42

Linda then referred Generosa to the accused in the latter's office, where Linda turned over Generosa's
documents as well as the P15,000 00 to the accused.43 The accused promised that Linda would be able
to leave, but her departure never took place.44 When Generosa demanded the return of her money and
her documents, the accused told her that she had to pay a cancellation fee of $600.00.45 Stunned, Linda
just opted to await the further outcome of her application.46 Her waiting was all for naught.

With the promises of jobs abroad unfulfilled, complainants decided to verify if the accused was a licensed
recruiter. Upon learning from the POEA that she was not so licensed,47 they proceeded to the Philippine
Anti-Crime Commission (PACC) to execute their respective affidavits.48

SPO4 Johnny Marqueta investigated the women's complaint. He confirmed with the POEA that the
accused was not licensed or authorized to recruit overseas contract workers.49 The four complainants
also informed him that the accused wanted to meet with the group on January 26, 1995.50 SPO4
Marqueta thus had their money, totaling P2,000.00,51 marked at the National Bureau of Investigation
(NBI) Forensic Section for their entrapment operation.52

On January 26, 1995, the accused met with the four complainants at Jollibee, Commonwealth Avenue,
Quezon City. As soon as she finished counting the marked money and wrapping it in Jollibee napkins, the
accused was arrested.53

In her defense, the accused claimed that as an "employee" of a duly licensed agency who was tasked to
recruit and offer job placements abroad, she could not be held liable for illegal recruitment.54 She
admitted that she had no authority to recruit in her personal capacity,55 but that her authority emanated
from a Special Power of Attorney (SPA) and a Certification issued by a licensed agency.56
At the time complainants applied for overseas employment, the accused was "employed" as a Marketing
Directress of Sarifudin Manpower and General Services,57 a duly licensed agency with License No. OS-
91-LB-61193-NL issued by the Department of Labor and Employment.58 A Special Power of Attorney
(SPA) from Sarifudin, dated May 1, 1994,59 states that she was authorized:

1. To negotiate, enter into business transactions for manpower supply particularly in the Middle East
countries;

2. For and in behalf of SARIFUDIN, MANPOWER AND GENERAL SERVICES using as guidelines and
terms and conditions by both parties to secure:

(a) Verified Job Orders;

(b) Special Power of Attorney;

(c) Copy of Certified Certificate of Business Registration;

(d) VISA Authorization and/or NOC VISA.

....60

A Certification61 dated February 3, 1995, issued by the same agency, also states that: "MRS. FLOR T.
GUTIERREZ was (sic) employed as OVERSEAS MARKETING DIRECTRESS of SARIFUDIN
MANPOWER AND GENERAL SERVICES, effective May 1994, up to the present"62

The defense also submitted several documents to prove compliance with the requirements of the agency
for her to assume her duties under the SPA. These include receipts63 for a cash bond in the amount of
P30,000.00 that she paid in several installments. She also paid a royalty fee of P4,000.0064 and an office
rental fee of P3,000.00.65

The accused was also required by the agency to submit a monthly report for June 1994, as evidenced by
a Memorandum signed by the General Manager, Leah Salud.66 She submitted said monthly report,
indeed, several monthly reports.67 A document calling on all Marketing Directresses/Directors to attend a
meeting on July 8, 1994, was also presented.68

The accused did not receive any salary or allowances from Sarifudin but received commissions from the
agency's principals, the employers from foreign countries (ten in the Middle East and two in Singapore) at
the rate of U.S. $100.00 per person.69 From her commissions, she paid rent and royalty to Sarifudin.70

Edwin Cristobal, POEA Labor Employment Officer, confirmed that Sarifudin was duly licensed to engage
in recruitment activities.71 He presented a Certification issued by Ma. Salome S. Mendoza, Manager of
the Licensing Branch72 and containing the list of officers and staff of Sarifudin. On said list appear the
names "Florna Gutierrez" and "Flor Gutierrez,"73 apparently, one and the same person.74 In the same
Certification, appears the following:

It is further certified that the said agency revoked the appointment of Ms. Flor Gutierrez as Overseas
Mktg. Director/Manager in a letter dated Dec. 15, 1995, although this Office has not received nor
acknowledged the representation of Ms. Gutierrez.75

Cristobal explained that the POEA, "Never had a letter from Sarifudin registering or authorizing Flor
Gutierrez... rather, [what] we received [was a] revocation of her appointment."76 He also revealed that the
name of the accused does not appear in the records of the POEA as being employed by the agency from
the assumption of its license on June 11, 1993, up to its termination on June 11, 1995.77

The defense likewise alleged that complainants Rosemarie Tugade and Evelyn Ramos executed
Affidavits of Desistance dated May 12, 1995,78 stating that the accused had returned to them the
amounts they paid her and that the complaint was a result of a misunderstanding.

