G.R. No. 161757 January 25, 2006
00
SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC.Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division; HON. ERNESTO S.
DINOPOL, in his capacity as Labor Arbiter, NLRC; NCR, Arbitration Branch, Quezon
City and DIVINA A. MONTEHERMOZO,Respondents.
DECISION
CARPIO MORALES, J.:
Petitioner, Sunace International Management Services (Sunace), a corporation duly
organized and existing under the laws of the Philippines, deployed to Taiwan Divina
A. Montehermozo (Divina) as a domestic helper under a 12-month contract effective
February 1, 1997.1 The deployment was with the assistance of a Taiwanese broker,
Edmund Wang, President of Jet Crown International Co., Ltd.
After her 12-month contract expired on February 1, 1998, Divina continued working
for her Taiwanese employer, Hang Rui Xiong, for two more years, after which she
returned to the Philippines on February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a complaint2 before the
National Labor Relations Commission (NLRC) against Sunace, one Adelaide Perez, the
Taiwanese broker, and the employer-foreign principal alleging that she was jailed for
three months and that she was underpaid.
The following day or on February 15, 2000, Labor Arbitration Associate Regina T.
Gavin issued Summons3 to the Manager of Sunace, furnishing it with a copy of
Divina’s complaint and directing it to appear for mandatory conference on February
28, 2000.
The scheduled mandatory conference was reset. It appears to have been concluded,
however.
On April 6, 2000, Divina filed her Position Paper4 claiming that under her original one-
year contract and the 2-year extended contract which was with the knowledge and
consent of Sunace, the following amounts representing income tax and savings were
deducted:
Year Deduction for Income Tax Deduction for Savings
1997 NT10,450.00 NT23,100.
1998 NT9,500.00 NT36,000.00
1999 NT13,300.00 NT36,000.00;5
and while the amounts deducted in 1997 were refunded to her, those deducted in
1998 and 1999 were not. On even date, Sunace, by its Proprietor/General Manager
Maria Luisa Olarte, filed its Verified Answer and Position Paper,6claiming as follows,
quoted verbatim:
COMPLAINANT IS NOT ENTITLED FOR THE REFUND OF HER 24 MONTHS SAVINGS
3. Complainant could not anymore claim nor entitled for the refund of her 24 months
savings as she already took back her saving already last year and the employer did
not deduct any money from her salary, in accordance with a Fascimile Message from
the respondent SUNACE’s employer, Jet Crown International Co. Ltd., a xerographic
copy of which is herewith attached as ANNEX "2" hereof;
COMPLAINANT IS NOT ENTITLED TO REFUND OF HER 14 MONTHS TAX AND
PAYMENT OF ATTORNEY’S FEES
4. There is no basis for the grant of tax refund to the complainant as the she finished
her one year contract and hence, was not illegally dismissed by her employer. She
could only lay claim over the tax refund or much more be awarded of damages such
as attorney’s fees as said reliefs are available only when the dismissal of a migrant
worker is without just valid or lawful cause as defined by law or contract.
The rationales behind the award of tax refund and payment of attorney’s fees is not
to enrich the complainant but to compensate him for actual injury suffered.
Complainant did not suffer injury, hence, does not deserve to be compensated for
whatever kind of damages.
Hence, the complainant has NO cause of action against respondent SUNACE for
monetary claims, considering that she has been totally paid of all the monetary
benefits due her under her Employment Contract to her full satisfaction.
6. Furthermore, the tax deducted from her salary is in compliance with the Taiwanese
law, which respondent SUNACE has no control and complainant has to obey and this
Honorable Office has no authority/jurisdiction to intervene because the power to tax
is a sovereign power which the Taiwanese Government is supreme in its own
territory. The sovereign power of taxation of a state is recognized under international
law and among sovereign states.
1
7. That respondent SUNACE respectfully reserves the right to file supplemental
Verified Answer and/or Position Paper to substantiate its prayer for the dismissal of
the above case against the herein respondent. AND BY WAY OF -
x x x x (Emphasis and underscoring supplied)
Reacting to Divina’s Position Paper, Sunace filed on April 25, 2000 an ". . . answer to
complainant’s position paper"7alleging that Divina’s 2-year extension of her contract
was without its knowledge and consent, hence, it had no liability attaching to any
claim arising therefrom, and Divina in fact executed a Waiver/Quitclaim and Release
of Responsibility and an Affidavit of Desistance, copy of each document was annexed
to said ". . . answer to complainant’s position paper."
To Sunace’s ". . . answer to complainant’s position paper," Divina filed a 2-page
reply,8 without, however, refuting Sunace’s disclaimer of knowledge of the extension
of her contract and without saying anything about the Release, Waiver and Quitclaim
and Affidavit of Desistance.
The Labor Arbiter, rejected Sunace’s claim that the extension of Divina’s contract for
two more years was without its knowledge and consent in this wise:
We reject Sunace’s submission that it should not be held responsible for the amount
withheld because her contract was extended for 2 more years without its knowledge
and consent because as Annex "B"9 shows, Sunace and Edmund Wang have not
stopped communicating with each other and yet the matter of the contract’s
extension and Sunace’s alleged non-consent thereto has not been categorically
established.
What Sunace should have done was to write to POEA about the extension and its
objection thereto, copy furnished the complainant herself, her foreign employer,
Hang Rui Xiong and the Taiwanese broker, Edmund Wang.
And because it did not, it is presumed to have consented to the extension and should
be liable for anything that resulted thereform (sic).10 (Underscoring supplied)
The Labor Arbiter rejected too Sunace’s argument that it is not liable on account of
Divina’s execution of a Waiver and Quitclaim and an Affidavit of Desistance. Observed
the Labor Arbiter:
Should the parties arrive at any agreement as to the whole or any part of the dispute,
the same shall be reduced to writing and signed by the parties and their respective
counsel (sic), if any, before the Labor Arbiter.
The settlement shall be approved by the Labor Arbiter after being satisfied that it was
voluntarily entered into by the parties and after having explained to them the terms
and consequences thereof.
A compromise agreement entered into by the parties not in the presence of the Labor
Arbiter before whom the case is pending shall be approved by him, if after
confronting the parties, particularly the complainants, he is satisfied that they
understand the terms and conditions of the settlement and that it was entered into
freely voluntarily (sic) by them and the agreement is not contrary to law, morals, and
public policy.
And because no consideration is indicated in the documents, we strike them down as
contrary to law, morals, and public policy.11
He accordingly decided in favor of Divina, by decision of October 9, 2000,12 the
dispositive portion of which reads:
Wherefore, judgment is hereby rendered ordering respondents SUNACE
INTERNATIONAL SERVICES and its owner ADELAIDA PERGE, both in their personal
capacities and as agent of Hang Rui Xiong/Edmund Wang to jointly and severally pay
complainant DIVINA A. MONTEHERMOZO the sum of NT91,950.00 in its peso
equivalent at the date of payment, as refund for the amounts which she is hereby
adjudged entitled to as earlier discussed plus 10% thereof as attorney’s fees since
compelled to litigate, complainant had to engage the services of counsel.
SO ORDERED.13 (Underescoring supplied)
On appeal of Sunace, the NLRC, by Resolution of April 30, 2002,14 affirmed the Labor
Arbiter’s decision.
Via petition for certiorari,15 Sunace elevated the case to the Court of Appeals which
dismissed it outright by Resolution of November 12, 2002,16 the full text of which
reads:
The petition for certiorari faces outright dismissal.
2
The petition failed to allege facts constitutive of grave abuse of discretion on the part
of the public respondent amounting to lack of jurisdiction when the NLRC affirmed
the Labor Arbiter’s finding that petitioner Sunace International Management
Services impliedly consented to the extension of the contract of private respondent
Divina A. Montehermozo. It is undisputed that petitioner was continually
communicating with private respondent’s foreign employer (sic). As agent of the
foreign principal, "petitioner cannot profess ignorance of such extension as
obviously, the act of the principal extending complainant (sic) employment contract
necessarily bound it." Grave abuse of discretion is not present in the case at bar.
ACCORDINGLY, the petition is hereby DENIED DUE COURSE and DISMISSED.17
SO ORDERED.
(Emphasis on words in capital letters in the original; emphasis on words in small
letters and underscoring supplied)
Its Motion for Reconsideration having been denied by the appellate court by
Resolution of January 14, 2004,18Sunace filed the present petition for review on
certiorari.
The Court of Appeals affirmed the Labor Arbiter and NLRC’s finding that Sunace knew
of and impliedly consented to the extension of Divina’s 2-year contract. It went on to
state that "It is undisputed that [Sunace] was continually communicating with
[Divina’s] foreign employer." It thus concluded that "[a]s agent of the foreign
principal, ‘petitioner cannot profess ignorance of such extension as obviously, the act
of the principal extending complainant (sic) employment contract necessarily bound
it.’"
Contrary to the Court of Appeals finding, the alleged continuous communication was
with the Taiwanese brokerWang, not with the foreign employer Xiong.
The February 21, 2000 telefax message from the Taiwanese broker to Sunace,
the only basis of a finding of continuous communication, reads verbatim:
xxxx
Regarding to Divina, she did not say anything about her saving in police
station. As we contact with her employer, she took back her saving already
last years. And they did not deduct any money from her salary. Or she will
call back her employer to check it again. If her employer said yes! we will
get it back for her.
Thank you and best regards.
(Sgd.)
Edmund Wang
President19
The finding of the Court of Appeals solely on the basis of the above-quoted telefax
message, that Sunace continually communicated with the foreign "principal"
(sic) and therefore was aware of and had consented to the execution of the extension
of the contract is misplaced. The message does not provide evidence that Sunace was
privy to the new contract executed after the expiration on February 1, 1998 of the
original contract. That Sunace and the Taiwanese broker communicated regarding
Divina’s allegedly withheld savings does not necessarily mean that Sunace ratified the
extension of the contract. As Sunace points out in its Reply20 filed before the Court of
Appeals,
As can be seen from that letter communication, it was just an information given to
the petitioner that the private respondent had t[aken] already her savings from her
foreign employer and that no deduction was made on her salary. It contains nothing
about the extension or the petitioner’s consent thereto.21
Parenthetically, since the telefax message is dated February 21, 2000, it is safe to
assume that it was sent to enlighten Sunace who had been directed, by Summons
issued on February 15, 2000, to appear on February 28, 2000 for a mandatory
conference following Divina’s filing of the complaint on February 14, 2000.
Respecting the Court of Appeals following dictum:
As agent of its foreign principal, [Sunace] cannot profess ignorance of such an
extension as obviously, the act of its principal extending [Divina’s] employment
contract necessarily bound it,22
it too is a misapplication, a misapplication of the theory of imputed knowledge.
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to
the principal, employer Xiong, not the other way around.23 The knowledge of the
principal-foreign employer cannot, therefore, be imputed to its agent Sunace.
3
There being no substantial proof that Sunace knew of and consented to be bound
under the 2-year employment contract extension, it cannot be said to be privy
thereto. As such, it and its "owner" cannot be held solidarily liable for any of Divina’s
claims arising from the 2-year employment extension. As the New Civil Code
provides,

Contracts take effect only between the parties, their assigns, and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law.24

Furthermore, as Sunace correctly points out, there was an implied revocation of its
agency relationship with its foreign principal when, after the termination of the
original employment contract, the foreign principal directly negotiated with Divina
and entered into a new and separate employment contract in Taiwan. Article 1924
of the New Civil Code reading

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

thus applies.

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

WHEREFORE, the petition is GRANTED. The challenged resolutions of the Court of

Appeals are hereby REVERSED and SET ASIDE. The complaint of respondent
Divina A. Montehermozo against petitioner is DISMISSED.

SO ORDERED.

4
[G.R. NO. 167614 : March 24, 2009] By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails
the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals
ANTONIO M. SERRANO, Petitioner, v. Gallant MARITIME SERVICES, INC. and (CA), which applied the subject clause, entreating this Court to declare the subject
MARLOW NAVIGATION CO., INC., Respondents. clause unconstitutional.

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

For decades, the toil of solitary migrants has helped lift entire families and Duration of contract 12 months
communities out of poverty. Their earnings have built houses, provided health care,
equipped schools and planted the seeds of businesses. They have woven together Position Chief Officer
the world by transmitting ideas and knowledge from country to country. They have
provided the dynamic human link between cultures, societies and economies. Yet, Basic monthly salary US$1,400.00
only recently have we begun to understand not only how much international
migration impacts development, but how smart public policies can magnify this Hours of work 48.0 hours per week
effect.
Overtime US$700.00 per month
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development Vacation leave with pay 7.00 days per month5
Brussels, July 10, 20071
On March 19, 1998, the date of his departure, petitioner was constrained to accept
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th a downgraded employment contract for the position of Second Officer with a
paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit: monthly salary of US$1,000.00, upon the assurance and representation of
respondents that he would be made Chief Officer by the end of April 1998.6
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without
just, valid or authorized cause as defined by law or contract, the workers shall be Respondents did not deliver on their promise to make petitioner Chief
entitled to the full reimbursement of his placement fee with interest of twelve Officer.7 Hence, petitioner refused to stay on as Second Officer and was repatriated
percent (12%) per annum, plus his salaries for the unexpired portion of his to the Philippines on May 26, 1998.8
employment contract or for three (3) months for every year of the unexpired term,
whichever is less.
Petitioner's employment contract was for a period of 12 months or from March 19,
1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he
x x x x (Emphasis and underscoring supplied)cralawlibrary had served only two (2) months and seven (7) days of his contract, leaving an
unexpired portion of nine (9) months and twenty-three (23) days.
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for
entitlement in case of illegal dismissal to their lump-sum salary either for the constructive dismissal and for payment of his money claims in the total amount of
unexpired portion of their employment contract "or for three months for every year US$26,442.73, broken down as follows:
of the unexpired term, whichever is less" (subject clause). Petitioner claims that the
last clause violates the OFWs' constitutional rights in that it impairs the terms of their
contract, deprives them of equal protection and denies them due process. May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90

5
 The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner
June 01/30, 1998 2,590.00
illegal and awarding him monetary benefits, to wit:
July 01/31, 1998 2,590.00
WHEREFORE, premises considered, judgment is hereby rendered declaring that the
August 01/31, 1998 2,590.00 dismissal of the complainant (petitioner) by the respondents in the above-entitled
case was illegal and the respondents are hereby ordered to pay the complainant
Sept. 01/30, 1998 2,590.00 [petitioner], jointly and severally, in Philippine Currency, based on the rate of
exchange prevailing at the time of payment, the amount of EIGHT THOUSAND SEVEN
Oct. 01/31, 1998 2,590.00
HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the complainant's
Nov. 01/30, 1998 2,590.00 salary for three (3) months of the unexpired portion of the aforesaid contract of
employment.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Dec. 01/31, 1998 2,590.00
The respondents are likewise ordered to pay the complainant [petitioner], jointly and
Jan. 01/31, 1999 2,590.00 severally, in Philippine Currency, based on the rate of exchange prevailing at the time
of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing the
Feb. 01/28, 1999 2,590.00 complainant's claim for a salary differential. In addition, the respondents are hereby
ordered to pay the complainant, jointly and severally, in Philippine Currency, at the
Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00
exchange rate prevailing at the time of payment, the complainant's (petitioner's)
----------------- claim for attorney's fees equivalent to ten percent (10%) of the total amount awarded
----------------- to the aforesaid employee under this Decision.
-----------------
----------------- The claims of the complainant for moral and exemplary damages are hereby
------------ DISMISSED for lack of merit.

25,382.23 All other claims are hereby DISMISSED.

Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) +
SO ORDERED.13 (Emphasis supplied)cralawlibrary
1,060.5010
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
----------------- computation on the salary period of three months only - - rather than the entire
----------------- unexpired portion of nine months and 23 days of petitioner's employment contract -
----------------- applying the subject clause. However, the LA applied the salary rate of US$2,590.00,
----------------- consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month,
----------------- fixed overtime pay, + US$490.00/month, vacation leave pay =
--------- US$2,590.00/compensation per month."14

TOTAL CLAIM US$ 26,442.7311 Respondents appealed15 to the National Labor Relations Commission (NLRC) to
question the finding of the LA that petitioner was illegally dismissed.
as well as moral and exemplary damages and attorney's fees.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor

6
Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their
salaries for the unexpired portion of their contracts.18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby
ordered to pay complainant, jointly and severally, in Philippine currency, at the
prevailing rate of exchange at the time of payment the following:
1. Three (3) months salary
$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorney's fees 424.50
TOTAL US$4,669.50
The other findings are affirmed.
SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to
petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00
because R.A. No. 8042 "does not provide for the award of overtime pay, which should
be proven to have been actually performed, and for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional
challenge against the subject clause.24 After initially dismissing the petition on a
technicality, the CA eventually gave due course to it, as directed by this Court in its
Resolution dated August 7, 2003 which granted the Petition for Certiorari, docketed
as G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the
reduction of the applicable salary rate; however, the CA skirted the constitutional
issue raised by petitioner.25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings
his cause to this Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in
accord with applicable decision of the Supreme Court involving similar issue of
granting unto the migrant worker back wages equal to the unexpired portion of his
contract of employment instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely
applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted
that the Court of Appeals gravely erred in law when it failed to discharge its judicial
duty to decide questions of substance not theretofore determined by the Honorable
Supreme Court, particularly, the constitutional issues raised by the petitioner on the
constitutionality of said law, which unreasonably, unfairly and arbitrarily limits
payment of the award for back wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act
No. 8042, the Court of Appeals gravely erred in law in excluding from petitioner's
award the overtime pay and vacation pay provided in his contract since under the
contract they form part of his salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is
already old and sickly, and he intends to make use of the monetary award for his
medical treatment and medication.29 Required to comment, counsel for petitioner
filed a motion, urging the court to allow partial execution of the undisputed monetary
award and, at the same time, praying that the constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now
takes up the full merit of the petition mindful of the extreme importance of the
constitutional question raised therein.
7
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was
illegal is not disputed. Likewise not disputed is the salary differential of US$45.00
awarded to petitioner in all three fora. What remains disputed is only the
computation of the lump-sum salary to be awarded to petitioner by reason of his
illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
petitioner at the monthly rate of US$1,400.00 covering the period of three months
out of the unexpired portion of nine months and 23 days of his employment contract
or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in
addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to
US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the
entire nine months and 23 days left of his employment contract, computed at the
monthly rate of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly
impairs the freedom of OFWs to negotiate for and stipulate in their overseas
employment contracts a determinate employment period and a fixed salary
package.32 It also impinges on the equal protection clause, for it treats OFWs
differently from local Filipino workers (local workers) by putting a cap on the amount
of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while
setting no limit to the same monetary award for local workers when their dismissal
is declared illegal; that the disparate treatment is not reasonable as there is no
substantial distinction between the two groups;33 and that it defeats Section
18,34 Article II of the Constitution which guarantees the protection of the rights and
welfare of all Filipino workers, whether deployed locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are
not in line with existing jurisprudence on the issue of money claims of illegally
dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the
Court to sort them out for the guidance of affected OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No.
8042 serves no other purpose but to benefit local placement agencies. He marks the
statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of
money claims in the event that jurisdiction over the foreign employer is not acquired
by the court or if the foreign employer reneges on its obligation. Hence, placement
agencies that are in good faith and which fulfill their obligations are unnecessarily
penalized for the acts of the foreign employer. To protect them and to promote their
continued helpful contribution in deploying Filipino migrant workers, liability for
money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis
supplied)cralawlibrary
Petitioner argues that in mitigating the solidary liability of placement agencies, the
subject clause sacrifices the well-being of OFWs. Not only that, the provision makes
foreign employers better off than local employers because in cases involving the
illegal dismissal of employees, foreign employers are liable for salaries covering a
maximum of only three months of the unexpired employment contract while local
employers are liable for the full lump-sum salaries of their employees. As petitioner
puts it:
In terms of practical application, the local employers are not limited to the amount
of backwages they have to give their employees they have illegally dismissed,
following well-entrenched and unequivocal jurisprudence on the matter. On the
other hand, foreign employers will only be limited to giving the illegally dismissed
migrant workers the maximum of three (3) months unpaid salaries notwithstanding
the unexpired term of the contract that can be more than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it
deprives him of the salaries and other emoluments he is entitled to under his fixed-
period employment contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional
issue should not be entertained, for this was belatedly interposed by petitioner in his
appeal before the CA, and not at the earliest opportunity, which was when he filed
an appeal before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15,
1995, its provisions could not have impaired petitioner's 1998 employment contract.
Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof
are deemed part of the minimum terms of petitioner's employment, especially on
the matter of money claims, as this was not stipulated upon by the parties.42
8
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the
nature of their employment, such that their rights to monetary benefits must
necessarily be treated differently. The OSG enumerates the essential elements that
distinguish OFWs from local workers: first, while local workers perform their jobs
within Philippine territory, OFWs perform their jobs for foreign employers, over
whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost
impossible to enforce judgment; and second, as held in Coyoca v. National Labor
Relations Commission43 and Millares v. National Labor Relations
Commission,44 OFWs are contractual employees who can never acquire regular
employment status, unlike local workers who are or can become regular employees.
Hence, the OSG posits that there are rights and privileges exclusive to local workers,
but not available to OFWs; that these peculiarities make for a reasonable and valid
basis for the differentiated treatment under the subject clause of the money claims
of OFWs who are illegally dismissed. Thus, the provision does not violate the equal
protection clause nor Section 18, Article II of the Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power
measure adopted to mitigate the solidary liability of placement agencies for this
"redounds to the benefit of the migrant workers whose welfare the government
seeks to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under
decent and humane conditions."46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of
its co-equals, such as the Congress, it does so only when these conditions obtain: (1)
that there is an actual case or controversy involving a conflict of rights susceptible of
judicial determination;47 (2) that the constitutional question is raised by a proper
party48 and at the earliest opportunity;49 and (3) that the constitutional question is
the very lis mota of the case,50 otherwise the Court will dismiss the case or decide the
same on some other ground.51
Without a doubt, there exists in this case an actual controversy directly involving
petitioner who is personally aggrieved that the labor tribunals and the CA computed
his monetary award based on the salary period of three months only as provided
under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity entails
the interposition of the issue in the pleadings before a competent court, such that, if
the issue is not raised in the pleadings before that competent court, it cannot be
considered at the trial and, if not considered in the trial, it cannot be considered on
appeal.52 Records disclose that the issue on the constitutionality of the subject clause
was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial
Reconsideration with said labor tribunal,53 and reiterated in his Petition
for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised
because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial
function - its function in the present case is limited to determining questions of fact
to which the legislative policy of R.A. No. 8042 is to be applied and to resolving such
questions in accordance with the standards laid down by the law itself;55 thus, its
foremost function is to administer and enforce R.A. No. 8042, and not to inquire into
the validity of its provisions. The CA, on the other hand, is vested with the power of
judicial review or the power to declare unconstitutional a law or a provision thereof,
such as the subject clause.56Petitioner's interposition of the constitutional issue
before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to
take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the
case likewise obtains because the monetary claim of petitioner to his lump-sum
salary for the entire unexpired portion of his 12-month employment contract, and
not just for a period of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject
clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his
contract on the term of his employment and the fixed salary package he will
receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
9
The prohibition is aligned with the general principle that laws newly enacted have To Filipino workers, the rights guaranteed under the foregoing constitutional
only a prospective operation,58and cannot affect acts or contracts already provisions translate to economic security and parity: all monetary benefits should be
perfected;59 however, as to laws already in existence, their provisions are read into equally enjoyed by workers of similar category, while all monetary obligations should
contracts and deemed a part thereof.60 Thus, the non-impairment clause under be borne by them in equal degree; none should be denied the protection of the laws
Section 10, Article II is limited in application to laws about to be enacted that would which is enjoyed by, or spared the burden imposed on, others in like circumstances.65
in any way derogate from existing acts or contracts by enlarging, abridging or in any
manner changing the intention of the parties thereto. 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,
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the to be valid, the classification must comply with these requirements: 1) it is based on
execution of the employment contract between petitioner and respondents in 1998. substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, to existing conditions only; and 4) it applies equally to all members of the class.66
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 There are three levels of scrutiny at which the Court reviews the constitutionality of
the provisions of R.A. No. 8042. 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
But even if the Court were to disregard the timeline, the subject clause may not be a legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the
declared unconstitutional on the ground that it impinges on the impairment clause, government must show that the challenged classification serves an important state
for the law was enacted in the exercise of the police power of the State to regulate a interest and that the classification is at least substantially related to serving that
business, profession or calling, particularly the recruitment and deployment of OFWs, interest;68 and c) strict judicial scrutiny69 in which a legislative classification which
with the noble end in view of ensuring respect for the dignity and well-being of OFWs impermissibly interferes with the exercise of a fundamental right70 or operates to the
wherever they may be employed.61 Police power legislations adopted by the State to peculiar disadvantage of a suspect class71 is presumed unconstitutional, and the
promote the health, morals, peace, education, good order, safety, and general burden is upon the government to prove that the classification is necessary to
welfare of the people are generally applicable not only to future contracts but even achieve a compelling state interest and that it is the least restrictive means to
to those already in existence, for all private contracts must yield to the superior and protect such interest.72
legitimate measures taken by the State to promote public welfare.62
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
Does the subject clause violate Section 1, classifications73 based on race74 or gender75 but not when the classification is drawn
Article III of the Constitution, and Section 18, along income categories.76
Article II and Section 3, Article XIII on labor
as a protected sector? It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng
Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the
The answer is in the affirmative. constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas (BSP),
a government financial institution (GFI), was challenged for maintaining its rank-and-
Section 1, Article III of the Constitution guarantees: file employees under the Salary Standardization Law (SSL), even when the rank-and-
file employees of other GFIs had been exempted from the SSL by their respective
No person shall be deprived of life, liberty, or property without due process of law charters. Finding that the disputed provision contained a suspect classification based
nor shall any person be denied the equal protection of the law. on salary grade, the Court deliberately employed the standard of strict judicial
scrutiny in its review of the constitutionality of said provision. More significantly, it
was in this case that the Court revealed the broad outlines of its judicial philosophy,
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor
to wit:
sector, without distinction as to place of deployment, full protection of their rights
and welfare.

10
Congress retains its wide discretion in providing for a valid classification, and its
policies should be accorded recognition and respect by the courts of justice except
when they run afoul of the Constitution. The deference stops where the classification
violates a fundamental right, or prejudices persons accorded special protection by
the Constitution. When these violations arise, this Court must discharge its primary
role as the vanguard of constitutional guaranties, and require a stricter and more
exacting adherence to constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the
Constitution requires a stricter judicial scrutiny finds no support in American or
English jurisprudence. Nevertheless, these foreign decisions and authorities are not
per se controlling in this jurisdiction. At best, they are persuasive and have been used
to support many of our decisions. We should not place undue and fawning reliance
upon them and regard them as indispensable mental crutches without which we
cannot come to our own decisions through the employment of our own
endowments. We live in a different ambience and must decide our own problems in
the light of our own interests and needs, and of our qualities and even idiosyncrasies
as a people, and always with our own concept of law and justice. Our laws must be
construed in accordance with the intention of our own lawmakers and such intent
may be deduced from the language of each law and the context of other local
legislation related thereto. More importantly, they must be construed to serve our
own public interest which is the be-all and the end-all of all our laws. And it need not
be stressed that our public interest is distinct and different from others.
xxx
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution.
The Preamble proclaims "equality" as an ideal precisely in protest against crushing
inequities in Philippine society. The command to promote social justice in Article II,
Section 10, in "all phases of national development," further explicitated in Article XIII,
are clear commands to the State to take affirmative action in the direction of greater
equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal support
for a more vigorous state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic
rights to marginalized groups of society, including labor. Under the policy of social
justice, the law bends over backward to accommodate the interests of the working
class on the humane justification that those with less privilege in life should have
more in law. And the obligation to afford protection to labor is incumbent not only
on the legislative and executive branches but also on the judiciary to translate this
pledge into a living reality. Social justice calls for the humanization of laws and the
equalization of social and economic forces by the State so that justice in its rational
and objectively secular conception may at least be approximated.
xxx
Under most circumstances, the Court will exercise judicial restraint in deciding
questions of constitutionality, recognizing the broad discretion given to Congress in
exercising its legislative power. Judicial scrutiny would be based on the "rational
basis" test, and the legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right,
or the perpetuation of prejudice against persons favored by the Constitution with
special protection, judicial scrutiny ought to be more strict. A weak and watered
down view would call for the abdication of this Court's solemn duty to strike down
any law repugnant to the Constitution and the rights it enshrines. This is true whether
the actor committing the unconstitutional act is a private person or the government
itself or one of its instrumentalities. Oppressive acts will be struck down regardless
of the character or nature of the actor.
xxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or
officer-employee status. It is akin to a distinction based on economic class and status,
with the higher grades as recipients of a benefit specifically withheld from the lower
grades. Officers of the BSP now receive higher compensation packages that are
competitive with the industry, while the poorer, low-salaried employees are limited
to the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-
and-file employees are paid the strictly regimented rates of the SSL while employees
higher in rank - possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to stay.
Considering that majority, if not all, the rank-and-file employees consist of people
whose status and rank in life are less and limited, especially in terms of job
marketability, it is they - and not the officers - who have the real economic and
financial need for the adjustment . This is in accord with the policy of the Constitution
"to free the people from poverty, provide adequate social services, extend to them a
decent standard of living, and improve the quality of life for all." Any act of Congress
that runs counter to this constitutional desideratum deserves strict scrutiny by this
Court before it can pass muster. (Emphasis supplied)cralawlibrary
11
Imbued with the same sense of "obligation to afford protection to labor," the Court
in the present case also employs the standard of strict judicial scrutiny, for it
perceives in the subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis - Ã -vis OFWs with
employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis - Ã -vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis - Ã -vis OFWs with
employment contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National
Labor Relations Commission79 (Second Division, 1999) that the Court laid down the
following rules on the application of the periods prescribed under Section 10(5) of
R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award
an illegally dismissed overseas contract worker, i.e., whether his salaries for the
unexpired portion of his employment contract or three (3) months' salary for every
year of the unexpired term, whichever is less, comes into play only when the
employment contract concerned has a term of at least one (1) year or more. This is
evident from the words "for every year of the unexpired term" which follows the
words "salaries x x x for three months."
To follow petitioners' thinking that private respondent is entitled to three (3) months
salary only simply because it is the lesser amount is to completely disregard and
overlook some words used in the statute while giving effect to some. This is contrary
to the well-established rule in legal hermeneutics that in interpreting a statute, care Case Title
should be taken that every part or word thereof be given effect since the law-making
body is presumed to know the meaning of the words employed in the statue and to
have used them advisedly. Ut res magis valeat quam pereat.80 (Emphasis
supplied)cralawlibrary
In Marsaman, the OFW involved was illegally dismissed two months into his 10-
month contract, but was awarded his salaries for the remaining 8 months and 6 days
of his contract.
Prior to Marsaman, however, there were two cases in which the Court made
conflicting rulings on Section 10(5). One was Asian Center for Career and Employment
System and Services v. National Labor Relations Commission (Second Division,
October 1998),81 which involved an OFW who was awarded a two-year employment
contract,but was dismissed after working for one year and two months. The LA
declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary
covering eight months, the unexpired portion of his contract. On appeal, the Court
reduced the award to SR3,600.00 equivalent to his three months' salary, this being
the lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment
without just, valid or authorized cause is entitled to his salary for the unexpired
portion of his employment contract or for three (3) months for every year of the
unexpired term, whichever is less.
In the case at bar, the unexpired portion of private respondent's employment
contract is eight (8) months. Private respondent should therefore be paid his basic
salary corresponding to three (3) months or a total of SR3,600.82
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
Commission (Third Division, December 1998),83 which involved an OFW (therein
respondent Erlinda Osdana) who was originally granted a 12-month contract, which
was deemed renewed for another 12 months. After serving for one year and seven-
and-a-half months, respondent Osdana was illegally dismissed, and the Court
awarded her salaries for the entire unexpired portion of four and one-half months of
her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the
following cases:
Contract Period of Unexpired Period Period Applied in the
Period Service Computation of the
Monetary Award
Skippers v. 6 months 2 months 4 months 4 months
Maguad84
12
 with fixed-period employment contracts of one year or more; in case of illegal
Bahia Shipping v. 9 months 8 months 4 months 4 months
dismissal, they are entitled to monetary award equivalent to only 3 months of the
Reynaldo Chua 85
unexpired portion of their contracts.
Centennial 9 months 4 months 5 months 5 months
Transmarine v. The disparity in the treatment of these two groups cannot be discounted. In Skippers,
dela Cruz l86 the respondent OFW worked for only 2 months out of his 6-month contract, but was
awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs
Talidano v. 12 months 3 months 9 months 3 months in Oriental and PCL who had also worked for about 2 months out of their 12-month
Falcon87 contracts were awarded their salaries for only 3 months of the unexpired portion of
their contracts. Even the OFWs involved in Talidano and Univan who had worked for
Univan v. CA 88 12 months 3 months 9 months 3 months a longer period of 3 months out of their 12-month contracts before being illegally
dismissed were awarded their salaries for only 3 months.
Oriental v. CA 89 12 months more than 2 10 months 3 months
months To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-
A with an employment contract of 10 months at a monthly salary rate of US$1,000.00
PCL v. NLRC90 12 months more than 2 more or less 9 3 months and a hypothetical OFW-B with an employment contract of 15 months with the same
months months monthly salary rate of US$1,000.00. Both commenced work on the same day and
under the same employer, and were illegally dismissed after one month of work.
Olarte v. 12 months 21 days 11 months and 9 3 months Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his
Nayona91 days salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled
to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion
JSS v. .Ferrer92 12 months 16 days 11 months and 24 3 months of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of
days his contract, as the US$3,000.00 is the lesser amount.

Pentagon v. 12 months 9 months and 7 2 months and 23 2 months and 23 days The disparity becomes more aggravating when the Court takes into account
Adelantar93 days days jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14,
1995,97 illegally dismissed OFWs, no matter how long the period of their employment
Phil. Employ v. 12 months 10 months 2 months Unexpired portion
contracts, were entitled to their salaries for the entire unexpired portions of their
Paramio, et al.94
contracts. The matrix below speaks for itself:
Flourish 2 years 26 days 23 months and 4 6 months or 3
Maritime v. days months for eachCase
yearTitle Contract Period of Unexpired Period Applied in the
Almanzor 95 of contract Period Service Period Computation of the
Monetary Award
Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3
Manpower v. months and and 28 days months for eachATCI
yearv. CA, et al.98 2 years 2 months 22 months 22 months
Villanos 96 28 days of contract
Phil. Integrated v. 2 years 7 days 23 months and 23 months and 23 days
NLRC99 23 days
As the foregoing matrix readily shows, the subject clause classifies OFWs into two
categories. The first category includes OFWs with fixed-period employment contracts JGB v. NLC100 2 years 9 months 15 months 15 months
of less than one year; in case of illegal dismissal, they are entitled to their salaries for
the entire unexpired portion of their contract. The second category consists of OFWs

13
 the subject clause "for three (3) months for every year of the unexpired
Agoy v. NLRC101 2 years 2 months 22 months 22 months
term, whichever is less" shall apply is not the length of the original contract period as
held in Marsaman,106 but the length of the unexpired portion of the contract period
EDI v. NLRC, et 2 years 5 months 19 months 19 months
- - the subject clause applies in cases when the unexpired portion of the contract
al.102
period is at least one year, which arithmetically requires that the original contract
Barros v. NLRC, et 12 months 4 months 8 months 8 months period be more than one year.
al.103
Viewed in that light, the subject clause creates a sub-layer of discrimination among
Philippine 12 months 6 months and 5 months and 5 months and 18 days OFWs whose contract periods are for more than one year: those who are illegally
Transmarine v. 22 days 18 days dismissed with less than one year left in their contracts shall be entitled to their
Carilla104 salaries for the entire unexpired portion thereof, while those who are illegally
dismissed with one year or more remaining in their contracts shall be covered by the
subject clause, and their monetary benefits limited to their salaries for three months
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the only.
unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform To concretely illustrate the application of the foregoing interpretation of the subject
rule of computation: their basic salaries multiplied by the entire unexpired portion of clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-
their employment contracts. month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally
dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule is at least 12 months remaining in the contract period of OFW-C, the subject clause
of computation of the money claims of illegally dismissed OFWs based on their applies to the computation of the latter's monetary benefits. Thus, OFW-C will be
employment periods, in the process singling out one category whose contracts have entitled, not to US$12,000,00 or the latter's total salaries for the 12 months
an unexpired portion of one year or more and subjecting them to the peculiar unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the
disadvantage of having their monetary awards limited to their salaries for 3 months latter's salaries for 3 months out of the 12-month unexpired term of the contract. On
or for the unexpired portion thereof, whichever is less, but all the while sparing the the other hand, OFW-D is spared from the effects of the subject clause, for there are
other category from such prejudice, simply because the latter's unexpired contracts only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to
fall short of one year. US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month
unexpired portion.
Among OFWs With Employment Contracts of More Than One Year
OFWs vis - Ã -vis Local Workers
Upon closer examination of the terminology employed in the subject clause, the With Fixed-Period Employment
Court now has misgivings on the accuracy of the Marsaman interpretation.
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the
The Court notes that the subject clause "or for three (3) months for every year of the monetary awards of illegally dismissed OFWs was in place. This uniform system was
unexpired term, whichever is less" contains the qualifying phrases "every year" and applicable even to local workers with fixed-term employment.107
"unexpired term." By its ordinary meaning, the word "term" means a limited or
definite extent of time.105 Corollarily, that "every year" is but part of an "unexpired The earliest rule prescribing a uniform system of computation was actually Article
term" is significant in many ways: first, the unexpired term must be at least one 299 of the Code of Commerce (1888),108 to wit:
year, for if it were any shorter, there would be no occasion for such unexpired term to
be measured by every year; and second, the original term must be more than one Article 299. If the contracts between the merchants and their shop clerks and
year, for otherwise, whatever would be the unexpired term thereof will not reach employees should have been made of a fixed period, none of the contracting parties,
even a year. Consequently, the more decisive factor in the determination of when
14
without the consent of the other, may withdraw from the fulfillment of said contract
until the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage
suffered, with the exception of the provisions contained in the following articles.
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to
determine the liability of a shipping company for the illegal discharge of its managers
prior to the expiration of their fixed-term employment. The Court therein held the
shipping company liable for the salaries of its managers for the remainder of their
fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code
of Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent
should be for a definite period or voyage, they cannot be discharged until the
fulfillment of their contracts, except for reasons of insubordination in serious
matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or
to its cargo by malice or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in
which the Court held the shipping company liable for the salaries and subsistence
allowance of its illegally dismissed employees for the entire unexpired portion of
their employment contracts.
While Article 605 has remained good law up to the present,111 Article 299 of the Code
of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain
time and for a certain work cannot leave or be dismissed without sufficient cause,
before the fulfillment of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article
1586 as a conjunctive "and" so as to apply the provision to local workers who are
employed for a time certain although for no particular skill. This interpretation of
Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company.113 And in
both Lemoine and Palomar, the Court adopted the general principle that in actions
for wrongful discharge founded on Article 1586, local workers are entitled to recover
damages to the extent of the amount stipulated to be paid to them by the terms of
their contract. On the computation of the amount of such damages, the Court in
Aldaz v. Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has been
brought to our attention to the contrary under Spanish jurisprudence, that when an
employee is wrongfully discharged it is his duty to seek other employment of the
same kind in the same community, for the purpose of reducing the damages resulting
from such wrongful discharge. However, while this is the general rule, the burden of
showing that he failed to make an effort to secure other employment of a like nature,
and that other employment of a like nature was obtainable, is upon the
defendant. When an employee is wrongfully discharged under a contract of
employment his prima facie damage is the amount which he would be entitled to had
he continued in such employment until the termination of the period. (Howard v. Daly,
61 N. Y., 362; Allen v. Whitlark, 99 Mich., 492; Farrell v. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)cralawlibrary
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-
term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and
Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title
VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions
of the Civil Code do not expressly provide for the remedies available to a fixed-term
worker who is illegally discharged. However, it is noted that in Mackay Radio &
Telegraph Co., Inc. v. Rich,117 the Court carried over the principles on the payment of
damages underlying Article 1586 of the Civil Code of 1889 and applied the same to a
case involving the illegal discharge of a local worker whose fixed-period employment
contract was entered into in 1952, when the new Civil Code was already in effect.118
More significantly, the same principles were applied to cases involving overseas
Filipino workers whose fixed-term employment contracts were illegally terminated,
such as in First Asian Trans & Shipping Agency, Inc. v. Ople,119 involving seafarers who
were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National Labor
Relations Commission,120 an OFW who was illegally dismissed prior to the expiration
of her fixed-period employment contract as a baby sitter, was awarded salaries
corresponding to the unexpired portion of her contract. The Court arrived at the
same ruling in Anderson v. National Labor Relations Commission,121 which involved a
foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who was
illegally dismissed after only nine months on the job - - the Court awarded him
salaries corresponding to 15 months, the unexpired portion of his contract. In Asia
World Recruitment, Inc. v. National Labor Relations Commission,122 a Filipino working
as a security officer in 1989 in Angola was awarded his salaries for the remaining
period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta
Maritime Co., Inc. v. National Labor Relations Commission,123 an OFW whose 12-
15
month contract was illegally cut short in the second month was declared entitled to
his salaries for the remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment
who were illegally discharged were treated alike in terms of the computation of their
money claims: they were uniformly entitled to their salaries for the entire unexpired
portions of their contracts. But with the enactment of R.A. No. 8042, specifically the
adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of
one year or more in their employment contract have since been differently treated
in that their money claims are subject to a 3-month cap, whereas no such limitation
is imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in that,
in the computation of the monetary benefits of fixed-term employees who are
illegally discharged, it imposes a 3-month cap on the claim of OFWs with an
unexpired portion of one year or more in their contracts, but none on the claims of
other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive
means.
What constitutes compelling state interest is measured by the scale of rights and
powers arrayed in the Constitution and calibrated by history.124 It is akin to the
paramount interest of the state125 for which some individual liberties must give way,
such as the public interest in safeguarding health or maintaining medical
standards,126 or in maintaining access to information on matters of public concern.127
In the present case, the Court dug deep into the records but found no compelling
state interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect
the employment of Filipino seafarers overseas x x x. By limiting the liability to three
months [sic], Filipino seafarers have better chance of getting hired by foreign
employers." The limitation also protects the interest of local placement agencies,
which otherwise may be made to shoulder millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of
money claims in the event that jurisdiction over the foreign employer is not acquired
by the court or if the foreign employer reneges on its obligation. Hence, placement
agencies that are in good faith and which fulfill their obligations are unnecessarily
penalized for the acts of the foreign employer. To protect them and to promote their
continued helpful contribution in deploying Filipino migrant workers, liability for
money are reduced under Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies helps
[assure] the government that migrant workers are properly deployed and are
employed under decent and humane conditions.129 (Emphasis supplied)cralawlibrary
However, nowhere in the Comment or Memorandum does the OSG cite the source
of its perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego
in sponsorship of House Bill No. 14314 (HB 14314), from which the law
originated;130 but the speech makes no reference to the underlying reason for the
adoption of the subject clause. That is only natural for none of the 29 provisions in
HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money
claims, to wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of the complaint, the claim arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino workers
for overseas employment including claims for actual, moral, exemplary and other
forms of damages.
The liability of the principal and the recruitment/placement agency or any and all
claims under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims
exclusive of damages under this Section shall not be less than fifty percent (50%) of
such money claims: Provided, That any installment payments, if applicable, to satisfy
any such compromise or voluntary settlement shall not be more than two (2) months.
16
Any compromise/voluntary agreement in violation of this paragraph shall be null and
void.
Non-compliance with the mandatory period for resolutions of cases provided under
this Section shall subject the responsible officials to any or all of the following
penalties:
(1) The salary of any such official who fails to render his decision or resolution within
the prescribed period shall be, or caused to be, withheld until the said official
complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public
office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to
any liability which any such official may have incurred under other existing laws or
rules and regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the
computation of money claims.
A rule on the computation of money claims containing the subject clause was
inserted and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042.
The Court examined the rationale of the subject clause in the transcripts of the
"Bicameral Conference Committee (Conference Committee) Meetings on the Magna
Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No.
14314)." However, the Court finds no discernible state interest, let alone a compelling
one, that is sought to be protected or advanced by the adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of
a compelling state interest that would justify the perpetuation of the discrimination
against OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to
protect the employment of OFWs by mitigating the solidary liability of placement
agencies, such callous and cavalier rationale will have to be rejected. There can never
be a justification for any form of government action that alleviates the burden of one
sector, but imposes the same burden on another sector, especially when the favored
sector is composed of private businesses such as placement agencies, while the
disadvantaged sector is composed of OFWs whose protection no less than the
Constitution commands. The idea that private business interest can be elevated to
the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability
of placement agencies vis-a-vis their foreign principals, there are mechanisms
already in place that can be employed to achieve that purpose without infringing on
the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of
Land-Based Overseas Workers, dated February 4, 2002, imposes administrative
disciplinary measures on erring foreign employers who default on their contractual
obligations to migrant workers and/or their Philippine agents. These disciplinary
measures range from temporary disqualification to preventive suspension. The POEA
Rules and Regulations Governing the Recruitment and Employment of Seafarers,
dated May 23, 2003, contains similar administrative disciplinary measures against
erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of
aiding local placement agencies in enforcing the solidary liability of their foreign
principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative
of the right of petitioner and other OFWs to equal protection.ςηαñrοblεš νιrâ€
υαl lαω lιbrαrÿ
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause
directly violates state policy on labor under Section 3,131 Article XIII of the
Constitution.
While all the provisions of the 1987 Constitution are presumed self-
executing,132 there are some which this Court has declared not judicially
enforceable, Article XIII being one,133 particularly Section 3 thereof, the nature of
which, this Court, in Agabon v. National Labor Relations Commission,134 has
described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may
be deemed as self-executing in the sense that these are automatically acknowledged
and observed without need for any enabling legislation. However, to declare that the
constitutional provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed, would be
17
impractical, if not unrealistic. The espousal of such view presents the dangerous
tendency of being overbroad and exaggerated. The guarantees of "full protection to
labor" and "security of tenure", when examined in isolation, are facially unqualified,
and the broadest interpretation possible suggests a blanket shield in favor of labor
against any form of removal regardless of circumstance. This interpretation implies
an unimpeachable right to continued employment-a utopian notion, doubtless-but
still hardly within the contemplation of the framers. Subsequent legislation is still
needed to define the parameters of these guaranteed rights to ensure the protection
and promotion, not only the rights of the labor sector, but of the employers' as well.
Without specific and pertinent legislation, judicial bodies will be at a loss, formulating
their own conclusion to approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a
positive enforceable right to stave off the dismissal of an employee for just cause
owing to the failure to serve proper notice or hearing. As manifested by several
framers of the 1987 Constitution, the provisions on social justice require legislative
enactments for their enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct
enforceable rights, for the violation of which the questioned clause may be declared
unconstitutional. It may unwittingly risk opening the floodgates of litigation to every
worker or union over every conceivable violation of so broad a concept as social
justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working
class any actual enforceable right, but merely clothes it with the status of a sector for
whom the Constitution urges protection through executive or legislative action
and judicial recognition. Its utility is best limited to being an impetus not just for the
executive and legislative departments, but for the judiciary as well, to protect the
welfare of the working class.And it was in fact consistent with that constitutional
agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee
Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice now
Chief Justice Reynato S. Puno, formulated the judicial precept that when the
challenge to a statute is premised on the perpetuation of prejudice against persons
favored by the Constitution with special protection - - such as the working class or a
section thereof - - the Court may recognize the existence of a suspect classification
and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny
formulated in Central Bank Employee Association exaggerate the significance of
Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII
in conjunction with the equal protection clause. Article XIII, by itself, without the
application of the equal protection clause, has no life or force of its own as elucidated
in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause
violates petitioner's right to substantive due process, for it deprives him of property,
consisting of monetary benefits, without any existing valid governmental purpose.136
The argument of the Solicitor General, that the actual purpose of the subject clause
of limiting the entitlement of OFWs to their three-month salary in case of illegal
dismissal, is to give them a better chance of getting hired by foreign employers. This
is plain speculation. As earlier discussed, there is nothing in the text of the law or the
records of the deliberations leading to its enactment or the pleadings of respondent
that would indicate that there is an existing governmental purpose for the subject
clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and
it is for that precise reason that the clause violates not just petitioner's right to equal
protection, but also her right to substantive due process under Section 1,137 Article III
of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the
entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary
basis in the computation of his monetary award, because these are fixed benefits
that have been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For
seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the
basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime
pay is compensation for all work "performed" in excess of the regular eight hours,
and holiday pay is compensation for any work "performed" on designated rest days
and holidays.
18
By the foregoing definition alone, there is no basis for the automatic inclusion of
overtime and holiday pay in the computation of petitioner's monetary award, unless
there is evidence that he performed work during those periods. As the Court held
in Centennial Transmarine, Inc. v. Dela Cruz,138

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

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

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

WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three
months for every year of the unexpired term, whichever is less" in the 5th paragraph
of Section 10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the
December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals
are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire
unexpired portion of his employment contract consisting of nine months and 23 days
computed at the rate of US$1,400.00 per month.

No costs.

SO ORDERED.

19
G.R. No. 170139, August 05, 2014 On October 15, 1997, Joy filed a complaint17 with the National Labor Relations
Commission against petitioner and Wacoal. She claimed that she was illegally
SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. JOY C. dismissed.18 She asked for the return of her placement fee, the withheld amount for
CABILES, Respondent. repatriation costs, payment of her salary for 23 months as well as moral and
exemplary damages.19 She identified Wacoal as Sameer Overseas Placement
DECISION Agency’s foreign principal.20cralawred

LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our duty,
given the facts and the law, to approximate justice for her.
We are asked to decide a petition for review1 on certiorari assailing the Court of
Appeals’ decision2 dated June 27, 2005. This decision partially affirmed the National
Labor Relations Commission’s resolution dated March 31, 2004,3 declaring
respondent’s dismissal illegal, directing petitioner to pay respondent’s three-month
salary equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering it to reimburse
the NT$3,000.00 withheld from respondent, and pay her NT$300.00 attorney’s
fees.4cralawred
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement
agency.5Responding to an ad it published, respondent, Joy C. Cabiles, submitted her
application for a quality control job in Taiwan.6cralawred
Joy’s application was accepted.7 Joy was later asked to sign a one-year employment
contract for a monthly salary of NT$15,360.00.8 She alleged that Sameer Overseas
Agency required her to pay a placement fee of P70,000.00 when she signed the
employment contract.9cralawred
Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26,
1997.10 She alleged that in her employment contract, she agreed to work as quality
control for one year.11 In Taiwan, she was asked to work as a cutter.12cralawred
Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr.
Huwang from Wacoal informed Joy, without prior notice, that she was terminated
and that “she should immediately report to their office to get her salary and
passport.”13 She was asked to “prepare for immediate repatriation.”14cralawred
Joy claims that she was told that from June 26 to July 14, 1997, she only earned a
total of NT$9,000.15According to her, Wacoal deducted NT$3,000 to cover her plane
ticket to Manila.16cralawred
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
20
of placement fees for lack of jurisdiction.43 It refused to entertain the issue of the caveat embodied in the last sentence. No costs.
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 SO ORDERED.53
Arbiter’s decision not to rule on the matter.45cralawred
Dissatisfied, Sameer Overseas Placement Agency filed this petition.54cralawred
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 We are asked to determine whether the Court of Appeals erred when it affirmed the
withheld from her, and attorney’s fees of NT$300.46cralawred ruling of the National Labor Relations Commission finding respondent illegally
dismissed and awarding her three months’ worth of salary, the reimbursement of the
The Commission denied the agency’s motion for reconsideration47 dated May 12, cost of her repatriation, and attorney’s fees despite the alleged existence of just
2004 through a resolution48 dated July 2, 2004. causes of termination.

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a Petitioner reiterates that there was just cause for termination because there was a
petition49 for certiorari with the Court of Appeals assailing the National Labor finding of Wacoal that respondent was inefficient in her work.55 Therefore, it claims
Relations Commission’s resolutions dated March 31, 2004 and July 2, 2004. that respondent’s dismissal was valid.56cralawred

The Court of Appeals50 affirmed the decision of the National Labor Relations Petitioner also reiterates that since Wacoal’s accreditation was validly transferred to
Commission with respect to the finding of illegal dismissal, Joy’s entitlement to the Pacific at the time respondent filed her complaint, it should be Pacific that should
equivalent of three months worth of salary, reimbursement of withheld repatriation now assume responsibility for Wacoal’s contractual obligations to the workers
expense, and attorney’s fees.51 The Court of Appeals remanded the case to the originally recruited by petitioner.57cralawred
National Labor Relations Commission to address the validity of petitioner's
allegations against Pacific.52 The Court of Appeals held, Sameer Overseas Placement Agency’s petition is without merit. We find for
thus:chanRoblesvirtualLawlibrary respondent.

Although the public respondent found the dismissal of the complainant-respondent I

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 AFFIRMEDin accordance with the foregoing discussion, but subject to the
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
21
through the proper procedure. may be dismissed on the ground of illness would encourage illegal or arbitrary pre-
termination of employment contracts.66 (Emphasis supplied, citation omitted)
Security of tenure for labor is guaranteed by our Constitution.64cralawred
Even with respect to fundamental procedural rights, this court emphasized in PCL
Employees are not stripped of their security of tenure when they move to work in a Shipping Philippines, Inc. v. NLRC,67 to wit:chanRoblesvirtualLawlibrary
different jurisdiction. With respect to the rights of overseas Filipino workers, we
follow the principle of lex loci contractus. 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
Thus, in Triple Eight Integrated Services, Inc. v. NLRC,65 this court opportunity to air his side. However, petitioners contend that the twin requirements
noted:chanRoblesvirtualLawlibrary 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
Petitioner likewise attempts to sidestep the medical certificate requirement by maritime or overseas employment.
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 The Court does not agree. The provisions of the Constitution as well as the Labor
appear that the labor laws of Saudi Arabia do not require any certification by a Code which afford protection to labor apply to Filipino employees whether working
competent public health authority in the dismissal of employees due to illness. 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
Again, petitioner’s argument is without merit. 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
First, established is the rule that lex loci contractus (the law of the place where the with the approval of the Philippine Overseas Employment Administration (POEA).
contract is made) governs in this jurisdiction. There is no question that the contract Hence, the Labor Code together with its implementing rules and regulations and
of employment in this case was perfected here in the Philippines. Therefore, the other laws affecting labor apply in this case.68 (Emphasis supplied, citations omitted)
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 By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or
not enforce any foreign claim obnoxious to the forum’s public policy. Here in the authorized cause and after compliance with procedural due process requirements.
Philippines, employment agreements are more than contractual in nature. The
Constitution itself, in Article XIII, Section 3, guarantees the special protection of Article 282 of the Labor Code enumerates the just causes of termination by the
workers, to wit:chanRoblesvirtualLawlibrary employer. Thus:chanRoblesvirtualLawlibrary

The State shall afford full protection to labor, local and overseas, organized and Art. 282. Termination by employer. An employer may terminate an employment for
unorganized, and promote full employment and equality of employment any of the following causes:cralawlawlibrary
opportunities for all.
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
It shall guarantee the rights of all workers to self-organization, collective bargaining of his employer or representative in connection with his
and negotiations, and peaceful concerted activities, including the right to strike in work;chanroblesvirtuallawlibrary
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 (b) Gross and habitual neglect by the employee of his
processes affecting their rights and benefits as may be provided by law. duties;chanroblesvirtuallawlibrary

. . . .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
(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
22
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.
23
Respondent started working on June 26, 1997. She was told that she was terminated inclusive of damages under this section shall be paid within four (4) months from the
on July 14, 1997 effective on the same day and barely a month from her first workday. approval of the settlement by the appropriate authority.
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 In case of termination of overseas employment without just, valid or authorized cause
and given the opportunity to be heard. Her constitutional right to due process of law as defined by law or contract, the workers shall be entitled to the full reimbursement
was violated. 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
II of the unexpired term, whichever is less.

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. (Emphasis supplied)chanrobleslaw

Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers and Section 15 of Republic Act No. 8042 states that “repatriation of the worker and the
Overseas Filipinos Act of 1995, states that overseas workers who were terminated transport of his [or her] personal belongings shall be the primary responsibility of the
without just, valid, or authorized cause “shall be entitled to the full reimbursement agency which recruited or deployed the worker overseas.” The exception is when
of his placement fee with interest of twelve (12%) per annum, plus his salaries for the “termination of employment is due solely to the fault of the worker,”80 which as we
unexpired portion of his employment contract or for three (3) months for every year have established, is not the case. It reads:chanRoblesvirtualLawlibrary
of the unexpired term, whichever is less.”
SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. – The
Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of law to the contrary, the repatriation of the worker and the transport of his personal belongings shall be the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the primary responsibility of the agency which recruited or deployed the worker
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days overseas. All costs attendant to repatriation shall be borne by or charged to the
after filing of the complaint, the claims arising out of an employer-employee agency concerned and/or its principal. Likewise, the repatriation of remains and
relationship or by virtue of any law or contract involving Filipino workers for overseas transport of the personal belongings of a deceased worker and all costs attendant
deployment including claims for actual, moral, exemplary and other forms of thereto shall be borne by the principal and/or local agency. However, in cases where
damages. 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
The liability of the principal/employer and the recruitment/placement agency for any repatriation of the former and/or his belongings.
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 The Labor Code81 also entitles the employee to 10% of the amount of withheld wages
claims or damages that may be awarded to the workers. If the as attorney’s fees when the withholding is unlawful.
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 The Court of Appeals affirmed the National Labor Relations Commission’s decision to
liable with the corporation or partnership for the aforesaid claims and damages. 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
Such liabilities shall continue during the entire period or duration of the employment salary, which answered for her repatriation.
contract and shall not be affected by any substitution, amendment or modification
made locally or in a foreign country of the said contract. 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
Any compromise/amicable settlement or voluntary agreement on money claims to the amount equivalent to the unexpired term of the employment contract.
24

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
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

SEC. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the (a) The salary of any such official who fails to render his decision or resolution within
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the the prescribed period shall be, or caused to be, withheld until the said official
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days complies therewith;chanroblesvirtuallawlibrary
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 (b) Suspension for not more than ninety (90) days; or
deployment including claims for actual, moral, exemplary and other forms of
damage. Consistent with this mandate, the NLRC shall endeavor to update and keep (c) Dismissal from the service with disqualification to hold any appointive public office
abreast with the developments in the global services industry. for five (5) years.

The liability of the principal/employer and the recruitment/placement agency for any Provided, however, That the penalties herein provided shall be without prejudice to
and all claims under this section shall be joint and several. This provision shall be any liability which any such official may have incured [sic] under other existing laws
incorporated in the contract for overseas employment and shall be a condition or rules and regulations as a consequence of violating the provisions of this
precedent for its approval. The performance bond to de [sic] filed by the paragraph. (Emphasis supplied)
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 Republic Act No. 10022 was promulgated on March 8, 2010. This means that the
recruitment/placement agency is a juridical being, the corporate officers and reinstatement of the clause in Republic Act No. 8042 was not yet in effect at the time
directors and partners as the case may be, shall themselves be jointly and solidarily of respondent’s termination from work in 1997.86 Republic Act No. 8042 before it was
liable with the corporation or partnership for the aforesaid claims and damages. amended by Republic Act No. 10022 governs this case.

Such liabilities shall continue during the entire period or duration of the employment When a law is passed, this court awaits an actual case that clearly raises adversarial
contract and shall not be affected by any substitution, amendment or modification positions in their proper context before considering a prayer to declare it as
made locally or in a foreign country of the said contract. unconstitutional.

Any compromise/amicable settlement or voluntary agreement on money claims However, we are confronted with a unique situation. The law passed incorporates
inclusive of damages under this section shall be paid within thirty (30) days from the exact clause already declared as unconstitutional, without any perceived
25
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
26
violate the equal protection clause prescribes a reasonable classification.104cralawred
A reasonable classification “(1) must rest on substantial distinctions; (2) must be
germane to the purposes of the law; (3) must not be limited to existing conditions
only; and (4) must apply equally to all members of the same class.”105cralawred
The reinstated clause does not satisfy the requirement of reasonable classification.
In Serrano, we identified the classifications made by the reinstated clause. It
distinguished between fixed-period overseas workers and fixed-period local
workers.106 It also distinguished between overseas workers with employment
contracts of less than one year and overseas workers with employment contracts of
at least one year.107 Within the class of overseas workers with at least one-year
employment contracts, there was a distinction between those with at least a year left
in their contracts and those with less than a year left in their contracts when they
were illegally dismissed.108cralawred
The Congress’ classification may be subjected to judicial review. In Serrano, there is
a “legislative classification which impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar disadvantage of a suspect
class.”109cralawred
Under the Constitution, labor is afforded special protection.110 Thus, this court
in Serrano, “[i]mbued with the same sense of ‘obligation to afford protection to
labor,’ . . . employ[ed] the standard of strict judicial scrutiny, for it perceive[d] in the
subject clause a suspect classification prejudicial to OFWs.”111cralawred
We also noted in Serrano that before the passage of Republic Act No. 8042, the
money claims of illegally terminated overseas and local workers with fixed-term
employment were computed in the same manner.112 Their money claims were
computed based on the “unexpired portions of their contracts.”113The adoption of
the reinstated clause in Republic Act No. 8042 subjected the money claims of illegally
dismissed overseas workers with an unexpired term of at least a year to a cap of three
months worth of their salary.114 There was no such limitation on the money claims of
illegally terminated local workers with fixed-term employment.115cralawred
We observed that illegally dismissed overseas workers whose employment contracts
had a term of less than one year were granted the amount equivalent to the
unexpired portion of their employment contracts.116 Meanwhile, illegally dismissed
overseas workers with employment terms of at least a year were granted a cap
equivalent to three months of their salary for the unexpired portions of their
contracts.117cralawred
Observing the terminologies used in the clause, we also found that “the subject
clause creates a sub-layer of discrimination among OFWs whose contract periods are
for more than one year: those who are illegally dismissed with less than one year left
in their contracts shall be entitled to their salaries for the entire unexpired portion
thereof, while those who are illegally dismissed with one year or more remaining in
their contracts shall be covered by the reinstated clause, and their monetary benefits
limited to their salaries for three months only.”118cralawred
We do not need strict scrutiny to conclude that these classifications do not rest on
any real or substantial distinctions that would justify different treatments in terms of
the computation of money claims resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to security of tenure,
at least for the period agreed upon in their contracts. This means that they cannot be
dismissed before the end of their contract terms without due process. If they were
illegally dismissed, the workers’ right to security of tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated are
neither greater than nor less than the rights violated when a fixed-period overseas
worker is illegally terminated. It is state policy to protect the rights of workers without
qualification as to the place of employment.119 In both cases, the workers are
deprived of their expected salary, which they could have earned had they not been
illegally dismissed. For both workers, this deprivation translates to economic
insecurity and disparity.120 The same is true for the distinctions between overseas
workers with an employment contract of less than one year and overseas workers
with at least one year of employment contract, and between overseas workers with
at least a year left in their contracts and overseas workers with less than a year left
in their contracts when they were illegally dismissed.
For this reason, we cannot subscribe to the argument that “[overseas workers] are
contractual employees who can never acquire regular employment status, unlike
local workers”121 because it already justifies differentiated treatment in terms of the
computation of money claims.122cralawred
Likewise, the jurisdictional and enforcement issues on overseas workers’ money
claims do not justify a differentiated treatment in the computation of their money
claims.123 If anything, these issues justify an equal, if not greater protection and
assistance to overseas workers who generally are more prone to exploitation given
their physical distance from our government.
We also find that the classifications are not relevant to the purpose of the law, which
is to “establish a higher standard of protection and promotion of the welfare of
migrant workers, their families and overseas Filipinos in distress, and for other
27
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
28

Section 1. The rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of an express contract as
to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for
Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for
Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines
in computing legal interest in Nacar v. Gallery Frames:130cralawred
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:chanRoblesvirtualLawlibrary
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under
and subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated
claims or damages, except when or until the demand can
be established with reasonable certainty. Accordingly,
where the demand is established with reasonable
certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil
Code), but when such certainty cannot be so reasonably
established at the time the demand is made, the interest
shall begin to run only from the date the judgment of the
court is made (at which time the quantification of
damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally
adjudged.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2,
above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior
to July 1, 2013, shall not be disturbed and shall continue to be implemented applying
the rate of interest fixed therein.131
Circular No. 799 is applicable only in loans and forbearance of money, goods, or
credits, and in judgments when there is no stipulation on the applicable interest rate.
Further, it is only applicable if the judgment did not become final and executory
before July 1, 2013.132cralawred
We add that Circular No. 799 is not applicable when there is a law that states
otherwise. While the Bangko Sentral ng Pilipinas has the power to set or limit interest
rates,133 these interest rates do not apply when the law provides that a different
interest rate shall be applied. “[A] Central Bank Circular cannot repeal a law. Only a
law can repeal another law.”134cralawred
For example, Section 10 of Republic Act No. 8042 provides that unlawfully terminated
overseas workers are entitled to the reimbursement of his or her placement fee with
an interest of 12% per annum. Since Bangko Sentral ng Pilipinas circulars cannot
repeal Republic Act No. 8042, the issuance of Circular No. 799 does not have the
effect of changing the interest on awards for reimbursement of placement fees from
12% to 6%. This is despite Section 1 of Circular No. 799, which provides that the 6%
interest rate applies even to judgments.
Moreover, laws are deemed incorporated in contracts. “The contracting parties need
not repeat them. They do not even have to be referred to. Every contract, thus,
contains not only what has been explicitly stipulated, but the statutory provisions
that have any bearing on the matter.”135 There is, therefore, an implied stipulation in
contracts between the placement agency and the overseas worker that in case the
29
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 The provision on joint and several liability in the Migrant Workers and Overseas
stipulation has the effect of removing awards for reimbursement of placement fees Filipinos Act of 1995 assures overseas workers that their rights will not be frustrated
from Circular No. 799’s coverage. with these complications.

The same cannot be said for awards of salary for the unexpired portion of the The fundamental effect of joint and several liability is that “each of the debtors is
employment contract under Republic Act No. 8042. These awards are covered by liable for the entire obligation.”138 A final determination may, therefore, be achieved
Circular No. 799 because the law does not provide for a specific interest rate that even if only one of the joint and several debtors are impleaded in an action. Hence,
should apply. 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.
In sum, if judgment did not become final and executory before July 1, 2013 and there This way, the overseas workers are assured that someone — the foreign employer’s
was no stipulation in the contract providing for a different interest rate, other money local agent — may be made to answer for violations that the foreign employer may
claims under Section 10 of Republic Act No. 8042 shall be subject to the 6% interest have committed.
per annum in accordance with Circular No. 799.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas
This means that respondent is also entitled to an interest of 6% per annum on her workers have recourse in law despite the circumstances of their employment. By
money claims from the finality of this judgment. 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
IV sufficient payment of what is due them.140cralawred

Finally, we clarify the liabilities of Wacoal as principal and petitioner as the Corollary to the assurance of immediate recourse in law, the provision on joint and
employment agency that facilitated respondent’s overseas employment. 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
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that employment agency. However, it must be emphasized that the local agency that is
the foreign employer and the local employment agency are jointly and severally liable held to answer for the overseas worker’s money claims is not left without remedy.
for money claims including claims arising out of an employer-employee relationship The law does not preclude it from going after the foreign employer for
and/or damages. This section also provides that the performance bond filed by the reimbursement of whatever payment it has made to the employee to answer for the
local agency shall be answerable for such money claims or damages if they were money claims against the foreign employer.
awarded to the employee.
A further implication of making local agencies jointly and severally liable with the
This provision is in line with the state’s policy of affording protection to labor and foreign employer is that an additional layer of protection is afforded to overseas
alleviating workers’ plight.136cralawred 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
In overseas employment, the filing of money claims against the foreign employer is law. Lest they risk their reputation or finances, local agencies must already have
attended by practical and legal complications. The distance of the foreign employer mechanisms for guarding against unscrupulous foreign employers even at the level
alone makes it difficult for an overseas worker to reach it and make it liable for prior to overseas employment applications.
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 With the present state of the pleadings, it is not possible to determine whether there
attempt to advance his or her claims. 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
It may be argued, for instance, that the foreign employer must be impleaded in the judgment. Petitioner is possessed with the resources to determine the proper legal
complaint as an indispensable party without which no final determination can be had remedies to enforce its rights against Pacific, if any.
of an action.137cralawred
30
V is AFFIRMED with modification. Petitioner Sameer Overseas Placement Agency
is ORDERED to pay respondent Joy C. Cabiles the amount equivalent to her salary for
Many times, this court has spoken on what Filipinos may encounter as they travel the unexpired portion of her employment contract at an interest of 6% per annum
into the farthest and most difficult reaches of our planet to provide for their families. from the finality of this judgment. Petitioner is also ORDERED to reimburse
In Prieto v. NLRC:141cralawred 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 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 The clause, “or for three (3) months for every year of the unexpired term, whichever
more fulfilling future. Breach of contract, maltreatment, rape, insufficient is less” in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act
nourishment, sub-human lodgings, insults and other forms of debasement, are only No. 8042 is declared unconstitutional and, therefore, null and void.
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 SO ORDERED.
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

31
G.R. No. 191310, April 11, 2018
1.1 Duration: This contract shall be enforced for the period of six
months, Extendible by another six months by mutual
PRINCESS TALENT CENTER PRODUCTION, INC., AND/OR LUCHI SINGH
agreement of the parties.
MOLDES, Petitioners, v.DESIREE T. MASAGCA, Respondent.

Affectivity (sic): The contract shall commence upon the

DECISION
Talent's departure from The Philippines (Date 6) and shall
remain in force as Stipulated in the duration, unless sooner
LEONARDO-DE CASTRO,**J.:
terminated by the mutual consent of The parties or due to
circumstances beyond their control. Booking of Talent Shall be
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised effected within three (3) days upon arrival in Korea, But only
Rules of Court filed by petitioners Princess Talent Center Production, Inc. (PTCPI) and after Undergoing Mandatory Post-Arrival Briefing at the
Luchi Singh Moldes (Moldes) assailing: (1) the Decision1 dated November 27, 2009 of Philippine Embassy Overseas Labor Office (POLO), Philippine
the Court of Appeals in CA-G.R. SP No. 110277, which annulled and set aside the Embassy in Seoul.
Resolutions dated November 11, 20082 and January 30, 20093 of the National Labor
Relations Commission (NLRC) in NLRC NCR CA No. 049990-06, and ordered
petitioners and their foreign principal, Saem Entertainment Company, Ltd. (SAENCO),
to jointly and severally pay respondent Desiree T. Masagca her unpaid salaries for 2. NAME OF PERFORMANCE VENUE:
one year, plus attorney's fees; and (2) the Resolution4 dated February 16, 2010 of the
appellate court in the same case, which denied the Motion for Reconsideration of Siheung Tourist Hotel Night Club
petitioners and SAENCO.
NAME OF OWNER:
I
FACTUAL ANTECEDENTS
Cho Kang Hyung
Sometime in November 2002, respondent auditioned for a singing contest at ABC-
Channel 5 in Novaliches, Quezon City when a talent manager approached her to ADDRESS:
discuss her show business potential. Enticed by thoughts of a future in the
entertainment industry, respondent went to the office of petitioner PTCPI, a 1622-6 (B2) Jung Wang Dons Siheung Kyung Ki Do
domestic corporation engaged in the business of training and development of actors,
singers, dancers, and musicians in the movie and entertainment industry.5 At the
office, respondent met petitioner Moldes, President of petitioner PTCPI, who xxxx
persuaded respondent to apply for a job as a singer/entertainer in South Korea.

A Model Employment Contract for Filipino Overseas Performing Artists (OPAS) To

Korea6 (Employment Contract) was executed on February 3, 2003 between
respondent and petitioner PTCPI as the Philippine agent of SAENCO, the Korean
principal/promoter. Important provisions of the Employment Contract are
reproduced below:
1. DURATION AND PERIOD OF EFFECTIVITY OF THE CONTRACT
(Subject to ocular inspection, Verification, and approval by the POLO)
3. COMPENSATION: The Talent shall receive a monthly compensation of a
Minimum of U.S.D. $600, (Ranging from U.S.D. 500 to 800 based on The
categories of the ARB, skill and experience of the Talent, and of the
Performance Venue) which shall accrue beginning on the day of the

32
 Talent's Departure from the Philippines and shall be paid every end of the
month directly To The Talent. By the Employer, minus the authorized fees
of the Philippine Agent and The Talent Manager, which shall be deducted
at a maximum monthly Rates of U.S. $100 and U.S. $100 for the Philippine
Agent and Talent Manager, respectively. Deductions of $200/month is
good for three (3) months only.
4. HOURS OF WORK, RESTDAY AND OVERTIME PAY
4.1 Hours of work: Maximum of Five (5) hours per day.
4.2 Rest day: One (1) day a week
4.3 Overtime Rate: (100) percent of regular rate or the prevailing
rate in Korea as Required by the Labor Standard Act.
xxxx
9. The services of the Talents as provided in this contract shall only be
rendered at the Performance Venue identified in this contract. Should
there be a need and mutual agreement of the parties for the talent to
transfer to another Performance Venue There shall be executed a new
contract. The new contract shall be subject of Verification requirement
of the Philippine Overseas Labor Office, Philippine Embassy.
xxxx
12. TERMINATION:
A. Termination by the Employer: The Employer may terminate
the Contract of Employment for any of the following just
causes: serious misconduct or Willful disobedience of the
lawful orders of the employer, gross or habitual Neglect of
duties, violation of the laws of the host country. When the
Termination of the contract is due to the foregoing causes, the
Talent shall Bear the cost of repatriation. In addition, the
Talent may be liable to Blacklisting and/or other penalties in
case of serious offense.
B. Termination by the Talent: The Talent may terminate the
contract for any of The following just causes: when the Talent
is maltreated by the Employer or Any of his/her associates, or
when the employer commits of (sic) the following — Non-
payment of Talent salary, underpayment of salary in violation
of this Contract, non-booking of the Talent, physical
molestation, assault or Subjecting the talent to inhumane
treatment or shame. Inhumane treatment Shall be
understood to include forcing or letting the talent to be used
in Indecent performance or in prostitution. In any of the
foregoing case, the Employer shall pay the cost of repatriation
and be liable to garnishment of The escrow deposit, aside
from other penalties that may arise from a case.
C. Termination due to illness: Any of the parties may terminate
the contract on The ground of illness, disease, or injury
suffered by the Talent, where the Latter's continuing
employment is prohibited by law or prejudicial to his/her
Health, or to the health of the employer, or to others. The cost
of the Repatriation of the Talent for any of the foregoing
reasons shall be for the Account of the employer.7
Respondent left for South Korea on September 6, 2003 and worked there as a singer
for nine months, until her repatriation to the Philippines sometime in June 2004.
Believing that the termination of her contract was unlawful and premature,
respondent filed a complaint against petitioners and SAENCO with the NLRC.
Respondent's Allegations
Respondent alleged that she was made to sign two Employment Contracts but she
was not given the chance to read any of them despite her requests. Respondent had
33
to rely on petitioner Moldes's representations that: (a) her visa was valid for one year
with an option to renew; (b) SAENCO would be her employer; (c) she would be singing
in a group with four other Filipinas8 at Seaman's Seven Pub at 82-8 Okkyo-Dong, Jung-
Gu, Ulsan, South Korea; (d) her Employment Contract had a minimum term of one
year, which was extendible for two years; and (e) she would be paid a monthly salary
of US$400.00, less US$100.00 as monthly commission of petitioners. Petitioner
Moldes also made respondent sign several spurious loan documents by threatening
the latter that she would not be deployed if she refused to do so.
For nine months, respondent worked at Seaman's Seven Pub in Ulsan, South Korea -
not at Siheung Tourist Hotel Night Club in Siheung, South Korea as stated in her
Employment Contract - without receiving any salary from SAENCO. Respondent
subsisted on the 20% commission that she received for every lady's drink the
customers purchased for her. Worse, respondent had to remit half of her commission
to petitioner Moldes for the payment of the fictitious loan. When respondent failed
to remit any amount to petitioner Moldes in May 2004, petitioner Moldes demanded
that respondent pay the balance of the loan supposedly amounting to US$10,600.00.
To dispute the loan, respondent engaged the legal services of Fortun, Narvasa &
Salazar, a Philippine law firm, which managed to obtain copies of respondent's
Employment Contract and Overseas Filipino Worker Information Sheet. It was only
then when respondent discovered that her employment was just for six months and
that her monthly compensation was US$600.00, not just US$400.00.
Respondent further narrated that on June 13, 2004, petitioner Moldes went to South
Korea and paid the salaries of all the performers, except respondent. Petitioner
Moldes personally handed respondent a copy of the loan document for US$10,600.00
and demanded that respondent terminate the services of her legal counsel in the
Philippines. When respondent refused to do as petitioner Moldes directed, petitioner
Moldes withheld respondent's salary. On June 24, 2004, Park Sun Na (Park), President
of SAENCO,9 went to the club where respondent worked, dragged respondent
outside, and brought respondent to his office in Seoul where he tried to intimidate
respondent into apologizing to petitioner Moldes and dismissing her counsel in the
Philippines. However, respondent did not relent. Subsequently, Park turned
respondent over to the South Korean immigration authorities for deportation on the
ground of overstaying in South Korea with an expired visa. It was only at that moment
when respondent found out that petitioner Moldes did not renew her visa.
Petitioners' Allegations
Petitioners countered that respondent signed only one Employment Contract, and
that respondent read its contents before affixing her signature on the same.
Respondent understood that her Employment Contract was only for six months since
she underwent the mandatory post-arrival briefing before the Philippine Labor Office
in South Korea, during which, the details of her Employment Contract were explained
to her. Respondent eventually completed the full term of her Employment Contract,
which negated her claim that she was illegally dismissed.
Petitioners additionally contended that respondent, on her own, extended her
Employment Contract with SAENCO, and so petitioners' liability should not extend
beyond the original six-month term of the Employment Contract because the
extension was made without their participation or consent.
Petitioners likewise averred that they received complaints that respondent violated
the club policies of SAENCO against wearing skimpy and revealing dresses, dancing in
a provocative and immoral manner, and going out with customers after working
hours. Respondent was repatriated to the Philippines on account of her illegal or
immoral activities. Petitioners also insisted that respondent's salaries were paid in
full as evidenced by the nine cash vouchers10 dated October 5, 2003 to June 5, 2004.
Petitioners submitted the Magkasamang Sinumpaang Salaysay11 of respondent's co-
workers, Sheila Marie V. Tiatco (Tiatco) and Carolina Flores (Flores), who confirmed
that respondent violated the club policies of SAENCO and that respondent received
her salaries.
Petitioners submitted as well the Sworn Statement12 dated November 9, 2004 of
Baltazar D. Fuentes (Baltazar), respondent's husband, to prove that respondent
obtained a loan from petitioner PTCPI. Baltazar affirmed that petitioner PTCPI lent
them some money which respondent used for her job application, training, and
processing of documents so that she could work abroad. A portion of the loan
proceeds was also used to pay for their land in Lagrimas Village, Tiaong, Quezon, and
respondent's other personal expenses.
Petitioner Moldes, for her part, disavowed personal liability, stating that she merely
acted in her capacity as a corporate officer of petitioner PTCPI.

Respondent filed the complaint against petitioners and SAENCO praying that a Petitioners thus prayed that the complaint against them be dismissed and that
decision be rendered declaring them guilty of illegal dismissal and ordering them to respondent be ordered to pay them moral and exemplary damages for their
pay her unpaid salaries for one year, inclusive of her salaries for the unexpired besmirched reputation, and attorney's fees for they were compelled to litigate and
portion of her Employment Contract, backwages, moral and exemplary damages, and defend their interests against respondent's baseless suit.
attorney's fees.
Labor Arbiter's Ruling
34

On May 4, 2006, Labor Arbiter Antonio R. Macam rendered a Decision13 dismissing
respondent's complaint, based on the following findings:
The facts of the case and the documentary evidence submitted by both parties would
show that herein [respondent] was not illegally dismissed. This Office has noted that
the POEA approved contract declares that the duration of [respondent's]
employment was for six (6) months only. The fact that the duration of [respondent's]
employment was for six (6) months only is substantiated by the documentary
evidence submitted by both parties. Attached is [respondent's] Position Paper as
Annex "D" is a Model Employment Contract for Filipino Overseas Performing Artist to
Korea signed by the parties and approved by the POEA. Also attached to the Position
Paper of the [petitioners] as Annex "1" is a copy of the Employment Contract signed
by the parties and approved by POEA. We readily noted that the common evidence
submitted by the parties would prove that [respondent's] employment was for six (6)
months only. The deploying agency, Princess. Talent Center Production, Inc.
processed the [respondent] for a six-month contract only and there is no showing
that the deploying agency participated in the extension of the contract made by the
[respondent] herself. There is likewise no evidence on record which would show that
the POEA approved such an extension. As matters now stand, this Office has no
choice but to honor the six months duration of the contract as approved by the POEA.
The conclusion therefore is that the [respondent] was not illegally dismissed since
she was able to finish the duration of the contract as approved by the POEA.
Following the above ruling, the [respondent] is likewise not entitled to the payment
of the unexpired portion of the employment contract. This Office could not exactly
determine what [respondent] means when she refers to the unexpired portion of the
contract. The [respondent] comes to this Office alleging that [petitioners] are still
liable to the new extended contract of the employment without however presenting
the said contract binding the recruitment agency as jointly and solidarily liable with
the principal employer. Such a document is vital as this will prove the participation of
the [petitioners] and the latter's assumption of responsibility. Without the
presentation of the "extended" contract, the "unexpired portion" could not be
determined. [Respondent's] claim therefore for the payment of the unexpired
portion of the contract must also fail.
The crux of the present controversy is whether or not [respondent] was paid her
salaries during the period she worked in Korea. [Respondent] claims that she was not
paid her salaries during the time she worked in Korea. [Petitioners] presented an
Affidavit executed by Filipino workers who worked with [respondent] in Korea
declaring that they, together with the [respondent], were paid by the foreign
employer all their salaries and wages. [Petitioners and SAENCO] likewise presented
vouchers showing that the [respondent] received full payment of her salaries during
the time that she worked in Korea. In the pleading submitted by the [respondent],
she never denied the fact that she indeed signed the vouchers showing full payment
of her salaries.
It becomes clear therefore that [respondent] miserably failed to destroy the
evidentiary value of the vouchers presented by the [petitioners]. This Office will not
dare to declare as void or incompetent the vouchers signed by the [respondent] in
the absence of any evidence showing any irregularity so much so that this Office did
not fail to notice the inconsistencies in the [respondent's] position paper.
[Respondent's] claim for the payment of overtime pay likewise lacks merit. There was
no showing that [respondent] actually rendered overtime work. Mere allegation is
not sufficient to establish [respondent's] entitlement to overtime pay. It is
[respondent's] obligation to prove that she actually rendered overtime work to
entitle her for the payment of overtime pay.14
In the end, the Labor Arbiter dismissed for lack of merit respondent's complaint, as
well as all other claims of the parties.15
Ruling of the NLRC
Respondent appealed the Labor Arbiter's Decision before the NLRC.16 In a
Decision17 dated May 22, 2008, the NLRC ruled in respondent's favor, reasoning that:
There is sufficient evidence to establish the fact that [respondent] was not paid her
regular salaries. A scrutiny of the vouchers presented shows that it bears the peso
sign when in fact the salaries of [respondent] were to be received in Korea.
Furthermore, it appears that the vouchers were signed in one instance due to
similarities as to how they were
written.
Despite the fact that We find the vouchers questionable, they prove that
[respondent] was allowed to work beyond the effectivity of her visa. [Petitioners],
wanting to prove that they paid [respondent's] salary, presented vouchers for the
period starting October 2003 up to June 2004. It covers nine (9) months which implies
that, despite having a visa good for six months, they consented to [respondent]
working up to nine months. Otherwise, if they were against [respondent's]
overstaying in Korea, they could have asked for her deportation earlier. Also, if
[respondent] was misbehaving and went against their policy, they could have taken
disciplinary action against her earlier.
The "Magkasamang Sinumpaang Salaysay" of Ms. Tiatco and Ms. Flores, which was
presented by [petitioners] to prove the alleged immoral acts of [respondent] and that
they received their salaries on time, is self-serving and deserves scant weight as the
affiants are beholden to [petitioners and SAENCO] from whom they depended their
employment.
35

We find as more credible [respondent's] allegations that she was made to believe
that her contract was for one year and that her overstaying in Korea was with the
consent of [petitioners and SAENCO], and that when she refused to surrender the
50% of her commission, that was the only time they questioned her stay and alleged
that she committed immoral and illegal acts.
Further, the zealousness of [respondent] in filing a case against [petitioners and
SAENCO] in different government agencies for different causes of action manifests
the intensity of her desire to seek justice for the sufferings she experienced.
There is sufficient evidence to establish that [petitioners and SAENCO]
misrepresented to [respondent] the details of her employment and that she was not
paid her salaries. Hence, she is entitled to be paid her salaries for one year at the rate
of $600 per month as this was what [petitioners and SAENCO] represented to her.
For lack of proof, however, [respondent] is not entitled to her claim for overtime
pay.18
Based on the foregoing, the NLRC ruled:
WHEREFORE, premises considered, the Decision of Labor Arbiter Antonio R. Macam
dated 4 May 2006 is hereby REVERSED and SET ASIDE and a NEW ONE entered
ordering [petitioners and SAENCO] to jointly and severally pay [respondent] her
salaries for one year at a rate of $600 per month, or a total of US$7,200. The claim
for overtime pay is DENIED for lack of sufficient basis.19
Acting on the Motion for Reconsideration20 of petitioners, however, the NLRC issued
a Resolution21 on November 11, 2008, reversing its previous Decision. According to
the NLRC, respondent's appeal was dismissible for several fatal procedural defects,
to wit:
Perusal of the records show that [respondent's] new counsel filed on May 31, 2006 a
Motion for Extension of Time to File a Motion for Reconsideration due to lack of
material time in preparing a Motion for Reconsideration. However, [respondent's]
counsel filed a Memorandum of Appeal through registered mail on June 1, 2006 x x
x and paid the appeal fee on July 17, 2006 x x x.
Rule VI, Section 4 of the 2005 Revised Rules and Procedures of the National Labor
Relations Commission provides that:
Section 4, requisites for Perfection of Appeal. - a) The appeal shall be: 1) filed within
the reglementary period provided in Section 1 of this Rule; 2) verified by the appellant
himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in
the form of a memorandum of appeal which shall state the grounds relied upon and
the arguments in support thereof, the relief prayed for, and with a statement of the
date the appellant received the appealed decision, resolution or order; 4) in three (3)
legibly typewritten or printed copies; and 5) accompanied by i) proof of payment of
the required appeal fee, ii) posting of a cash or surety bond as provided in Section 6
of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the
other parties.
The above-quoted Rules explicitly provides for the requisites for perfecting an appeal,
which [respondent] miserably failed to comply. [Respondent's] Memorandum of
Appeal contains no averments as to the date [respondent] or her counsel received
the Decision of the Labor Arbiter. The appeal is unverified. No certificate of non-
forum shopping was attached to the appeal. The appeal fee was paid only on July 17,
2006, or after more than forty-six (46) days from the filing of the Memorandum of
Appeal on June 1, 2006. Lacking these mandatory requirements, [respondent's]
appeal is fatally defective, and no appeal was perfected within the reglementary
period. Consequently, the Decision of the Labor Arbiter had become final and
executory. The belated filing of the verification and certification on non-forum
shopping will not cure its defect and it only proves that indeed [respondent's] appeal
was not perfected at all.22
Nonetheless, the NLRC set technicalities aside and still proceeded to resolve the case
on the merits, ultimately finding that respondent failed to present evidence to prove
she had been illegally dismissed:
We cannot subscribe to [respondent's] contention that she was illegally dismissed
from her employment. Records show that the Model Employment Contract
presented as evidence by both [respondent] and [petitioners and SAENCO] would
prove that [respondent's] employment was for a period of six (6) months only. Aside
from [respondent's] allegation that [petitioners and SAENCO] misrepresented to her
that her contract is for a period of one (1) year, there is no other evidence on record
which will corroborate and strengthen such allegation. We took note of the fact that
[respondent's] Model Employment Contract was verified by the Labor Attache of the
Philippine Embassy in Korea and duly approved by the Philippines Overseas
Employment Administration (POEA). There is no showing that her contract was
extended by [petitioners and SAENCO], or that an extension was approved by the
POEA. All the pieces of documentary evidence on record prove otherwise.
We agree with [petitioners and SAENCO's] argument that [respondent] was given a
copy of her employment contract prior to her departure for Korea because
[respondent] was required to submit a copy thereof to the Philippine Labor Office
upon her arrival in Korea. We are also convinced that [respondent] read and
understood the terms and conditions of her Model Employment Contract because of
the following reasons: First, [respondent] was informed thereof when a post arrival
briefing was conducted at the Philippine Embassy Overseas Labor Office. This
procedure is mandatory, and the booking of the talent shall be effective only within
three (3) days after her arrival in Korea. Second, [respondent's] passport shows that
her visa is valid only for six (6) months x x x. Third, the Model Employment Contract
has been signed by [respondent] on the left hand margin on each and every page and
on the bottom of the last page thereof x x x. Fourth, [respondent's] claim that
36
[petitioners and SAENCO] forced her in signing two (2) employment contracts
appears to be doubtful considering that she avers that she was not able to read the
terms and conditions of her employment contract. It is amazing how she was able to
differentiate the contents of the two (2) contracts she allegedly signed without first
reading it.
On the basis of the foregoing, [respondent's] contention that she did not know the
terms and conditions of her Model Employment Contract, in particular the provision
which states that her contract and her visa is valid only for six (6) months, lacks
credence. Thus, it can be concluded that she was not dismissed at all by [petitioners
and SAENCO] as her employment contract merely expired.
As to [respondent's] allegation that she was not paid her salaries during her stay in
Korea, [petitioners and SAENCO] presented cash vouchers and affidavits of co-
employees showing that [respondent] was paid US$600 per month by her Korean
employer. [Respondent] failed to prove that the vouchers were faked, or her
signatures appearing thereon were falsified. Hence, [respondent] is not entitled to
her claim for unpaid salaries.
On her claim for the payment of her salary for the unexpired portion of her contract,
We agree with the findings of the Labor Arbiter that the same lacks merit considering
that she was able to finish her six (6) month employment contract.23
Consequently, the NLRC granted the Motion for Reconsideration of petitioners and
reinstated the Labor Arbiter's Decision dated May 4, 2006 dismissing respondent's
complaint against petitioners and SAENCO.24
In a subsequent Resolution dated January 30, 2009, the NLRC denied respondent's
Motion for Reconsideration25 as it raised no new matters of substance which would
warrant reconsideration of the NLRC Resolution dated November 11, 2008.
Ruling of the Court of Appeals
Respondent sought remedy from the Court of Appeals by filing a Petition
for Certiorari,26 alleging that the NLRC acted with grave abuse of discretion
amounting to excess or lack of jurisdiction in reinstating the Labor Arbiter's Decision.
The Court of Appeals, in its Decision dated November 27, 2009, took a liberal
approach by excusing the technical lapses of respondent's appeal before the NLRC
for the sake of substantial justice:
The requisites for perfecting an appeal before the NLRC are laid down in Rule VI of
the 2005 Revised Rules of Procedure of the NLRC. Section 4 of the said Rule requires
that the appeal shall be verified by the appellant, accompanied by a certification of
non-forum shopping and with proof of payment of appeal fee. As a general rule, these
requirements are mandatory and non-compliance therewith would render the
appealed judgment final and executory. Be that as it may, jurisprudence is replete
that courts have adopted a relaxed and liberal interpretation of the rules on
perfection of appeal so as to give way to the more prudent policy of deciding cases
on their merits and not on technicality, especially if there was substantial compliance
with the rules.
In the case of Manila Downtown YMCA vs. Remington Steel Corp., the Supreme
Court held that non-compliance with [the] verification does not necessarily render
the pleading fatally defective, hence, the court may order its correction if verification
is lacking, or act on the pleading although it is not verified, if the attending
circumstances are such that strict compliance with the Rules may be dispensed with
in order that the ends of justice may thereby served. Moreover, in Roadway Express,
Inc. vs. CA, the High Court allowed the filing of the certification against forum
shopping fourteen (14) days before the dismissal of the petition. In Uy v. LandBank,
the petition was reinstated on the ground of substantial compliance even though the
verification and certification were submitted only after the petition had already been
originally dismissed.
Here, the records show that [respondent] had no intent to delay, or prolong the
proceedings before the NLRC. In fact, the NLRC, in its Resolution dated November 11,
2008 took note that [respondent] belatedly filed her verification and certification on
non-forum shopping. Such belated filing should be considered as substantial
compliance with the requirements of the law for perfecting her appeal to the NLRC.
Moreover, the appeal fee was eventually paid on July 17, 2006. Clearly, [respondent]
had demonstrated willingness to comply with the requirements set by the rules.
Besides, in its earlier Decision dated May 22, 2008, the First Division of the NLRC
brushed aside these technicalities and gave due course to [respondent's] appeal.
Verily, We deem it prudent to give a liberal interpretation of the technical rules on
appeal, talcing into account the merits of [respondent's] case. After all, technical
rules of procedure in labor cases are not to be strictly applied in order to serve the
demands of substantial justice.27 (Citations omitted.)
The appellate court then held that respondent was dismissed from employment
without just cause and without procedural due process and that petitioners and
SAENCO were solidarity liable to pay respondent her unpaid salaries for one year and
attorney's fees:
Time and again, it has been ruled that the onus probandi to prove the lawfulness of
the dismissal rests with the employer. In termination cases, the burden of proof rests
upon the employer to show that the dismissal was for just and valid cause. Failure to
do so would necessarily mean that the dismissal was not justified and, therefore, was
illegal. In Royal Crown Internationale vs. National Labor Relations Commission and
Nacionales, the Supreme Court held that where termination cases involve a Filipino
37
worker recruited and deployed for overseas employment, the burden to show the
validity of the dismissal 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 solidarity liable with its
foreign principal for any claims or liabilities arising from the dismissal of the worker.
In the case at bar, [petitioners] failed to discharge the burden of proving that
[respondent] was terminated from employment for a just and valid cause.
[Petitioners'] claim that [respondent] was deported because her employment
contract has already expired, was without any basis. Before being deployed to South
Korea, [petitioners] made [respondent] believe that her contract of employment was
for one (1) year. [Respondent] relied on such misrepresentation and continuously
worked from September 11, 2003 up [to] June 24, 2004 or for more than nine (9)
months. [Petitioners] never questioned her stay beyond the six-month period. If
[petitioners] were really against her overstaying in Korea, they could have easily
asked their principal, [SAENCO], to facilitate her immediate deportation. Even when
[petitioner] Moldes sent the demand letter to [respondent] in May 2004 or when she
came to Korea to pay the salaries of the performers in June 2004, she never
mentioned that [respondent's] contract has already expired.
Moreover, in the Model Employment Contract for Filipino Overseas Performing
Artists (OPAS) to Korea filed with the POEA which was entered into between
[respondent] and [petitioners], it was categorically stated therein that the name of
her performance venue was Si Heung Tourist Hotel Night Club, owned by Cho Kang
Hyung and with address at Jung Wang Dong Siheung Kuyng Ki Do. However,
[respondent] was made to work at Seaman's Seven Pub located at Ulsan, South Korea
owned by a certain Lee Young-Gun. [Respondent's] employment contract also states
that she should be receiving a monthly salary of US$600.00 and not US$400.00 as
represented to her by [petitioner] Moldes.
The Court cannot likewise adhere to [petitioners'] claim that [respondent] committed
serious misconduct and willful disobedience to the lawful orders of her employer
when she allegedly danced in an immoral manner, wore skimpy costumes, and went
out with clients. This Court is convinced from the records and pictures submitted by
[respondent] that her Korean employer, Lee Young-Gun, ordered them to wear
provocative skirts while dancing and singing to make the pub more attractive to their
customers. Even the Seaman's Seven Pub poster itself was advertising its singers and
dancers wearing provocative dresses. [Respondent] was not even hired as a dancer,
but only as a singer as shown by her Overseas Filipino Worker Information. Besides,
if [respondent] was misbehaving offensively as early as September 2003, her
employer could have likewise terminated her employment at the earliest opportunity
to protect its interest. Instead, [respondent] was allowed to work even beyond the
period of her contract. Thus, [petitioners'] defenses appear to be more of an
afterthought which could not be given any weight.
Furthermore, [respondent] was not afforded her right to procedural due process of
notice and hearing before she was terminated. In the same case of Royal Crown
Internationale vs. National Labor Relations Commission and Nacionales, the
Supreme Court ruled that all Filipino workers, whether employed locally or overseas,
enjoy the protective mantle of Philippine labor and social legislation, contract
stipulations to the contrary notwithstanding. This pronouncement is in keeping with
the basic policy of the State to afford full protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employers.
In the instant case, the records show that [respondent] was publicly accosted and
humiliated by one Park Sun Na, the President of [SAENCO], and was brought to its
office in Seoul, Korea, which was a six (6) hour drive from the pub. Such acts were
witnessed and narrated by Wolfgang Pelzer, a Professor in the School of English,
University of Ulsan, South Korea and a frequent client of Seaman's Seven Pub, in his
Affidavit dated August 16, 2004. When it became apparent that [respondent] would
not be apologizing to [petitioner] Moldes nor would she dismiss her lawyer in the
Philippines, Park Sun Na turned her over to the local authorities of South Korea.
[Respondent] was then deported to the Philippines allegedly for expiration of her
visa. Worst, she was not allowed to get her personal belongings which she left at the
pub.
It may also be noted that [respondent] went to all the trouble of filing cases against
[petitioners] in different government agencies for different causes of action. Such
zealousness of [respondent] manifests the intensity of her desire to seek justice for
the wrong done to her.28 (Citations omitted.)
The Court of Appeals determined the respective liabilities of petitioners and SAENCO
for respondent's illegal dismissal to be as follows:
For being illegally dismissed, [respondent] is rightfully entitled to her unpaid salaries
for one (1) year at the rate of US$600.00 per month or a total of US$7,200.00. The
US$600.00 per month was based on the rate indicated in her contract [of]
employment filed with the POEA. [Petitioners] also failed to present convincing
evidence that [respondent's] salaries were actually paid. The cash vouchers
presented by [petitioners] were of doubtful character considering that they do not
bear [SAENCO's] name and tax identification numbers. The vouchers also appear to
have been signed in one instance due to the similarities as to how they were written.
[Petitioner PTCPI and SAENCO] should be held solidarity liable for the payment of
[respondent's] salaries. In Datuman vs. First Cosmopolitan Manpower and
Promotion Services, Inc., the Supreme Court ruled that private employment agencies
38
are held jointly and severally liable with the foreign-based employer for any violation
of the recruitment agreement or contract of employment. This joint and solidary
liability imposed by law against recruitment agencies and foreign employers is meant
to assure the aggrieved worker of immediate and sufficient payment of what is due
him. This is in line with the policy of the state to protect and alleviate the plight of
the working class.
We likewise rule that [petitioner] Moldes should be held solidarity liable with
[petitioner PTCPI and SAENCO] for [respondent's] unpaid salaries for one year. Well
settled is the rule that officers of the company are solidarity liable with the
corporation for the termination of employees if they acted with malice or bad faith.
Here, [petitioner] Moldes was privy to [respondent's] contract of employment by
taking an active part in the latter's recruitment and deployment abroad. [Petitioner]
Moldes also denied [respondent's] salary for a considerable period of time and
misrepresented to her the duration of her contract of employment.
[Respondent] should also be awarded attorney's fees equivalent to ten percent (10%)
of the total monetary awards. In Asian International Manpower Services, Inc.,
(AIMS) vs. Court of Appeals and Lacerna, the Supreme Court held that in actions for
recovery of wages or where an employee was forced to litigate and thus incurred
expenses to protect his rights and interests, a maximum often percent (10%) of the
total monetary award by way of attorney's fees is justified under Article 111 of the
Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules, and paragraph 7,
Article 2208 of the Civil Code.29 (Citations omitted.)
The dispositive portion of the judgment of the appellate court reads:
WHEREFORE, premises considered, the instant petition for is hereby GRANTED. The
assailed Resolutions of public respondent NLRC, First Division, dated November 11,
2008 and January 30, 2009 are ANNULLED AND SET ASIDE. Accordingly, [petitioner
PTCPI, SAENCO, and petitioner Moldes] are ORDERED to jointly and severally pay
[respondent's] unpaid salaries for one (1) year at a rate of US$600.00 per month or a
total of US$7,200.00. In addition, [petitioners and SAENCO] are ORDERED to jointly
and severally pay [respondent] attorney's fees equivalent to ten percent (10%) of the
total monetary award.30
The Motion for Reconsideration31 of petitioners was denied by the Court of Appeals
in a Resolution dated February 16, 2010 because the issues raised therein were
already judiciously evaluated and passed upon by the appellate court in its previous
Decision, and there was no compelling reason to modify or reverse the same.
II
THE RULING OF THE COURT
Petitioners filed the instant Petition for Review on Certiorari under Rule 45 of the
Rules of Court assigning a sole error on the part of the Court of Appeals:
The Honorable Court of Appeals erred and abused its action when it ruled that private
respondent is entitled to recover from the petitioners her alleged unpaid salaries
during her employment in South Korea despite of (sic) the abundance of proof that
she was fully paid of (sic) her salaries while working as [an] overseas contract worker
in South Korea.32
Petitioners maintain that respondent initially worked at Siheung Tourist Hotel Night
Club (Siheung Night Club). After completing her six-month employment contract in
Siheung Night Club, respondent decided to continue working at Ulsan Seaman's
Seven Pub without the consent of petitioners. Throughout her employment in South
Korea, respondent's salaries were paid as evidenced by the cash vouchers and
Entertainer Wage Roster,33 which were signed by respondent and attached to the
"Reply"34 dated January 11, 2010 of Park, Chief Executive Officer (CEO) of SAENCO,
duly notarized per the Certificate of Authentication35 dated January 25, 2010 issued
by Consul General Sylvia M. Marasigan of the Philippine Embassy in Seoul, South
Korea and the Notarial Certificate of Sang Rock Law and Notary Office, Inc.36
Petitioners contend that respondent totally failed to discharge the burden of proving
nonpayment of her salaries, yet, the Court of Appeals still ordered petitioners to pay
the same on the basis of respondent's bare allegations.
Petitioners also argue that SAENCO would not risk its status as a reputable
entertainment and promotional entity by violating South Korean labor law.
Petitioners assert that in the absence of any showing that SAENCO was at anytime
charged with nonpayment of its employee's salaries before the Labor Ministry of
South Korea, petitioners could not be deemed to have breached the Employment
Contract with respondent. Petitioners describe respondent's complaint as plain
harassment.
Thus, petitioners pray that the Court nullify the Decision dated November 27, 2009
and Resolution dated February 16, 2010 of the Court of Appeals.
The Petition is partly meritorious.
Questions of Fact
It is apparent from a perusal of the Petition at bar that it essentially raises questions
of fact. Petitioners assail the findings of the Court of Appeals on the ground that the
evidence on record does not support respondent's claims of illegal dismissal and
nonpayment of salaries. In effect, petitioners would have the Court sift through,
calibrate, and re-examine the credibility and probative value of the evidence on
record so as to ultimately decide whether or not there is sufficient basis to hold
petitioners liable for the payment of respondent's salaries for one year, plus
attorney's fees.37
39

Normally, it is not the task of the Court to re-examine the facts and weigh the
evidence on record, for basic is the rule that the Court is not a trier of facts, and this
rule applies with greater force in labor cases. Questions of fact are for the labor
tribunals to resolve. It is elementary that the scope of this Court's judicial review
under Rule 45 of the Rules of Court is confined only to errors of law and does not
extend to questions of fact. However, the present case falls under one of the
recognized exceptions to the rule, i.e., when the findings of the Labor Arbiter, the
NLRC, and/or the Court of Appeals are in conflict with one another. The conflicting
findings of the Labor Arbiter, the NLRC, and the Court of Appeals pave the way for
this Court to review factual issues even if it is exercising its function of judicial review
under Rule 45.38
As the Court reviews the evidence on record, it notes at the outset that petitioners
are presenting new evidence herein never presented in the previous proceedings,
particularly, Park's notarized "Reply" dated January 11, 2010 and the attached
Entertainer Wage Roster. The Court is precluded from considering and giving weight
to said evidence which are presented for the first time on appeal. Fairness and due
process dictate that evidence and issues not presented below cannot be taken up for
the first time on appeal.39
It is true that the Court had declared in previous cases that strict adherence to the
technical rules of procedure is not required in labor cases. However, the Court also
highlights that in such cases, it had allowed the submission of evidence for the first
time on appeal with the NLRC in the interest of substantial justice, and had further
required for the liberal application of procedural rules that the party
should adequately explain the delay in the submission of evidence and
should sufficiently prove the allegations sought to be proven.40 In the instant case,
petitioners did not submit the evidence during the administrative proceedings before
the Labor Arbiter and NLRC or even during the proceedings before the Court of
Appeals, and petitioners did not offer any explanation at all as to why they are
submitting the evidence only on appeal before this Court. Hence, the Court is not
inclined to relax the rules in the present case in petitioners' favor.
Moreover, in its review of the evidence on record, the Court bears in mind the settled
rule that in administrative and quasi-judicial proceedings, substantial evidence is
considered sufficient. Substantial evidence is more than a mere scintilla of evidence
or relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine
otherwise.41 It is also a basic rule in evidence that each party must prove his/her
affirmative allegations. Since the burden of evidence lies with the party who asserts
an affirmative allegation, the plaintiff or complainant has to prove his/her affirmative
allegation in the complaint and the defendant or the respondent has to prove the
affirmative allegations in his/her affirmative defenses and counterclaim.42
Petitioner's Illegal Dismissal
The Constitutional guarantee of security of tenure extends to Filipino overseas
contract workers as the Court declared in Sameer Overseas Placement Agency, Inc. v.
Cabiles43:
Security of tenure for labor is guaranteed by our Constitution.
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, this court noted:
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:
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.
xxxx
40
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, x x x.
Even with respect to fundamental procedural rights, this court emphasized in PCL
Shipping Philippines, Inc. v. NLRC, to wit:
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. x x x.
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.
(Citations omitted.)
Since respondent's Employment Contract was executed in the Philippines on
February 3, 2003, Philippine Constitution and labor laws governed respondent's
employment with petitioners and SAENCO. An employee's right to security of tenure,
protected by the Constitution and statutes, means that no employee shall be
dismissed unless there are just or authorized causes and only after compliance with
procedural and substantive due process. A lawful dismissal by an employer must
meet both substantive and procedural requirements; in fine, the dismissal must be
for a just or authorized cause and must comply with the rudimentary due process of
notice and hearing.44
It is undisputed that when respondent was dismissed from employment and
repatriated to the Philippines in June 2004, her original six-month Employment
Contract with SAENCO had already expired.
Per the plain language of respondent's Employment Contract with SAENCO, her
employment would be enforced for the period of six months commencing on the
date respondent departed from the Philippines, and extendible by another six
months by mutual agreement of the parties. Since respondent left for South Korea
on September 6, 2003, the original six-month period of her Employment Contract
ended on March 5, 2004.
Although respondent's employment with SAENCO was good for six months only (i.e.,
September 6, 2003 to March 5, 2004) as stated in the Employment Contract, the
Court is convinced that it was extended under the same terms and conditions for
another six months (i.e., March 6, 2004 to September 5, 2004). Respondent and
petitioners submitted evidence establishing that respondent continued to work for
SAENCO in Ulsan, South Korea even after the original six-month period under
respondent's Employment Contract expired on March 5, 2004. Ideally, the extension
of respondent's employment should have also been reduced into writing and
submitted/reported to the appropriate Philippine labor authorities. Nonetheless,
even in the absence of a written contract evidencing the six-month extension of
respondent's employment, the same is practically admitted by petitioners, subject
only to the defense that there is no proof of their knowledge of or participation in
said extension and so they cannot be held liable for the events that transpired
between respondent and SAENCO during the extension period. Petitioners presented
nine vouchers to prove that respondent received her salaries from SAENCO for nine
months. Petitioners also did not deny that petitioner Moldes, President of petitioner
PTCPI, went to confront respondent about the latter's outstanding loan at the
Seaman's Seven Club in Ulsan, South Korea in June 2004, thus, revealing that
petitioners were aware that respondent was still working for SAENCO up to that time.
Hence, respondent had been working for SAENCO in Ulsan, South Korea, pursuant to
her Employment Contract, extended for another six-month period or until September
5, 2004, when she was dismissed and repatriated to the Philippines by SAENCO in
June 2004. With this finding, it is unnecessary for the Court to still consider and
address respondent's allegations that she had been misled into believing that her
Employment Contract and visa was good for one year.
Respondent decries that she was illegally dismissed, while petitioners assert that
respondent was validly dismissed because of her expired work visa and her
provocative and immoral conduct in violation of the club policies.
The Court finds that respondent was illegally dismissed.
Dismissal from employment has two facets: first, the legality of the act of dismissal,
which constitutes substantive due process; and, second, the legality of the manner of
dismissal, which constitutes procedural due process. The burden of proof rests upon
the employer to show that the disciplinary action was made for lawful cause or that
the termination of employment was valid. Unsubstantiated suspicions, accusations,
and conclusions of the employer do not provide legal justification for dismissing the
employee. When in doubt, the case should be resolved in favor of labor pursuant to
41
the social justice policy of our labor laws and the 1987 Constitution.45
As previously discussed herein, SAENCO extended respondent's Employment
Contract for another six months even after the latter's work visa already expired.
Even though it is true that respondent could not legitimately continue to work in
South Korea without a work visa, petitioners cannot invoke said reason alone to
justify the premature termination of respondent's extended employment. Neither
petitioners nor SAENCO can feign ignorance of the expiration of respondent's work
visa at the same time as her original six-month employment period as they were the
ones who facilitated and processed the requirements for respondent's employment
in South Korea. Petitioners and SAENCO should also have been responsible for
securing respondent's work visa for the extended period of her employment.
Petitioners and SAENCO should not be allowed to escape liability for a wrong they
themselves participated in or were responsible for.
Petitioners additionally charge respondent with serious misconduct and willful
disobedience, contending that respondent violated club policies by engaging in illegal
activities such as wearing skimpy and revealing dresses, dancing in an immoral or
provocative manner, and going out with customers after working hours. As evidence
of respondent's purported club policy violations, petitioners submitted the joint
affidavit of Tiatco and Flores, respondent's co-workers at the club.
The Court, however, is not swayed. Aside from their bare allegations, petitioners
failed to present concrete proof of the club policies allegedly violated by respondent.
The club policies were not written down. There is no allegation, much less, evidence,
that respondent was at least verbally apprised of the said club policies during her
employment.
To refute petitioners' assertions against her, respondent submitted a poster
promoting the club and pictures46 of respondent with her co-workers at the said club.
Based on said poster and pictures, respondent did not appear to be wearing dresses
that were skimpier or more revealing than those of the other women working at the
club. Respondent also presented the Affidavit47 dated August 16, 2004 of Wolfgang
Pelzer (Pelzer), a Canadian citizen who was a regular patron of the club. According to
Pelzer, respondent was appropriately dressed for the songs she sang, and while
respondent was employed as a singer, she was also pressured into dancing onstage
and she appeared hesitant and uncomfortable as she danced. As between the
allegations of Pelzer, on one hand, and those of Tiatco and Flores, on the other hand,
as regards respondent's behavior at the club, the Court accords more weight to the
former as Pelzer can be deemed a disinterested witness who had no apparent gain in
executing his Affidavit, as opposed to Tiatco and Flores who were still employed by
SAENCO when they executed their joint affidavit.
Lastly, as the Court of Appeals pertinently observed, if respondent was truly
misbehaving as early as September 2003 as petitioners alleged, SAENCO would have
terminated her employment at the earliest opportunity to protect its interest.
Instead, SAENCO even extended respondent's employment beyond the original six-
month period. The Court likewise points out that there is absolutely no showing that
SAENCO, at any time during the course of respondent's employment, gave
respondent a reminder and/or warning that she was violating club policies.
This leads to another finding of the Court in this case, that petitioners also failed to
afford respondent procedural due process.
Article 277(b) of the Labor Code, as amended, mandates that the employer shall
furnish the worker whose employment is sought to be terminated a written notice
stating the causes for termination and shall afford the latter ample opportunity to be
heard and to defend himself/herself with the assistance of his/her representative, if
he/she so desires. Per said provision, the employer is actually required to give the
employee two notices: the first is the notice which apprises the employee of the
particular acts or omissions for which his/her dismissal is being sought along with the
opportunity for the employee to air his/her side, while the second is the subsequent
notice of the employer's decision to dismiss him/her.48
Again, the Court stresses that the burden of proving compliance with the
requirements of notice and hearing prior to respondent's dismissal from employment
falls on petitioners and SAENCO, but there had been no attempt at all by petitioners
and/or SAENCO to submit such proof. Neither petitioners nor SAENCO described the
circumstances how respondent was informed of the causes for her dismissal from
employment and/or the fact of her dismissal.
In contrast, respondent was able to recount in detail the events which led to her
dismissal from employment and subsequent repatriation to the Philippines,
corroborated in part by Pelzer. It appears that on June 13, 2004, petitioner Moldes
personally went to see respondent in Ulsan, South Korea to demand that respondent
pay the loan and dismiss the counsel respondent hired in the Philippines to contest
the same; respondent, however, refused. On June 24, 2004, Park confronted
respondent while she was working at the club, forcibly took her away from the club
in Ulsan, and brought her to his office in Seoul. Park tried to intimidate respondent
into agreeing to Moldes's demands. When his efforts failed, Park surrendered
respondent to the South Korean authorities and she was deported back to the
Philippines on account of her expired work visa.
To reiterate, respondent could only be dismissed for just and authorized cause, and
after affording her notice and hearing prior to her termination. SAENCO had no valid
cause to terminate respondent's employment. Neither did SAENCO serve two written
42
notices upon respondent informing her of her alleged club policy violations and of
her dismissal from employment, nor afforded her a hearing to defend herself. The
lack of valid cause, together with the failure of SAENCO to comply with the twin-
notice and hearing requirements, underscored the illegality surrounding
respondent's dismissal.49
The Liabilities of Petitioners and SAENCO
From its findings herein that (1) respondent's Employment Contract had been
extended for another six months, ending on September 5, 2004; and (2) respondent
was illegally dismissed and repatriated to the Philippines in June 2004, the Court next
proceeds to rule on the liabilities of petitioners and SAENCO to respondent.
Respondent's monetary claims against petitioners and SAENCO is governed by
Section 10 of Republic Act No. 8042, otherwise known as The Migrant Workers and
Overseas Filipinos Act of 1995, which provides:
Section 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
monetary 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 monetary 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 worker shall be entitled to the full
reimbursement of his placement fee with interest at twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or
for three (3) months for every year of the unexpired term, whichever is
less.(Emphases supplied.)
The Court finds that respondent had been paid her salaries for the nine months she
worked in Ulsan, South Korea, so she is no longer entitled to an award of the same.
It is a settled rule of evidence that the one who pleads payment has the burden of
proving it. Even where the plaintiff must allege nonpayment, the general rule is that
the burden rests on the defendant to prove payment, rather than on the plaintiff to
prove nonpayment.50
In the case at bar, petitioners submitted nine cash vouchers with respondent's
signature. That the nine cash vouchers did not bear the name of SAENCO and its Tax
Identification Number is insignificant as there is no legal basis for requiring such. The
vouchers clearly state that these were "salary full payment" for the months of
October 5, 2003 to June 5, 2004 for US$600.00 to respondent and each of the
vouchers was signed received by respondent. After carefully examining respondent's
signatures on the nine cash vouchers, and even comparing them to respondent's
signatures on all the pages of her Employment Contract, the Court observes that
respondent's signatures on all documents appear to be consistently the same. The
consistency and similarity of respondent's signatures on all the documents supports
the genuineness of said signatures. At this point, the burden of evidence has shifted
to respondent to negate payment of her salaries.
Respondent, though, admits that the signatures on the nine cash vouchers are hers
but asserts that she really had not received her salaries and was only made to sign
said vouchers all in one instance. Respondent further avers that she was made to
believe that her salaries would be deposited to her bank account, and she presents
as proof the passbook of her bank account showing that no amount equivalent to her
salary was ever deposited.
The Court is not persuaded.
Absent any corroborating evidence, the Court is left only with respondent's bare
allegations on the matter. Pelzer's statements in his Affidavit concerning the
nonpayment of respondent's salaries are hearsay, dependent mainly on what
respondent confided to him. It makes no sense to the Court that respondent would
agree to an extension of her Employment Contract for another six months if she had
not been receiving her salaries for the original six-month period. From her own
actuations, respondent does not appear to be totally helpless and gullible.
Respondent, in fact, was quite zealous in protecting her rights, hiring one of the well-
43
known law firms in the Philippines to represent her against petitioner Moldes who paragraph of Section 10 of Republic Act No. 8042, reproduced below for easier
was demanding payment of a loan which respondent insisted was fictitious. reference:
Respondent also stood up to and refused to given in to the demands of both The liability of the principal/employer and the recruitment/placement agency for any
petitioner Moldes and Park even during face-to-face confrontations. The Court then and all claims under this section shall be joint and several. This provision shall be
cannot believe that respondent would simply sign the nine cash vouchers even when incorporated in the contract for overseas employment and shall be a condition
she did not receive the corresponding salaries for the same. Respondent failed to precedent for its approval. The performance bond to be filed by the
establish that the passbook she submitted was for her bank account for payroll recruitment/placement agency, as provided by law, shall be answerable for all money
payments from SAENCO; it could very well just be her personal bank account to which claims or damages that may be awarded to the workers. If the
she had not made any deposit. The Court, unlike the Court of Appeals, is not ready to recruitment/placement agency is a juridical being, the corporate officers and
jump to the conclusion that the vouchers were all prepared on the same occasion directors and partners as the case may be, shall themselves be jointly and solidarity
and disregard their evidentiary value simply based on their physical appearance and liable with the corporation or partnership for the aforesaid claims and damages.
in the total absence of any corroborating evidence. The aforequoted provision is plain and clear, the joint and several liability of the
principal/employer, recruitment/placement agency, and the corporate officers of the
Nonetheless, pursuant to the fifth paragraph of Section 10 of Republic Act No. 8042, latter, for the money claims and damages of an overseas Filipino worker is absolute
respondent is entitled to an award of her salaries for the unexpired three months of and without qualification. It is intended to give utmost protection to the overseas
her extended Employment Contract, i.e., July to September 2004.51 Given that Filipino worker, who may not have the resources to pursue her money claims and
respondent's monthly salary was US$600.00, petitioners and SAENCO shall pay damages against the foreign principal/employer in another country. The overseas
respondent a total of US$1,800.00 for the remaining three months of her extended Filipino worker is given the right to seek recourse against the only link in the country
Employment Contract. The said amount, similar to backwages, is subject to legal to the foreign principal/employer, i.e., the recruitment/placement agency and its
interest of 12% per annum from respondent's illegal dismissal in June 2004 to June corporate officers. As a result, the liability of SAENCO, as principal/employer, and
30, 2013 and 6% per annum from July 1, 2013 to the date this Decision becomes final petitioner PTCPI, as recruitment/placement agency, for the monetary awards in favor
and executory.52 Respondent also has the right to the reimbursement of her of respondent, an illegally dismissed employee, is joint and several. In turn, since
placement fee with interest of 12% per annum from her illegal dismissal in June 2004 petitioner PTCPI is a juridical entity, petitioner Moldes, as its corporate officer, is
to the date this Decision becomes final and executory.53 herself jointly and solidarity liable with petitioner PTCPI for respondent's monetary
awards, regardless of whether she acted with malice or bad faith in dealing with
Moreover, the award of attorney's fees to respondent is likewise justified. It is settled respondent.
that in actions for recovery of wages or where an employee was forced to litigate and
incur expenses to protect his/her right and interest, he/she is entitled to an award of WHEREFORE, premises considered, the Petition for Review
attorney's fees equivalent to 10% of the award.54 on Certiorari is PARTIALLY GRANTED. The assailed Decision dated November 27,
2009 of the Court of Appeals is AFFIRMED with MODIFICATIONS. For the illegal
Finally, all of the foregoing monetary awards in respondent's favor shall earn legal dismissal of respondent Desiree T. Masagca, petitioners Princess Talent Center
interest of 6% per annum from the time this Decision becomes final and executory Production, Inc. and Luchi Singh Moldes, together with Saem Entertainment
until fully satisfied.55 Company, Ltd., are ORDERED to jointly and severally pay respondent the following:
(a) US$1,800.00, representing respondent's salaries for the unexpired portion of her
In an attempt to escape any liability to respondent, petitioners assert that only extended Employment Contract, subject to legal interest of 12% per annum from
SAENCO should be answerable for respondent's illegal dismissal because petitioners June 2004 to June 30, 2013 and 6% per annum from July 1, 2013 to the date that this
were not privy to the extension of respondent's Employment Contract beyond the Decision becomes final and executory; (b) reimbursement of respondent's placement
original six-month period. Petitioner Moldes additionally argues that she should not fees with 12% interest per annum from June 2004 to the date that this Decision
be held personally liable as a corporate officer of PTCPI without evidence that she becomes final and executory; and (c) attorney's fees equivalent to 10% of the total
had acted with malice or bad faith. monetary award. The order for payment of respondent's salaries from September
2003 to May 2004 is DELETED. All the monetary awards herein to respondent shall
Petitioners' arguments are untenable considering the explicit language of the second earn legal interest of 6% per annum from the date that this Decision becomes final
and executory until full satisfaction thereof.
44
SO ORDERED.

45
G.R. Nos. L-58674-77 July 11, 1990 The posture of the petitioner is that the private respondent is being prosecuted under
Article 39 in relation to Article 16 of the Labor Code; hence, Article 13(b) is not
PEOPLE OF THE PHILIPPINES, petitioner, applicable. However, as the first two cited articles penalize acts of recruitment and
vs. placement without proper authority, which is the charge embodied in the
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales informations, application of the definition of recruitment and placement in Article
& Olongapo City, Branch III and SERAPIO ABUG, respondents. 13(b) is unavoidable.

The view of the private respondents is that to constitute recruitment and placement,
all the acts mentioned in this article should involve dealings with two or m re persons
CRUZ, J: as an indispensable requirement. On the other hand, the petitioner argues that the
requirement of two or more persons is imposed only where the recruitment and
placement consists of an offer or promise of employment to such persons and always
The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442,
in consideration of a fee. The other acts mentioned in the body of the article may
otherwise known as the Labor Code, reading as follows:
involve even only one person and are not necessarily for profit.
(b) Recruitment and placement' refers to any act of canvassing,
Neither interpretation is acceptable. We fail to see why the proviso should speak only
enlisting, contracting, transporting, hiring, or procuring workers,
of an offer or promise of employment if the purpose was to apply the requirement
and includes referrals, contract services, promising or advertising
of two or more persons to all the acts mentioned in the basic rule. For its part, the
for employment, locally or abroad, whether for profit or not:
petitioner does not explain why dealings with two or more persons are needed where
Provided, That any person or entity which, in any manner, offers or
the recruitment and placement consists of an offer or promise of employment but
promises for a fee employment to two or more persons shall be
not when it is done through "canvassing, enlisting, contracting, transporting, utilizing,
deemed engaged in recruitment and placement.
hiring or procuring (of) workers.
Four informations were filed on January 9, 1981, in the Court of First Instance of
As we see it, the proviso was intended neither to impose a condition on the basic rule
Zambales and Olongapo City alleging that Serapio Abug, private respondent herein,
nor to provide an exception thereto but merely to create a presumption. The
"without first securing a license from the Ministry of Labor as a holder of authority to
presumption is that the individual or entity is engaged in recruitment and placement
operate a fee-charging employment agency, did then and there wilfully, unlawfully
whenever he or it is dealing with two or more persons to whom, in consideration of
and criminally operate a private fee charging employment agency by charging fees
a fee, an offer or promise of employment is made in the course of the "canvassing,
and expenses (from) and promising employment in Saudi Arabia" to four separate
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "
individuals named therein, in violation of Article 16 in relation to Article 39 of the
Labor Code. 1
The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule
Abug filed a motion to quash on the ground that the informations did not charge an
in Article 13(b) win constitute recruitment and placement even if only one
offense because he was accused of illegally recruiting only one person in each of the
prospective worker is involved. The proviso merely lays down a rule of evidence that
four informations. Under the proviso in Article 13(b), he claimed, there would be
where a fee is collected in consideration of a promise or offer of employment to two
illegal recruitment only "whenever two or more persons are in any manner promised
or more prospective workers, the individual or entity dealing with them shall be
or offered any employment for a fee. " 2
deemed to be engaged in the act of recruitment and placement. The words "shall be
deemed" create that presumption.
Denied at first, the motion was reconsidered and finally granted in the Orders of the
trial court dated June 24 and September 17, 1981. The prosecution is now before us
This is not unlike the presumption in article 217 of the Revised Penal Code, for
on certiorari. 3
example, regarding the failure of a public officer to produce upon lawful demand
funds or property entrusted to his custody. Such failure shall be prima facie evidence
46
that he has put them to personal use; in other words, he shall be deemed to have
malversed such funds or property. In the instant case, the word "shall be deemed"
should by the same token be given the force of a disputable presumption or of prima
facie evidence of engaging in recruitment and placement. (Klepp vs. Odin Tp.,
McHenry County 40 ND N.W. 313, 314.)

It is unfortunate that we can only speculate on the meaning of the questioned

provision for lack of records of debates and deliberations that would otherwise have
been available if the Labor Code had been enacted as a statute rather than a
presidential decree. The trouble with presidential decrees is that they could be, and
sometimes were, issued without previous public discussion or consultation, the
promulgator heeding only his own counsel or those of his close advisers in their lofty
pinnacle of power. The not infrequent results are rejection, intentional or not, of the
interest of the greater number and, as in the instant case, certain esoteric provisions
that one cannot read against the background facts usually reported in the legislative
journals.

At any rate, the interpretation here adopted should give more force to the campaign
against illegal recruitment and placement, which has victimized many Filipino
workers seeking a better life in a foreign land, and investing hard- earned savings or
even borrowed funds in pursuit of their dream, only to be awakened to the reality of
a cynical deception at the hands of theirown countrymen.

WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and
the four informations against the private respondent reinstated. No costs.

SO ORDERED.

47
G.R. No. 138535-38 April 19, 2001
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
LUZ GONZALES-FLORES, accused-appellant.
MENDOZA, J.:
This is an appeal from the decision1 of the Regional Trial Court, branch 77, Quezon
City, finding accused-appellant Luz Gonzales-Flores guilty of illegal recruitment in
large scale and of three counts of estafa against Felizberto Leongson, Jr., Ronald
Frederizo,2 and Larry Tibor and sentencing her to suffer four prison terms and to pay
indemnity and damages to complainants.
In Criminal Case No. Q-94-59470, the information for estafa against accused-
appellant alleged:
That on or about the month of August, 1994, in Quezon City, Philippines, the
said accused, conspiring together, confederating with several persons
whose true names and true identities have not as yet been ascertained, and
helping one another, did then and there wilfully, unlawfully and feloniously
CONTRARY TO LA W.4
defraud FELIXBERTO LEONGSON, JR. y CASTAÑEDA in the following manner,
to wit: the said accused, by means of false manifestations and fraudulent
In Criminal Case No. Q-94-59472, another case for estafa, the information averred:
representation which she made to said complainant to the effect that they
had the power and capacity to recruitment employ complainant abroad as
[a] seaman and could facilitate the processing of the requirements thereof,
and by means of other similar deceits, induced and succeeded in inducing
said complainant to give and deliver, as in fact he gave and delivered to said
accused the amount of P45,000.00 on the strength of said manifestations
and representations, said accused well knowing that the same were false
and fraudulent and were made solely to obtain, as in fact they did obtain the
amount of 1245,000.00, which amount once in possession, with intent to
defraud FELIXBER TO LEONGSON, JR. wilfully, unlawfully and feloniously
misappropriated, misapplied and converted to their own personal use and
benefit, to the damage and prejudice of said complainant in the aforesaid
amount of P45,000.00, Philippine Currency.
CONTRARY TO LAW.3
In Criminal Case No. Q-94-59471, also for estafa, the information charged:
That on or about the month of August, 1994, in Quezon City, Philippines, the
said accused conspiring. together , confederating with several persons
whose true names and true identities have not as yet been ascertained and
helping one another did then and there wilfully, unlawfully and feloniously
defraud RONALD F[R]EDERI[Z]O Y HUSENIA in the following manner, to wit:
the said accused, by means of false manifestations and fraudulent
representations which they made to said complainant to the effect that they
had the power and capacity to recruit and employ complainant abroad as
[a] seaman and could facilitate the processing of the pertinent papers if
given the :.. " necessary amount to meet the requirements thereof, and by
means of other similar deceits, induced and succeeded in inducing said
RONALD F[R]EDERI[Z]O Y HUSENIA to give and deliver, as in fact gave and
delivered to said accused the amount of P45,000.00 on the strength of said
manifestations and representations, said accused well knowing that the
same were false and fraudulent and were made solely to obtain, as in fact
they did obtain the amount of P45,000.00 which amount once in possession,
with intent to defraud complainant wilfully, unlawfully and feloniously
misappropriated, misapplied and converted to their own pers9nal use and
benefit, to the damage and prejudice of said RONALD F[RE]DERI[Z]O Y
HUSENIA in the aforesaid amount of P45,000.00, Philippine Currency.
That on or about the month of August, 1994, in Quezon City, Philippines, the
said accused, conspiring together, confederating with several persons
whose true names and whereabouts have not as yet been ascertained and
helping one another, did then and there wilfully, unlawfully and feloniously
defraud LARRY TIBOR Y MABILANGAN in the following manner, to wit: the
said accused, by means of false manifestations and fraudulent
representations which they made to said complainant to the effect that they
had the power and capacity to recruit and employ complainant abroad as
[a] seaman and could facilitate the processing of the pertinent papers if
given the necessary amount to meet the requirements thereof, and by
means of other similar deceits, induced and succeeded in inducing said
complainant to give and deliver, as in fact gave and delivered to said accused
the amount of P38,000.00 on the strength of said manifestations and
representations, said accused well knowing that the same were false and
fraudulent and were made solely to obtain, as in fact they did obtain the
amount of P38,000.00 which amount once in possession, with intent to
defraud LARRY TIBOR Y MABILANGAN wilfully, unlawfully and feloniously
48
 mis-appropriated misapplied and converted to their own personal use and
benefit) to the damage and prejudice of said complainant in the amount of
P38,000.00, Phi1ippine Currency.
CONTRAR Y TO LAW.5
On the other hand, in Criminal Case No. Q-94-59473, the information for illegal
recruitment in large scale charged:
That on or about the month of August, 1994, in Quezon City, Philippines, the
said accused, conspiring together, confederating with several persons
whose true names and whereabouts have not as yet been ascertained and
helping one another, did then and there, wilfully, unlawfully and feloniously
canvass, enlist, contract and promise employment to the following persons,
to wit:
1. RONALD F[R]EDERI[Z]O Y HlJSENIA
2. LARRY TIBOR Y MABILANGAN
3. FELIXBERTO LEONGSON, JR. y CASTANEDA
after requiring them to submit certain documentary requirements and exacting from
them the total amount of P128,000,00 Philippine Currency as recruitment fees such
recruitment activities being done without the required license or authority from the
Department of Labor.
That the crime described above is committed in large scale as the same was
perpetrated against three (3) or more persons individually or as group as penalized
under Articles 38 and 39) as amended by P.D. 2018, of the Labor Code.6
When arraigned, accused-appellant pleaded not guilty to the criminal charges,
whereupon the cases were jointly tried.
The evidence for the prosecution is as follows:
On August 6, 1994, at around 1:00 p.m., complainant Felixberto Leongson, Jr.
chanced upon his neighbors, Cloyd Malgapo, Jojo Bumatay, and accused-appellant,
who were talking in front of his house at 68-C East Riverside, Bgy. Paltok, San
Francisco del Monte, Quezon City. Complainant was asked by accused-appellant if he
was interested to work as a seaman in Miami, Florida, United States of America. He
replied that he was interested to work abroad but he had doubts regarding his
qualification for the job. Accused-appellant assured him that this was not a problem
because she could fix his application. All he had to do was pay P45,000.00 as
processing fee. Accused-appellant told him that Jojo and Cloyd were departing soon.
Complainant told accused-appellant that he would consider the offer.
That night, accused-appellant came to see Felixberto and reiterated her proposal.
Felixberto said he wanted the job but he only had P10,000.00. Accused-appellant told
him the amount would be sufficient as an initial payment.
Accused-appellant came back with Joseph Mendoza, whose brother-in-Iaw, Engr.
Leonardo Domingo, according to accused- appellant, was recruiting seamen.
Thereafter, accused-appellant and Mendoza took complainant, Cloyd, and Jojo's
wife, Clarita, to a house on Second Street, near Camp Crame in Quezon City, where
the latter were introduced to Andy Baloran.7 Complainant and his companions were
told that Baloran was an employee of the National Bureau of Investigation and he
would take care of processing the applications for employment. Baloran told
complainant and the other job applicants that those who would be employed would
be paid a monthly salary of US$ l,000.00, plus tips, and given vacation leaves of 45
days with pay. Baloran asked complainant to submit his picture, bio-data, and birth
certificate, which complainant later did. Accused-appellant then asked complainant
to give her the P10,000.00 as initial payment. Complainant handed her the money
and asked for a receipt, but accused-appellant told him not to worry and assured him
that she would be responsible if anything untoward happened. Complainant,
therefore, did not insist on asking accused-appellant for a receipt. Accused-appellant
said she gave the money to Baloran.
Two days later, Baloran and Domingo went to the compound where Felixberto and
accused-appellant were residing and called Felixberto, Cloyd, and Jojo to a meeting.
Domingo told the applicants that he was the chief engineer of the luxury ocean liner
where they would embark and repeated to them the salaries and other benefits
which they would receive. He told them not to get impatient.
Accused-appellant later saw complainant to collect the balance of P35,000.00.
Complainant was told to give the money to accused-appellant at Wendy's in Cubao,
Quezon.City on August 12, 1994.
At the appointed date and place, complainant and his wife delivered the amount to
accused-appellant who, in turn, handed it to Baloran. No receipt was, however,
issued to Felixberto.
49
Another meeting was held on August 16, 1994 at the Mandarin Hotel in Makati City
by accused-appellant, Domingo, Baloran, Mendoza, the Leongson spouses, the
Malgapo spouses, and Jojo Bumatay. The applicants were told by Domingo that they
would be employed as waiters and attendants in the luxury liner and asked them
again to wait a while.
On August 18, 1994, accused-appellant saw complainant again to collect the P
25,000.00 balance. Felixberto paid the amount to accused- appellant four days later.
As in the case of the first two payments, no receipt was given for the P25,000.00.
Accused-appellant told him that she would turn over the amount to Baloran.
Although complainant regularly followed up his application with accused-appellant,
he was told each time to have patience and to just wait for the call from Domingo or
from Baloran. But Felixberto never heard from either one of these two.8
Felixberto's testimony was corroborated by his wife, Maria Luz, who said that
accused-appellant claimed she could help her husband get a job as a seamen despite
the latter's lack of formal training. She knew of the three payments made to accused-
appellant, totalling P 45,000.00, and witnessed the last two payments of P10,000.00
at Wendy's, Cubao, and P25,000.00 at accused-appellant's residence. Maria Luz said
she met Baloran, Mendoza, and Domingo and discussed with them the job offered to
her husband and the salaries and benefits appurtenant thereto.9
Complainant Ronald Frederizo, a resident of 68-A East Riverside, San Francisco del
Monte, Quezon City, also testified. According to him, in the morning of August 10,
1994, he received a call from his sister, Elsa Cas, at Far East Bank, Binondo Branch,
Manila, asking him to go home because accused-appellant, their neighbor, was in his
house recruiting seaman for employment abroad. Ronald said that when he arrived
home, he was told by accused-appellant that he had to pay P10,000.00 as initial
payment for the processing of his application. Ronald withdrew the amount from
Elsa's account. Then, Ronald went with accused-appellant to a house on Second
Street near Camp Crame in Quezon City. On the way to that place, accused-appellant
assured him that he would receive a salary of US$1,000.00. At an apartment on
Second Street, Ronald saw his neighbors, complainant Felixberto, Jojo, and Cloyd.
Baloran and Mendoza were also there. Accused-appellant introduced Baloran to
Ronald, Cloyd, and Jojo. She told them that Baloran was going to take care of their
applications and that he could pull strings at the NBI. Ronald paid accused-appellant
P10,000.00 for which no receipt was issued. He was assured by accused-appellant
that he would be able to leave for his job abroad in one or two weeks. He was told to
be ready with the balance of P35,000.00 for the plane ticket on August 12, 1994.
Hence, on August 15, 1994, Ronald mortgaged his land in Batangas just so he could
pay the P35,000.00 remaining balance. Accused-appellant went to Ronald's house to
meet him. Thereafter, Ronald, Elsa, and accused-appellant took a cab to Mandarin
Hotel in Makati City. Accused-appellant told Ronald to have no fear because the
persons whom he was dealing with were her relatives. Elsa gave the P35,000.00 to
accused-appellant. Ronald no longer asked for a receipt because he trusted accused-
appellant. At the hotel were Felixberto and his wife, Baloran, and Domingo. Domingo
showed Ronald and Felixberto his identification card and said that he was the captain
of a ship. He told them that they would receive a salary of US$1,000.00 plus other
benefits. He also assured them that he would inform them of developments in their
applications through accused-appellant. After the meeting, Ronald went to his office
and tendered his resignation. Ronald followed up his application almost every week
but every time he was told by accused-appellant to be patient10 because Domingo
had not yet called.
Complainant Larry Tibor said that on August 10, 1994, he went to the house of his
cousin, Elsa Cas, at 68-A East Riverside, Bgy. Paltok, San Francisco del Monte, Quezon
City, because accused-appellant was there recruiting seamen to work abroad. Larry
was then looking for a job. Accused-appellant introduced herself and told him that
she could get him a job abroad if he had the necessary documents and P 45,000.00.
Larry said he had only P3,000.00. He was told by accused-appellant to bring the
amount the next day for his fare and certification. As instructed, Larry paid the
amount in the presence of his sister, Junet. He asked for a receipt, but accused-
appellant told him to trust her. Accused-appellant instructed Larry to prepare extra
money as his initial payment was insufficient. Larry left for the province to get a loan.
He went to accused-appellant's house on August 15, 1994 and paid her an additional
amount of P35,000.00. Again, no receipt was issued to him. Thereafter, accused-
appellant took him to Mandarin Hotel where he was introduced to Baloran and
Domingo. Larry kept waiting for a call, but none came. He was later told by accused-
appellant that he could not leave yet because Baloran was sick and he had to
postpone his trip.11
Junet T. Lim, Larry's sister, testified that she was present her when brother paid
P3,000.00 to accused-appellant, although no receipt was issued. She stated that she
asked accused-appellant questions to make sure she could help Larry get a job abroad
as a seaman. Janet said accused-appellant was able to convince her that she could do
so. Junet also testified that she accompanied her brother in following up his job
application for about three months until November 1994, when they realized they
had been defrauded by accused-appellant, Domingo, and Baloran12
Realizing that they had been deceived, complainants went to the Baler Police Station
2 in Quezon City on November 11, 1994 to file their complaints for illegal recruitment
and estafa against accused-appellant, Baloran, Domingo, and Mendoza. Felixberto
50
executed his sworn statement13 on the same day, while Ronald and Larry gave their
respective statements14 on November 12, 1994.
On November 14, 1994, complainants went to the Philippine Overseas Employment
Administration (POEA) and discovered that accused-appellant and her companions
did not have any license or authority to engage in any recruitment activity.
Felixberto and Ronald asked the court to order accused-appellant to pay them back
the placement fees of P45,000.00 which each of them had paid and moral damages
of P200,000.00 for each of them for the shame, anxiety, and loss of jobs they
suffered. They also sought the reimbursement for litigation expenses they each
incurred, amounting to P20,000.00 as attorney's fees and P500.00 per court
appearance. Larry, on the other hand, sought the recovery of the total amount of
P150,000.00 for placement fee, travelling expenses from the province to Manila to
follow up his application, and the anguish and .shame he suffered.15
In her defense, accused-appellant Luz Gonzales-Flores, a resident of 68-B East
Riverside, San Francisco del Monte, Quezon City, testified that she knew Felixberto
Leongson, Jr., who was her neighbor and a nephew of the owner of the house in
which they were staying. She came to know Ronald Frederizo and Larry Tibor through
Elsa Cas. Accused-appellant denied having promised complainants overseas
employment and having collected money from them. According to her, she came to
know Andy Baloran and Engr. Leonardo Domingo through Joseph Mendoza, who
referred her and her son, Noli, to them in connection with their own applications for
overseas employment. She came to know Joseph Mendoza through Elsa Cas and
Felixberto Leongson, Jr.
Accused-appellant claimed that she and Noli agreed to pay Baloran, Domingo, and
Mendoza the total sum of P90,000.00 for their application fees. Since she did not
have enough money to cover the amount, she asked her neighbors and friends to
help her get a loan. Felixberto and his wife offered help and introduced her to Jenny
Tolentino, from whom she got a loan of P15,000.00 guaranteed by Felixberto's wife.
Accused-appellant said she used the amount to pay for her and her son's recruitment
fees. Accused-appellant claimed that she paid the total amount of P46,500.00 for her
recruitment fee in three instalments, i.e., P10,000.00 to Mendoza at her house,
P10,000.00, and Pl6,500.00 to Baloran at the Mandarin Hotel. She alleged that she
also gave them several pieces of jewelry worth P10,000.00. According to her, no
receipts were issued for the money and jewelry she gave. 1âwphi1.nêt
Accused-appellant said that because Domingo, Baloran, and Mendoza did not make
good their promises, accused-appellant filed a complaint for illegal recruitment and
estafa against them on November 7, 1994 in the NBI, including as her co-
complainants Felixberto Leongson, Jr., Ronald Frederizo, Larry Tibor, Eduardo
Sibbalucas, Har Taccad, Romeo Gallardo, Joseph Mendoza, and her son, Noli Flores.16
Accused-appellant was investigated by the Baler Police Station 2 on November 11,
1994 as a result of the complaints filed against her by Felixberto, Ronald, and Larry.
Thereafter, she was detained.17
On November 24, 1994, she appeared before the NBI accompanied by a policewoman
to comply with the subpoena18 issued regarding her complaint. According to NBI
Agent Jesus Manapat, accused-appellant's complaint was dismissed for lack of
merit.19
Based on the evidence presented, the trial court rendered its assailed decision on
November 23, 1998, the dispositive portion of which reads:
WHEREFORE, the guilt of the accused for illegal recruitment in large scale
and estafa in three (3) counts having been proved beyond reasonable doubt,
she is hereby convicted of said crimes and is sentenced:
(1) To suffer the penalty of life imprisonment and pay a fine of P100,000 in
Criminal Case No. Q-94-59473;
(2) To suffer the penalty of imprisonment ranging from FOUR (4) YEARS AND
THREE (3) MONTHS of prision correccional, as minimum, and up to TEN (10)
YEARS of prision mayor, as maximum, and to pay the costs in Criminal Case
No. Q-94-59470;
(3) To suffer the penalty of imprisonment ranging from FOUR (4) YEARS AND
THREE (3) MONTHS of prision correccional, as minimum, and up to TEN (10)
YEARS of prision mayor, as maximum, and to pay the costs in Criminal Case
No. Q-94-59471; and
(4) To suffer the penalty of imprisonment ranging FOUR (4) YEARS AND
THREE (3) MONTHS of prision correccional, as minimum, and up to NINE (9)
YEARS of prision mayor, as maximum, and to pay the costs in Criminal Case
No. Q-94-59472.
The accused is also directed to pay: (a) Ronald Federi[z]o, the amount of
P45,000.00 as and by way of actual damages; (b) Felixberto Leongson, Jr.
P45,000.00 as and by way of actual damages; and (c) Larry Tibor, P38,000.00
as and by way of actual damages.
51
 The accused is further directed to pay to the said private complainants moral
damages in the sum of TWENTY THOUSAND PESOS (P20,000.00) each.
SO ORDERED.20
Hence, this appeal. Accused-appellant contends that -
I. THE LOWER COURT ERRED IN RELYING UPON THE JURISPRUDENCE AND
AUTHORITIES CITED, I.E., PEOPLE VS. COMIA, PEOPLE VS. MANOZCA,
PEOPLE VS. HONRADA, PEOPLE VS. TAN TIONG MENG, PEOPLE VS. VILLAS
AND PEOPLE VS. SENDON BECAUSE, WITH DUE RESPECT, THE FACTS AND
CIRCUMSTANCES AVAILING IN SAID CASES ARE DIFFERENT AS IN THE
PRESENT CASE; AND
II. [THE LOWER COURT] ERRED IN HOLDING THE ACCUSED GUlLTY BEYOND
REASONABLE DOUBT ON THE BASIS OF THE EVIDENCE ADDUCED BY THE
PROSECUTION TAKEN IN THE LIGHT OF THE UNREBUTTED EVIDENCE OF THE
ACCUSED ON VERY MATERIAL POINTS,21
The contentions are without merit.
In Criminal Case No. Q-94-59473, accused-appellant was charged with illegal
recruitment in large scale, the essential elements of which are: (1) that the accused
engages in acts of recruitment and placement of workers defined under Art. 13 (b) or
in any of the prohibited activities under Art. 34 of the Labor Code; (2) that the accused
has not complied with the guidelines issued by the Secretary of Labor and
Employment, particularly with respect to the securing of a license or an authority to
recruit and deploy workers, either locally or overseas; and (3) that the accused
commits the unlawful acts against three or more persons, individually or as a group.22
In these cases, according to the certification of the POEA, accused-appellant had no
license or authority to engage in any recruitment activities.23 In fact, this was
stipulated at the trial.24 Accused-appellant claims, however, that she herself was a
victim of illegal recruitment and that she simply told complainants about job
opportunities abroad.
The allegation is untenable. Art. 13 (b) of the Labor Code defines "recruitment and
placement" as referring to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not.
The same article further states 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.25
The evidence for the prosecution shows that accused-appellant sought out
complainants and promised them overseas employment. Despite their initial
reluctance because they lacked the technical skills required of seamen, complainants
were led to believe by accused-appellant that she could do something so that their
applications would be approved. Thus, because of accused-appellant's
misrepresentations, complainants gave her their moneys. Accused-appellant's
companions, Domingo, Baloran, and Mendoza, made her ploy even more plausible.
Accused-appellant contends that all she did was to refer complainants to Domingo,
Baloran, and Mendoza. However, under Article 13 (b) of the Labor Code, recruitment
includes "referral," which is defined as the act of passing along or forwarding an
applicant for employment after initial interview of a selected applicant for
employment to a selected employer, placement officer, or bureau.26 In these cases,
accused-appellant did more than just make referrals. She actively and directly
enlisted complainants for supposed employment abroad, even promising them jobs
as seamen, and collected moneys from them.
The failure of complainants to present receipts to evidence payments made to
accused-appellant is not fatal to the prosecution case. The presentation of the
receipts of payments is not necessary for the conviction of accused-appellant. As long
as the prosecution is able to establish through credible testimonies and affidavits that
the accused-appellant was involved in the prohibited recruitment, a conviction for
the offense can very well be justified.27In these cases, complainants could not present
receipts for their payment because accused-appellant assured them she would take
care of their money.
It must be remembered that the trial court's appreciation of complainants'
testimonies deserves the highest respect since it was in a better position to assess
their credibility.28 In these cases, complainants' testimonies, to the effect that they
paid money to accused-appellant and her companions, Domingo and Baloran,
because the latter promised them overseas employment, were positive,
straightforward, and categorical. They maintained their testimonies despite the
lengthy and gruelling cross-examination by the defense counsel. They have not been
shown to have any ill motive to falsely testify against accused-appellant. Naive,
simple-minded, and even gullible as they may have been, it is precisely for people like
complainants that the law was made. Accordingly, their testimonies are entitled to
full faith and credit.29
52
In contrast, accused-appellant's defense is merely denial. Time and again, this Court
has ruled that denial, being negative evidence which is self-serving in nature, cannot
prevail over the positive identification of prosecution witnesses.30 Here,
complainants positively identified accused-appellant as one of those who
represented that they could be deployed for overseas work upon payment of the
fees.
Accused-appellant claims that she herself had to borrow P15,00.00 from Jenny
Tolentino, guaranteed by Maria Luz Leongson, to defray her own and her son's
application expenses. The claim has no merit. Maria Luz Leongson, who is Felixberto's
wife, testified that accused-appellant sought her help to guarantee a loan to pay the
tuition fees of her daughter and the rent of the apartment in which she and her family
were staying,31 and not to finance her and her son's overseas job applications.
Accused-appellant likewise testified that she paid in cash a total of P36,500.00 in
three installments, i.e., P10,000.00 to Mendoza at her house, and P10,000.00 and
P16,500.00 to Baloran, at the Mandarin Hotel. This testimony cannot be deemed
worthy of belief. When cross-examined, accused-appellant could not remember the
dates when she allegedly made these payments. For someone who was jobless32 and
looking for employment, it is very doubtful that she would pay considerable sums of
money to strangers without even remembering at least the month or the year when
the same were supposed to have been paid.
Accused-appellant further contends that if she was indeed a conspirator in the illegal
recruitment transactions with complainants, she would not have filed a
complaint33 in the NBI against Domingo and Baloran. The complaint was, as already
stated, dismissed and it is apparent that accused-appellant filed the complaint only
to make it appear that she herself had been the victim of swindling and illegal
recruitment. First, the complaint shows that it was filed on November 7, 1994, even
before she was detained at the Baler Police Station 2 upon the sworn statements of
complainants. Complainants were included as complainants in a complaint filed by
accused-appellant. Yet, the complainants were never told, nor did they ever knew, of
the complaint until the trial of these cases. Second, accused-appellant could have
easily told them at least of the complaint because Felixberto Leongson, Jr., Ronald
Frederizo and Elsa Cas, a relative of complainant Larry Tibor, were her immediate
neighbors. Third, it is also noteworthy that despite her claim that she paid P10,000.00
to Mendoza, accused-appellant made the latter a co-complainant in the complaint
she filed with the NBI.
More importantly, accused-appellant's defense is uncorroborated. Not one of the
persons she included in her complaint to the NBI was ever presented in her defense
in these cases. Nor did she present Domingo, Baloran, or Mendoza to corroborate
her statements. It is probable that had she presented any of these persons, their
testimonies would have been adverse to accused-appellant.34
Direct proof of previous agreement to commit a crime is not necessary as it may be
deduced from the mode in which the offense was perpetrated, or inferred from the
acts of the accused which point to a joint purpose and design.35 In these cases, the
fact is that there was conspiracy among accused-appellant, Domingo, and Baloran in
recruiting complainants for employment overseas. The evidence shows that each had
a role in that conspiracy. Domingo posed as a representative of the luxury liner in
recruiting crew for the vessel. Baloran represented himself as the person who would
actually process complainants' travel documents, while accused-appellant acted as a
scout for job applicants and a collector of their payments. It was only Mendoza who
did not misrepresent himself as someone capable of helping complainants go abroad
nor collect money from them.36
In sum, we are of the opinion that the trial court correctly found accused-appellant
guilty of illegal recruitment in large scale: The imposition on accused-appellant of the
penalty of life imprisonment and a fine of P100,000.00 is thus justified.
Accused-appellant was likewise found guilty of estafa under Art. 315 (2) (a) of the
Revised Penal Code committed –
By means of any of the following false pretenses or fraudulent acts executed
prior to or simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power,
influence, qualifications, property, credit, agency, business or imaginary
transactions, or by means of other similar deceits.
Both elements of the crime were established in these cases, namely, (a) accused-
appellant defrauded complainant by abuse of confidence or by means of deceit and
(b) complainant suffered damage or prejudice capable of pecuniary estimation as a
result.37 Complainants parted with their money upon the prodding and enticement
of accused-appellant on the false pretense that she had the capacity to deploy them
for employment abroad. In the end, complainants were neither able to leave for work
overseas nor did they get their money back, thus causing them damage and
prejudice. 38
The issues that misappropriation on the part of accused-appellant of the money paid
by complainants and their demand for the same were not sufficiently established are
immaterial and irrelevant, conversion and demand not being elements of estafa
under Art. 315 (2) (a) of the Revised Penal Code.
53
In Criminal Case Nos. Q-94-59470 and Q-94-59471, the amounts involved are both (3) In Criminal Case No. Q-94-S9472, to suffer a prison term ranging from
P45,000.00, as testified to by complainants Felixberto Leongson, Jr. and Ronald four (4) years and two (2) months ofprision correccional, as minimum, to
Frederizo. Pursuant to Art. 315, par. 1 of the Revised Penal Code, the Indeterminate nine (9) years of prision mayor, as maximum.
Sentence Law, and the ruling in People v. Gabres,39 the trial court correctly meted
accused-appellant the maximum penalty of ten (10) years of prision mayor in each SO ORDERED.
case. This is so considering that the maximum penalty prescribed by law for the felony
is six (6) years, eight (8) months, and 21 days to eight (8) years of prision mayor. The
amounts involved in these cases exceed 1222,000.00 by at least 1220,000.00,
necessitating an increase of one (1) year for every 1210,000.00. Applying the
Indeterminate Sentence Law, the minimum of the sentence is thus from six (6)
months and one (1) day to four (4) years and two (2) months of prision
correccional. The trial court can exercise its discretion only within this period. Thus;
the minimum penalty imposed by the trial court should be reduced to four (4) years
and two (2) months of prision correccional.

In Criminal Case No. Q-94-59472, where the amount involved is 1238,000.00, the
indeterminate sentence which should be imposed on accused-appellant should range
from four (4) years and two (2) months of prision correccional, as minimum, to nine
(9) years of prision mayor, as maximum.

In accordance with the ruling in People v. Mercado,40 the fact that no receipts were
presented to prove the amounts paid by complainants to accused-appellant does not
prevent an award of actual damages in view of the fact that complainants were able
to prove by their respective testimonies and affidavits that accused-appellant was
involved in the recruitment process and succeeded in inveigling them to give their
money to her. The award of moral damages should likewise be upheld as it was
shown to have factual basis.

WHEREFORE, the decision of the Regional Trial Court, Branch 77, Quezon City, finding
accused-appellant guilty of illegal recruitment in large scale and estafa against
complainants Felixberto Leongson, Jr., Ronald Frederizo, and Larry Tibor is
AFFIRMED, with the MODIFICA TIONS that, in the cases for estafa, accused-appellant
is sentenced:

(1) In Criminal Case No. Q-94-S9470, to suffer a prison term ranging from
four (4) years and two (2) months of prision correccional, as minimum, to
ten (10) years of prision mayor, as maximum;

(2) In Criminal Case No. Q-94-S9471, to suffer a prison term ranging from
four (4) years and two (2) months of prision correccional, as minimum, to 10
years of prision mayor, as maximum; and

54