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Republic of the Philippines

SUPREME COURT
Manila
EN BANC
November 29, 1920
In re Application of MAX SHOOP for admission to practice law

MALCOLM, J.:
Application has been made to this court by Max Shoop for admission to
practice law in the Philippines Islands under paragraph four of the Rules for the
Examination of Candidates for Admission to the Practice of Law, effective July
1, 1920. The supporting papers show that the applicant has been admitted to
practice, and has practiced for more than five years in the highest court of the
State of New York.
THE RULES
That portion of the rules of this court, in point, is as follows:
Applicants for admission who have been admitted to practice in the
Supreme Court of the United States or in any circuit court of appeal or
district court, therein, or in the highest court of any State or territory of
the United States, which State or territory by comity confers the same
privilege on attorneys admitted to practice in the Philippine Islands,
and who can show by satisfactory affidavits that they have practiced at
least five years in any of said courts, may, in the discretion of the court,
be admitted without examination.
The above rule requires that New York State by comity confer the privilege of
admission without examination under similar circumstances to attorneys
admitted to practice in the Philippine Islands. The rule of the New York court
permits admission without examination, in the discretion of the Appellate
Division in several cases, among which are the following:
1. Any person admitted to practice and who has practiced five years as

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
Resolution

March 18, 1954

In the Matter of the Petitions for Admission to the Bar of Unsuccessful Candidates of 1946 to 1953;
ALBINO CUNANAN, ET AL., petitioners.
Jose M. Aruego, M.H. de Joya, Miguel R. Cornejo, and Antonio Enrile Inton for petitioners.
Office of the Solicitor General Juan R. Liwag for respondent.
DIOKNO, J.:
In recent years few controversial issues have aroused so much public interest and concern as Republic Act No. 972, popularly known as the "Bar Flunkers' Act of 1953." Under the
Rules of Court governing admission to the bar, "in order that a candidate (for admission to the Bar) may be deemed to have passed his examinations successfully, he must have
obtained a general average of 75 per cent in all subjects, without falling below 50 per cent in any subject." (Rule 127, sec. 14, Rules of Court). Nevertheless, considering the varying
difficulties of the different bar examinations held since 1946 and the varying degree of strictness with which the examination papers were graded, this court passed and admitted to
the bar those candidates who had obtained an average of only 72 per cent in 1946, 69 per cent in 1947, 70 per cent in 1948, and 74 per cent in 1949. In 1950 to 1953, the 74 per
cent was raised to 75 per cent.
Believing themselves as fully qualified to practice law as those reconsidered and passed by this court, and feeling conscious of having been discriminated against (See Explanatory
Note to R.A. No. 972), unsuccessful candidates who obtained averages of a few percentage lower than those admitted to the Bar agitated in Congress for, and secured in 1951 the
passage of Senate Bill No. 12 which, among others, reduced the passing general average in bar examinations to 70 per cent effective since 1946. The President requested the
views of this court on the bill. Complying with that request, seven members of the court subscribed to and submitted written comments adverse thereto, and shortly thereafter the
President vetoed it. Congress did not override the veto. Instead, it approved Senate Bill No. 371, embodying substantially the provisions of the vetoed bill. Although the members of
this court reiterated their unfavorable views on the matter, the President allowed the bill to become a law on June 21, 1953 without his signature. The law, which incidentally was
enacted in an election year, reads in full as follows:
REPUBLIC ACT NO. 972
AN ACT TO FIX THE PASSING MARKS FOR BAR EXAMINATIONS FROM NINETEEN HUNDRED AND FORTY-SIX UP TO AND INCLUDING NINETEEN
HUNDRED AND FIFTY-FIVE.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Notwithstanding the provisions of section fourteen, Rule numbered one hundred twenty-seven of the Rules of Court, any bar candidate who obtained a
general average of seventy per cent in any bar examinations after July fourth, nineteen hundred and forty-six up to the August nineteen hundred and fifty-one bar
examinations; seventy-one per cent in the nineteen hundred and fifty-two bar examinations; seventy-two per cent in the in the nineteen hundred and fifty-three bar
examinations; seventy-three per cent in the nineteen hundred and fifty-four bar examinations; seventy-four per cent in the nineteen hundred and fifty-five bar examinations
without a candidate obtaining a grade below fifty per cent in any subject, shall be allowed to take and subscribe the corresponding oath of office as member of the
Philippine Bar: Provided, however, That for the purpose of this Act, any exact one-half or more of a fraction, shall be considered as one and included as part of the next
whole number.

SEC. 2. Any bar candidate who obtained a grade of seventy-five per cent in any subject in any bar examination after July fourth, nineteen hundred and forty-six shall be
deemed to have passed in such subject or subjects and such grade or grades shall be included in computing the passing general average that said candidate may obtain in
any subsequent examinations that he may take.
SEC. 3. This Act shall take effect upon its approval.
Enacted on June 21, 1953, without the Executive approval.
After its approval, many of the unsuccessful postwar candidates filed petitions for admission to the bar invoking its provisions, while others whose motions for the revision of their
examination papers were still pending also invoked the aforesaid law as an additional ground for admission. There are also others who have sought simply the reconsideration of
their grades without, however, invoking the law in question. To avoid injustice to individual petitioners, the court first reviewed the motions for reconsideration, irrespective of whether
or not they had invoked Republic Act No. 972. Unfortunately, the court has found no reason to revise their grades. If they are to be admitted to the bar, it must be pursuant to
Republic Act No. 972 which, if declared valid, should be applied equally to all concerned whether they have filed petitions or not. A complete list of the petitioners, properly classified,
affected by this decision, as well as a more detailed account of the history of Republic Act No. 972, are appended to this decision as Annexes I and II. And to realize more readily the
effects of the law, the following statistical data are set forth:
(1) The unsuccessful bar candidates who are to be benefited by section 1 of Republic Act No. 972 total 1,168, classified as follows:

1946

(August)

206

121

18

1946

(November)

477

228

43

1947

749

340

1948

899

409

11

1949

1,218

532

164

1950

1,316

893

26

1951

2,068

879

196

1952

2,738

1,033

426

1953

TOTAL

2,555

968

284

12,230

5,421

1,168

Of the total 1,168 candidates, 92 have passed in subsequent examination, and only 586 have filed either motions for admission to the bar pursuant to said Republic Act, or mere
motions for reconsideration.
(2) In addition, some other 10 unsuccessful candidates are to be benefited by section 2 of said Republic Act. These candidates had each taken from two to five different
examinations, but failed to obtain a passing average in any of them. Consolidating, however, their highest grades in different subjects in previous examinations, with their latest
marks, they would be sufficient to reach the passing average as provided for by Republic Act No. 972.
(3) The total number of candidates to be benefited by this Republic Acts is therefore 1,094, of which only 604 have filed petitions. Of these 604 petitioners, 33 who failed in 1946 to
1951 had individually presented motions for reconsideration which were denied, while 125 unsuccessful candidates of 1952, and 56 of 1953, had presented similar motions, which
are still pending because they could be favorably affected by Republic Act No. 972, although as has been already stated, this tribunal finds no sufficient reasons to reconsider
their grades
UNCONSTITUTIONALITY OF REPUBLIC ACT NO. 972
Having been called upon to enforce a law of far-reaching effects on the practice of the legal profession and the administration of justice, and because some doubts have been
expressed as to its validity, the court set the hearing of the afore-mentioned petitions for admission on the sole question of whether or not Republic Act No. 972 is constitutional.
We have been enlightened in the study of this question by the brilliant assistance of the members of the bar who have amply argued, orally an in writing, on the various aspects in
which the question may be gleaned. The valuable studies of Messrs. E. Voltaire Garcia, Vicente J. Francisco, Vicente Pelaez and Buenaventura Evangelista, in favor of the validity
of the law, and of the U.P. Women's Lawyers' Circle, the Solicitor General, Messrs. Arturo A. Alafriz, Enrique M. Fernando, Vicente Abad Santos, Carlos A. Barrios, Vicente del
Rosario, Juan de Blancaflor, Mamerto V. Gonzales, and Roman Ozaeta against it, aside from the memoranda of counsel for petitioners, Messrs. Jose M. Aruego, M.H. de Joya,
Miguel R. Cornejo and Antonio Enrile Inton, and of petitioners Cabrera, Macasaet and Galema themselves, has greatly helped us in this task. The legal researchers of the court
have exhausted almost all Philippine and American jurisprudence on the matter. The question has been the object of intense deliberation for a long time by the Tribunal, and finally,
after the voting, the preparation of the majority opinion was assigned to a new member in order to place it as humanly as possible above all suspicion of prejudice or partiality.
Republic Act No. 972 has for its object, according to its author, to admit to the Bar, those candidates who suffered from insufficiency of reading materials and inadequate preparation.
Quoting a portion of the Explanatory Note of the proposed bill, its author Honorable Senator Pablo Angeles David stated:
The reason for relaxing the standard 75 per cent passing grade is the tremendous handicap which students during the years immediately after the Japanese occupation
has to overcome such as the insufficiency of reading materials and the inadequacy of the preparation of students who took up law soon after the liberation.
Of the 9,675 candidates who took the examinations from 1946 to 1952, 5,236 passed. And now it is claimed that in addition 604 candidates be admitted (which in reality total 1,094),
because they suffered from "insufficiency of reading materials" and of "inadequacy of preparation."