On March 22, 1996, the trial court rendered its Decision finding the accused guilty beyond reasonable
doubt of Illegal Recruitment in Large Scale:

WHEREFORE, after evaluating all the foregoing, the accused FLOR GUTIERREZ is hereby found guilty
beyond reasonable doubt of Illegal Recruitment in Large Scale, and judgment is hereby rendered as
follows:

(a) Convicting the accused of Illegal Recruitment in Large Scale and sentencing her to suffer the penalty
of life imprisonment and payment of P100,000.00 fine;

(b) No reimbursement to complainants is needed since their money have already been returned;

(c) Accused to pay moral damages in the amount of P50,000.00 to each complainant;

(d) Accused to pay exemplary damages in the amount of P50,000.00 to each complainant; and

(e) To pay the costs of the suit.79

Accused Flor Gutierrez filed the present appeal seeking the reversal of her conviction.

Illegal recruitment is committed when two elements concur, namely: (1) the offender has no valid license
or authority required by law to enable one to lawfully engage in recruitment and placement of workers;
and (2) he undertakes either any activity within the meaning of "recruitment and placement" defined under
Art. 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code.80 Art. 13(b) of
the Labor Code defines "recruitment and placement" as "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."81

The crime becomes Illegal Recruitment in Large Scale when the two elements concur, with the addition of
a third element: the recruiter committed the same against three or more persons, individually or as a
group.82

Appellant argues that as a representative of a duly licensed recruitment agency, she cannot be held guilty
of Illegal Recruitment in Large Scale. We disagree.

Section 11, Rule II, Book II of the Rules and Regulations Governing Overseas Employment requires the
prior approval of the POEA of the appointment of representatives or agents:

Section 11. Appointment of Representatives. Every appointment of representatives or agents of licensed

agency shall be subject to prior approval or authority of the Administration.
The approval may be issued upon submission of or compliance with the following requirements:

a. Proposed appointment or Special Power of Attorney;

b. Clearances of the proposed representative or agent from NBI;

c. A sworn or verified statement by the designating or appointing person or company assuming full
responsibility for all the acts of the agent or representative done in connection with the recruitment and
placement of workers.

Approval by the Administration of the appointment or designation does not authorize the agent or
representative to establish a branch or extension office of the licensed agency represented.

Any revocation or amendment in the appointment should be communicated to the administration.

Otherwise, the designation or appointment shall be deemed as not revoked or amended.

Section 1, Rule X of the same Book, in turn, provides that "recruitment and placement activities of agents
or representatives appointed by a licensee, whose appointments were not authorized by the
Administration shall likewise constitute illegal recruitment."

The Certification from the POEA that it "has not received nor acknowledged the representation of Ms.
Gutierrez" establishes that the appointment of appellant by Serafudin as a representative or agent was
not authorized by the POEA. It may be true that the POEA received from Serafudin a revocation of
appellant's appointment, but still is of no consequence since Serafudin in the first place did not submit her
appointment to the POEA, and so the POEA has nothing to approve.

As found by the trial court83 the evidence on record, notably appellant's own version, indicates that she
was running her own labor recruitment business.

Appellant cannot escape liability by claiming that she was not aware that before working for her employer
in the recruitment agency, she should first be registered with the POEA.84 Illegal recruitment in large
scale is malum prohibitum, not malum in se.85 Good faith is not a defense.

That appellant engaged in recruitment and placement is beyond dispute. The complaining witnesses
categorically testified that the accused promised them on several occasions that they would be leaving for
work abroad. Appellant received complainants' money and documents, a fact that the complainants
themselves witnessed and which the accused acknowledged when she returned the same to them after
the filing of the case against her. Appellant even brought complainant Rosalyn Sumayo to the airport
three times, raising her expectations, but leaving her hanging in mid-air. The accused even had the
audacity to demand cancellation fees from the complainants when they asked for a refund.

The Affidavits of Desistance executed by two of the complainants deserve little weight. The Court
attaches no persuasive value to affidavits of desistance, especially when executed as an afterthought. As
held in the case of People v. Ubina,86 "it would be a dangerous rule for courts to reject testimonies
solemnly taken before the courts of justice simply because the witnesses who had given them later on
changed their mind for one reason or another; for such rule would make solemn trials a mockery and
place the investigation of truth at the mercy of unscrupulous witnesses."87

As appellant committed illegal recruitment against three or more persons, she is liable for Illegal
Recruitment in Large Scale.
WHEREFORE, the Decision of the Regional Trial Court, finding appellant Flor Gutierrez y Timod guilty
beyond reasonable doubt of the crime of Illegal Recruitment in Large Scale and sentencing her to life
imprisonment and to pay a fine of P100,000.00 is AFFIRMED.

SO ORDERED.

Puno, (Chairman), Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur.