Professional Documents
Culture Documents
SERENO, C.J.:
FACTS:
On 14 December 1993, respondents Simeon Dejero and Teodoro Permejo filed separate
Complaints for illegal dismissal, nonpayment of salaries and overtime pay, refund of transportation
expenses, damages, and attorney fees against PRO Agency Manila, Inc., and Abdul Rahman Al
Mahwes.
The Labor Arbiter Pedro Ramos rendered a decision ordering respondents Pro Agecy Manila Inc.,
and Abdul Rahman Al Mahwes to pay complainants. The LA also issued a Writ of Execution. When
the writ was returned unsatisfied, an Alias Writ of Execution was issued, but was also returned
unsatisfied.
Respondents filed a Motion to Implead Respondent Pro Agency Manila, Inc. Corporate Officers
and Directors as Judgment Debtor. It included petitioner as the Vice-president/Stockholder/Director
of PRO Agenct, Manila, Inc. The LA granted the motion.
A 2nd Alias Writ of Execution was issued, which resulted in the garnishment of petitioner bank
deposit in the amount of P85,430.48. Since, judgment remained unsatisfied, respondents sought a
3rd alias writ of execution. The motion was granted resulting in the levying of two parcels of lot
owned by petitioner located in San Fernando Pampanga.
Petitioner filed a Motion to Quash 3rd Alias Writ of Execution. Petitioner alleged that apart from not
being made aware that she was impleaded as one of the parties to the case, the LA decision did
not hold her liable in any form whatsoever. Executive Labor Arbiter denied the motion.
Upon appeal, NLRC denied the appeal for lack of merit. NLRC ruled that in so far as overseas
migrant workers are concerned, it is R.A. 8042 itself that describes the nature of the liability of the
corporation and its officers and directors. It is not essential that the individual officers and directors
be impleaded as party respondents to the case instituted by the worker. A finding of liability on the
part of the corporation will necessarily mean the liability of the corporate officers or directors.
The CA affirmed the NLRC decision. The two Motions for Reconsideration were denied.
ISSUE: Whether or not petitioner may be held jointly and severally liable with PRO Agency Manila,
Inc. in accordance with Section 10 of R.A. 8042?
HELD: The Petitioner may not be held jointly and severally liable.
The pertinent portion of Section 10, R.A. 8042 reads as follows: 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.
In Sto. Tomas v. Salac, we had the opportunity to pass upon the constitutionality of this provision.
We have thus maintained: the Court has already held, pending adjudication of this case, that the
liability of corporate directors and officers is not automatic. To make them jointly and solidarily
liable with their company, there must be a finding that they were remiss in directing the affairs of
that company, such as sponsoring or tolerating the conduct of illegal activities.
Hence, for petitioner to be found jointly and solidarily liable, there must be a separate finding that
she was remiss in directing the affairs of the agency, resulting in the illegal dismissal of
respondents. Examination of the records would reveal that there was no finding of neglect on the
part of the petitioner in directing the affairs of the agency. In fact, respondents made no mention of
any instance when petitioner allegedly failed to manage the agency in accordance with law,
thereby contributing to their illegal dismissal.
CORTES, J.:
Petitioner Royal Crown Internationale seeks the nullification of a resolution of the National Labor
Relations Commission (NLRC) which affirmed a decision of the Philippine Overseas Employment
Administration (POEA) holding it liable to pay, jointly and severally with Zamel-Turbag Engineering
and Architectural Consultant (ZAMEL), private respondent Virgilio P. Nacionales' salary and
vacation pay corresponding to the unexpired portion of his employment contract with ZAMEL.
In 1983, petitioner, a duly licensed private employment agency, recruited and deployed private
respondent for employment with ZAMEL as an architectural draftsman in Saudi Arabia. On May 25,
1983, a service agreement was executed by private respondent and ZAMEL whereby the former
was to receive per month a salary of US$500.00 plus US$100.00 as allowance for a period of one
(1) year commencing from the date of his arrival in Saudi Arabia. Private respondent departed for
Saudi Arabia on June 28,1983.
On February 13, 1984, ZAMEL terminated the employment of private respondent on the ground
that his performance was below par. For three (3) successive days thereafter, he was detained at
his quarters and was not allowed to report to work until his exit papers were ready. On February
16, 1984, he was made to board a plane bound for the Philippines.
Private respondent then filed on April 23, 1984 a complaint for illegal termination against petitioner
and ZAMEL with the POEA, docketed as POEA Case No. (L) 84-04-401.
Based on a finding that petitioner and ZAMEL failed to establish that private respondent was
terminated for just and valid cause, the Workers' Assistance and Adjudication Office of the POEA
issued a decision dated June 23, 1986 signed by Deputy Administrator and Officer-in-Charge
Crescencio M. Siddayao, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the complainant and against respondents,
ordering the latter to pay, jointly and severally, to complainant the following amounts:
1. TWO THOUSAND SIX HUNDRED FORTY US DOLLARS (US$2,640.00) or its equivalent in
Philippine currency at the time of payment, representing the salaries corresponding to the
unexpired portion of complainant's contract;
2. SIX HUNDRED US DOLLARS (US$ 600.00) less partial payment of FIVE HUNDRED FIFTY-
EIGHT SAUDI RIYALS (SR558), or its equivalent in Philippine currency at the time of actual
payment, representing the unpaid balance of complainant's vacation pay;
3. THREE HUNDRED FIFTY US DOLLARS (US$350.00) or its equivalent in Philippine currency at
the time of actual payment representing reimbursement of salary deductions for return travel fund;
4. Ten percent (10%) of the above-stated amounts, as and for attorney's fees.
Complainant's claim for legal and transportation expenses are hereby DISMISSED for lack of
merit.
SO ORDERED.
[POEA Decision, p. 5; Rollo, p. 34.]
On July 18, 1986, petitioner filed thru its new counsel a motion for reconsideration which was
treated as an appeal to the NLRC by the POEA. Petitioner alleged that the POEA erred in holding it
solidarity liable for ZAMEL's violation of private respondent's service agreement even if it was not a
party to the agreement.
In a resolution promulgated on December 11, 1986, the NLRC affirmed the POEA decision, holding
that, as a duly licensed private employment agency, petitioner is jointly and severally liable with its
foreign principal ZAMEL for all claims and liabilities which may arise in connection with the
implementation of the employment contract or service agreement [NLRC Decision, pp. 3-4; Rollo,
pp. 26-27].
On March 30, 1987, the NLRC denied for lack of merit petitioner's motion for reconsideration.
Hence, petitioner filed the present petition captioned as "Petition for Review".
At this point, it is not amiss to note that the filing of a "Petition for Review" under Rule 45 of the
Rules of Court is not the proper means by which NLRC decisions are appealed to the Supreme
Court. It is only through a petition for certiorari under Rule 65 that NLRC decisions may be
reviewed and nullified on the grounds of lack of jurisdiction or grave abuse of discretion amounting
to lack or excess of jurisdiction. Nevertheless, in the interest of justice, this Court opted to treat the
instant petition as if it were a petition for certiorari. Thus, after the filing of respondents' comments,
petitioner's joint reply thereto, and respondents' rejoinders, the Court resolved to consider the
issues joined and the case submitted for decision.
The case at bar involves two principal issues, to wit:
I. Whether or not petitioner as a private employment agency may be held jointly and severally
liable with the foreign-based employer for any claim which may arise in connection with the
implementation of the employment contracts of the employees recruited and deployed abroad;
II. Whether or not sufficient evidence was presented by petitioner to establish the termination of
private respondent's employment for just and valid cause.
I.
Petitioner contends that there is no provision in the Labor Code, or the omnibus rules implementing
the same, which either provides for the "third-party liability" of an employment agency or recruiting
entity for violations of an employment agreement performed abroad, or designates it as the agent
of the foreign-based employer for purposes of enforcing against the latter claims arising out of an
employment agreement. Therefore, petitioner concludes, it cannot be held jointly and severally
liable with ZAMEL for violations, if any, of private respondent's service agreement.
Petitioner's conclusion is erroneous. Petitioner conveniently overlooks the fact that it had
voluntarily assumed solidary liability under the various contractual undertakings it submitted to the
Bureau of Employment Services. In applying for its license to operate a private employment
agency for overseas recruitment and placement, petitioner was required to submit, among others,
a document or verified undertaking whereby it assumed all responsibilities for the proper use of its
license and the implementation of the contracts of employment with the workers it recruited and
deployed for overseas employment [Section 2(e), Rule V, Book 1, Rules to Implement the Labor
Code (1976)]. It was also required to file with the Bureau a formal appointment or agency contract
executed by the foreign-based employer in its favor to recruit and hire personnel for the former,
which contained a provision empowering it to sue and be sued jointly and solidarily with the foreign
principal for any of the violations of the recruitment agreement and the contracts of employment
[Section 10 (a) (2), Rule V, Book I of the Rules to Implement the Labor Code (1976)]. Petitioner
was required as well to post such cash and surety bonds as determined by the Secretary of Labor
to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms
and conditions of employment as appropriate [Section 1 of Pres. Dec. 1412 (1978) amending
Article 31 of the Labor Code].
These contractual undertakings constitute the legal basis for holding petitioner, and other private
employment or recruitment agencies, liable jointly and severally with its principal, the foreign-based
employer, for all claims filed by recruited workers which may arise in connection with the
implementation of the service agreements or employment contracts [See Ambraque International
Placement and Services v. NLRC, G.R. No. 77970, January 28, 1988, 157 SCRA 431; Catan v.
NLRC, G.R. No. 77279, April 15, 1988, 160 SCRA 691; Alga Moher International Placement
Services v. Atienza, G.R. No. 74610, September 30, 1988].
In a belated attempt to bolster its position, petitioner contends in its joint reply that the omnibus
rules implementing the Labor Code are invalid for not having been published in the Official Gazette
pursuant to the Court's pronouncements in the cases of Tanada v. Tuvera [G.R. No. 63915, April
25, 1985, 136 SCRA 27; December 29, 1986, 146 SCRA 446]. Petitioner further contends that the
1985 POEA Rules and Regulations, in particular Section 1, Rule I of Book VII** quoted in the
NLRC decision, should not have been retroactively applied to the case at bar.
But these contentions are irrelevant to the issues at bar. They proceed from a misapprehension of
the legal basis of petitioner's liabilities as a duly licensed private employment agency. It bears
repeating that the basis for holding petitioner jointly and severally liable with the foreign-based
employer ZAMEL is the contractual undertakings described above which it had submitted to the
Bureau of Employment Services. The sections of the omnibus rules implementing the Labor Code
cited by this Court merely enumerate the various documents or undertakings which were submitted
by petitioner as applicant for the license to operate a private employment agency for overseas
recruitment and placement. These sections do not create the obligations and liabilities of a private
employment agency to an employee it had recruited and deployed for work overseas. It must be
emphasized again that petitioner assumed the obligations and liabilities of a private employment
agency by contract. Thus, whether or not the omnibus rules are effective in accordance with
Tanada v. Tuvera is an issue the resolution of which does not at all render nugatory the binding
effect upon petitioner of its own contractual undertakings.
The Court, consequently, finds it unnecessary to pass upon both the implications of Tanada v.
Tuvera on the omnibus rules implementing the Labor Code as well as the applicability of the 1985
POEA Rules and Regulations.
Petitioner further argues that it cannot be held solidarily liable with ZAMEL since public respondent
had not acquired jurisdiction over ZAMEL through extra-territorial service of summons as
mandated by Section 17, Rule 14 of the Rules of Court.
This argument is untenable. It is well-settled that service upon any agent of a foreign corporation,
whether or not engaged in business in the Philippines, constitutes personal service upon that
corporation, and accordingly, judgment may be rendered against said foreign corporation [Facilities
Management Corporation v. De la Osa, G.R. No. L-38649, March 26, 1979, 89 SCRA 131]. In the
case at bar, it cannot be denied that petitioner is an agent of ZAMEL. The service agreement was
executed in the Philippines between private respondent and Milagros G. Fausto, the General
Manager of petitioner, for and in behalf of ZAMEL [Annex "D" of Petition, p. 3; Rollo, p. 37].
Moreover, one of the documents presented by petitioner as evidence, i.e., the counter-affidavit of
its General Manager Ms. Fausto, contains an admission that it is the representative and agent of
ZAMEL [See Paragraph No. 1 of Annex "H" of Petition; Rollo. p. 43].
Considering the foregoing, the Court holds that the NLRC committed no grave abuse of discretion
amounting to lack or excess of jurisdiction in declaring petitioner jointly and severally liable with its
foreign principal ZAMEL for all claims which have arisen in connection with the implementation of
private respondent's employment contract.
II.
Petitioner asserts that the NLRC failed to consider the overwhelming evidence it had presented
before the POEA which establishes the fact that private respondent was terminated for just and
valid cause in accordance with his service agreement with ZAMEL.
This assertion is without merit. The NLRC upheld the POEA finding that petitioner's evidence was
insufficient to prove termination from employment for just and valid cause. And a careful study of
the evidence thus far presented by petitioner reveals to this Court that there is legal basis for public
respondent's conclusion.
It must be borne in mind that the basic principle in termination cases is that the burden of proof
rests upon the employer to show that the dismissal is for just and valid cause, and failure to do so
would necessarily mean that the dismissal was not justified and, therefore, was illegal [Polymedic
General Hospital v. NLRC, G.R. No. 64190, January 31, 1985,134 SCRA 420; and also Article 277
of the Labor Code]. And where the termination cases involve a Filipino worker recruited and
deployed for overseas employment, the burden naturally devolves upon both the foreign-based
employer and the employment agency or recruitment entity which recruited the worker, for the
latter is not only the agent of the former, but is also solidarily liable with its foreign principal for any
claims or liabilities arising from the dismissal of the worker.
In the case at bar, petitioner had indeed failed to discharge the burden of proving that private
respondent was terminated from employment for just and valid cause. Petitioner's evidence
consisted only of the following documents:
(1) A letter dated May l5, 1984 allegedly written by an official of ZAMEL, stating that a periodic
evaluation of the entire staff was conducted; that the personnel concerned were given a chance to
improve; that complainant's performance was found below par; and that on February 13,1984, at
about 8:30 AM, complainant was caught on the way out of the office to look for another job during
office hours without the permission of his supervisor;
(2) A telex message allegedly sent by employees of ZAMEL, stating that they have not experienced
maltreatment, and that the working conditions (in ZAMEL) are good;
(3) The signatures of fifteen (15) persons who allegedly sent the telex message;
(4) A receipt dated February 16, 1984 signed by complainant, stating that he was paid SR915
representing his salary and SR558, representing vacation pay for the month of February 1984;
(5) The counter-affidavit of Milagros G. Fausto, the General Manager of Royal Crown, stating that
complainant was dismissed because of poor performance, acts of dishonesty and misconduct, and
denying complainant's claim that his salary and leave pay were not paid, and that he was
maltreated [See POEA Decision, p. 3; Rollo, p. 32, See also Annexes "E", "F", "F-1 ", "G" and "H"
of Petition; Rollo, pp. 38-43].
Certainly, the telex message supposedly sent by the employees of ZAMEL is not relevant in the
determination of the legality of private respondent's dismissal. On the other hand, the receipt
signed by private respondent does not prove payment to him of the salary and vacation pay
corresponding to the unexpired portion of his contract.
More importantly, except for its allegation that private respondent was caught on February 13,1984
on his way out of the office compound without permission, petitioner had failed to allege and to
prove with particularity its charges against private respondent. The letter dated May 15, 1984
allegedly written by the Actg. Project Architect and the counter-affidavit of petitoner's General
Manager merely stated that the grounds for the employee's dismissal were his unsatisfactory
performance and various acts of dishonesty, insubordination and misconduct. But the particular
acts which would indicate private respondent's incompetence or constitute the above infractions
were neither specified nor described therein. In the absence of any other evidence to substantiate
the general charges hurled against private respondent, these documents, which comprise
petitioner's evidence in chief, contain empty and self-serving statements insufficient to establish
just and valid cause for the dismissal of private respondent [See Euro-Lines, Phils., Inc. v. NLRC,
G.R. No. 75782, December 1, 1987,156 SCRA 78; Ambraque International Placement and
Services v. NLRC, supra].
The Court is aware of the document attached in petitioner's manifestation and joint reply which is
purportedly a xerox copy of a statement executed on December 13, 1987 in Saudi Arabia by
private respondent claiming that the latter had settled the case with ZAMEL and had "received all
[his] benefits that is salary, vacation pay, severance pay and all other bonuses before [he] left the
kingdom of Saudi Arabia on 13 Feb. 1984 and hereby indemnify [ZAMEL] from any claims or
liabilities, [he] raised in the Philippine Courts" [Annex "A" of petitioner's Manifestation with Motion
to hold in Abeyance; Rollo, p. 82. And also Annex "A" of petitioner's Joint Reply; Rollo, p. 111].
But the veracity of the contents of the document is precisely disputed by private respondent. He
claims that he was made to sign the above statement against his will and under threat of
deportation [See Telex of private respondent received by the Supreme Court of the Philippines on
January 14,1988; Rollo, p. 83. And also private respondent's Rejoinder, pp. 1-3; Rollo, pp.
139-141].
Petitioner finally contends that inasmuch as clause no. 13 of the service agreement provided that
the law under which the agreement shall be regulated was the laws of Saudi Arabia [Annex "D" of
Petition, p. 2; Rollo, p. 36], public respondent should have taken into account the laws of Saudi
Arabia and the stricter concept of morality availing in that jurisdiction for the determination of the
legality of private respondent's dismissal.
This contention is patently erroneous. The provisions of the Labor Code of the Philippines, its
implementing rules and regulations, and doctrines laid down in jurisprudence dealing with the
principle of due process and the basic right of all Filipino workers to security of tenure, provide the
standard by which the legality of the exercise by management of its prerogative to dismiss
incompetent, dishonest or recalcitrant employees, is to be determined. Whether employed locally
or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social
legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping
with the basic public policy of the State to afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and regulate the relations
between workers and employers. For the State assures the basic rights of all workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work
[Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article
XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code
which states that laws "which have for their object public order, public policy and good customs
shall not be rendered ineffective by laws or judgments promulgated, or by determination or
conventions agreed upon in a foreign country."
Needless to say, the laws of Saudi Arabia which were, incidentally, neither pleaded nor proved by
petitioner, have absolutely no bearing whatsoever to the case at bar.
The Court holds, therefore, that the NLRC committed no grave abuse of discretion amounting to
lack or excess of jurisdiction in upholding the POEA's finding of insufficiency of evidence to prove
termination for just and valid cause.
WHEREFORE, the Court Resolved to DISMISS the instant petition.
SO ORDERED.
FACTS:
Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow
Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief
Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid
vacation leave per month.
On March 19, 1998, the date of his departure, Serrano was constrained to accept a downgraded
employment contract for the position of Second Officer with a monthly salary of US$1,000 upon the
assurance and representation of respondents that he would be Chief Officer by the end of April
1998.
Respondents did not deliver on their promise to make Serrano Chief Officer. Hence, Serrano
refused to stay on as second Officer and was repatriated to the Philippines on May 26, 1998,
serving only two (2) months and seven (7) days of his contract, leaving an unexpired portion of
nine (9) months and twenty-three (23) days.
Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for constructive
dismissal and for payment of his money claims in the total amount of US$26,442.73 (based on the
computation of $2590/month from June 1998 to February 199, $413.90 for March 1998, and $1640
for March 1999) as well as moral and exemplary damages.
The LA declared the petitioner's dismissal illegal and awarded him US$8,770, representing his
salaray for three (3) months of the unexpired portion of the aforesaid contract of employment, plus
$45 for salary differential and for attorney's fees equivalent to 10% of the total amount; however,
no compensation for damages as prayed was awarded.
On appeal, the NLRC modified the LA decision and awarded Serrano $4669.50, representing three
(3) months salary at $1400/month, plus 445 salary differential and 10% for attorney's fees. This
decision was based on the provision of RA 8042, which was made into law on July 15, 1995.
Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality
of the last clause in the 5th paragraph of Section 10 of RA 8042, which reads:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.
The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with the Court of
Appeals (CA), reiterating the constitutional challenge against the subject clause. The CA affirmed
the NLRC ruling on the reduction of the applicable salary rate, but skirted the constitutional issue
raised by herein petitioner Serrano.
ISSUES:
1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-
impairment of contracts;
2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section
18, Article II and Section 3, Article XIII on labor as a protected sector.
HELD:
The answer is in the negative. Petitioner's claim that the subject clause unduly interferes with the
stipulations in his contract on the term of his employment and the fixed salary package he will
receive is not tenable.
Section 10, Article III of the Constitution provides: No law impairing the obligation of contracts shall
be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation, and cannot affect acts or contracts already perfected; however, as to laws
already in existence, their provisions are read into contracts and deemed a part thereof. Thus, the
non-impairment clause under Section 10, Article II is limited in application to laws about to be
enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in
any manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of
the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued
that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the
parties. Rather, when the parties executed their 1998 employment contract, they were deemed to
have incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared
unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted
in the exercise of the police power of the State to regulate a business, profession or calling,
particularly the recruitment and deployment of OFWs, with the noble end in view of ensuring
respect for the dignity and well-being of OFWs wherever they may be employed. Police power
legislations adopted by the State to promote the health, morals, peace, education, good order,
safety, and general welfare of the people are generally applicable not only to future contracts but
even to those already in existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to promote public welfare.
Section 1, Article III of the Constitution guarantees: No person shall be deprived of life, liberty, or
property without due process of law nor shall any person be denied the equal protection of the law.
Section 18, Article II and Section 3, Article XIII accord all members of the labor sector, without
distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to
economic security and parity: all monetary benefits should be equally enjoyed by workers of similar
category, while all monetary obligations should be borne by them in equal degree; none should be
denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in
like circumstances.
Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it
sees fit, a system of classification into its legislation; however, to be valid, the classification must
comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the
purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all
members of the class.
There are three levels of scrutiny at which the Court reviews the constitutionality of a classification
embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification
needs only be shown to be rationally related to serving a legitimate state interest; b) the middle-tier
or intermediate scrutiny in which the government must show that the challenged classification
serves an important state interest and that the classification is at least substantially related to
serving that interest; and c) strict judicial scrutiny in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right or operates to the peculiar
disadvantage of a suspect class is presumed unconstitutional, and the burden is upon the
government to prove that the classification is necessary to achieve a compelling state interest and
that it is the least restrictive means to protect such interest.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs.
However, a closer examination reveals that the subject clause has a discriminatory intent against,
and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with employment
contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
The Court concludes that the subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in
their contracts, but none on the claims of other OFWs or local workers with fixed-term employment.
The subject clause singles out one classification of OFWs and burdens it with a peculiar
disadvantage.
There being a suspect classification involving a vulnerable sector protected by the Constitution, the
Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a
compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers arrayed in
the Constitution and calibrated by history. It is akin to the paramount interest of the state for which
some individual liberties must give way, such as the public interest in safeguarding health or
maintaining medical standards, or in maintaining access to information on matters of public
concern.
In the present case, the Court dug deep into the records but found no compelling state interest that
the subject clause may possibly serve.
In fine, the Government has failed to discharge its burden of proving the existence of a compelling
state interest that would justify the perpetuation of the discrimination against OFWs under the
subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous and
cavalier rationale will have to be rejected. There can never be a justification for any form of
government action that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private businesses such as
placement agencies, while the disadvantaged sector is composed of OFWs whose protection no
less than the Constitution commands. The idea that private business interest can be elevated to
the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement
agencies vis-a-vis their foreign principals, there are mechanisms already in place that can be
employed to achieve that purpose without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on
erring foreign employers who default on their contractual obligations to migrant workers and/or
their Philippine agents. These disciplinary measures range from temporary disqualification to
preventive suspension. The POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary
measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding local
placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right
of petitioner and other OFWs to equal protection.
The subject clause or for three months for every year of the unexpired term, whichever is less in
the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL
Note:
When the Court is called upon to exercise its power of judicial review of the acts of its co-equals,
such as the Congress, it does so only when these conditions obtain: (1) that there is an actual case
or controversy involving a conflict of rights susceptible of judicial determination; (2) that the
constitutional question is raised by a proper party and at the earliest opportunity; and (3) that the
constitutional question is the very lis mota of the case, otherwise the Court will dismiss the case or
decide the same on some other ground.
----
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary
awards of illegally dismissed OFWs was in place. This uniform system was applicable even to local
workers with fixed-term employment.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, in which the Court held the
shipping company liable for the salaries and subsistence allowance of its illegally dismissed
employees for the entire unexpired portion of their employment contracts.
While Article 605 has remained good law up to the present, Article 299 of the Code of Commerce
was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a
certain work cannot leave or be dismissed without sufficient cause, before the fulfillment of the
contract.
PONENTE: Leonen
TOPIC: Section 10 of RA 8042 vis-a-vis Section 7 of RA 10022
FACTS:
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement
agency.
Respondent Joy Cabiles was hired thus signed a one-year employment contract for a
monthly salary of NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal)
on June 26, 1997. She alleged that in her employment contract, she agreed to work as quality
control for one year. In Taiwan, she was asked to work as a cutter.
Sameer 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. She was asked to prepare for immediate repatriation. 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.
On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC against
petitioner and Wacoal. LA dismissed the complaint. NLRC reversed LAs decision. CA 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
attorneys fees
ISSUE:
Whether or not Cabiles was entitled to the unexpired portion of her salary due to illegal
dismissal.
HELD:
YES. The Court held that the award of the three-month equivalent of respondents salary
should 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., this court
ruled that the clause or for three (3) months for every year of the unexpired term, whichever is
less is unconstitutional for violating the equal protection clause and substantive due process.
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.
The Court said that they 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.
Ruling on the constitutional issue
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.
The Court observed 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.
The Court declared, once again, 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.
Facts:
Concerns the validity of the power of Secretary of Labor to issue of warrants of arrest and seizure
under Article 38 of the Labor Code, prohibiting illegal recruitment
On October 1987, Rosalie Tesoro of Pasay City in a sworn statement filed with POEA charged
Hortencia Salazar of illegally taking her PECC Card thus prohibiting her to be employed.
On November 1987, Atty. Marquez telegram the petitioner to report to the anti-illegal recruitment
unit of PEOA, but on the same day, having ascertained that the petitioner had no license to operate
a recruitment agency, Achaoso issued his challenged Closure and Seizure Order stating that
pursuant to PD No. 1920, the recruitment agency ordered be for closure and seizure of the
documents having verified that it has (1) no valid license from DOLE to recruit and deploy workers
for overseas employment (2) committed acts prohibited under Article 34 of Labor Code in relation
to Article 38.
On January 26, 1988, POEA director on Licensing and Regulation Atty. Espiritu issued an office
order designating the Atty Marquez and other members of a team tasked to implement closure and
seizure.
On January 28, 1988, petitioner filed a petition with POEA that the personal properties seized at
her residence be immediately returned on the ground that it was contrary to law because: (1) client
was not given prior notice or hearing, (2) violates section 2 of constitution (3) the premises
invaded were the private residence of the Salazar family and it was without consent.
On February 2, 1988 before POEA could answer the letter, petitioner filed the instant petition, on
even date, POEA filed a criminal complaint against her with the Pasig Provincial Fiscal
Issue: May POEA validly issue warrants of search and seizure under Article 38 of the Labor Code?
Ruling:
Under new constitution, only a judge may issue warrants of search and arrest, however in the
amended RA 8042, the minister of labor shall have the power to cause the arrest and detention of
non-licensee of authority if after proper investigation.
Petition is granted, Article 38 of the Labor code is declared unconstitutional and null and void.