By its declared objective, the law is contrary to public interest because it qualifies 1,094 law graduates who confessedly had inadequate preparation for the practice of the
profession, as was exactly found by this Tribunal in the aforesaid examinations. The public interest demands of legal profession adequate preparation and efficiency, precisely more
so as legal problem evolved by the times become more difficult. An adequate legal preparation is one of the vital requisites for the practice of law that should be developed
constantly and maintained firmly. To the legal profession is entrusted the protection of property, life, honor and civil liberties. To approve officially of those inadequately prepared
individuals to dedicate themselves to such a delicate mission is to create a serious social danger. Moreover, the statement that there was an insufficiency of legal reading materials
is grossly exaggerated. There were abundant materials. Decisions of this court alone in mimeographed copies were made available to the public during those years and private
enterprises had also published them in monthly magazines and annual digests. The Official Gazette had been published continuously. Books and magazines published abroad have
entered without restriction since 1945. Many law books, some even with revised and enlarged editions have been printed locally during those periods. A new set of Philippine
Reports began to be published since 1946, which continued to be supplemented by the addition of new volumes. Those are facts of public knowledge.
Notwithstanding all these, if the law in question is valid, it has to be enforced.
The question is not new in its fundamental aspect or from the point of view of applicable principles, but the resolution of the question would have been easier had an identical case of
similar background been picked out from the jurisprudence we daily consult. Is there any precedent in the long Anglo-Saxon legal history, from which has been directly derived the
judicial system established here with its lofty ideals by the Congress of the United States, and which we have preserved and attempted to improve, or in our contemporaneous
judicial history of more than half a century? From the citations of those defending the law, we can not find a case in which the validity of a similar law had been sustained, while
those against its validity cite, among others, the cases of Day (In re Day, 54 NE 646), of Cannon (State vs. Cannon, 240 NW, 441), the opinion of the Supreme Court of
Massachusetts in 1932 (81 ALR 1061), of Guaria (24 Phil., 37), aside from the opinion of the President which is expressed in his vote of the original bill and which the
postponement of the contested law respects.
This law has no precedent in its favor. When similar laws in other countries had been promulgated, the judiciary immediately declared them without force or effect. It is not within our
power to offer a precedent to uphold the disputed law.
To be exact, we ought to state here that we have examined carefully the case that has been cited to us as a favorable precedent of the law that of Cooper (22 NY, 81), where the
Court of Appeals of New York revoked the decision of the Supreme court of that State, denying the petition of Cooper to be admitted to the practice of law under the provisions of a
statute concerning the school of law of Columbia College promulgated on April 7, 1860, which was declared by the Court of Appeals to be consistent with the Constitution of the
state of New York.
It appears that the Constitution of New York at that time provided:
They (i.e., the judges) shall not hold any other office of public trust. All votes for either of them for any elective office except that of the Court of Appeals, given by the
Legislature or the people, shall be void. They shall not exercise any power of appointment to public office. Any male citizen of the age of twenty-one years, of good moral
character, and who possesses the requisite qualifications of learning and ability, shall be entitled to admission to practice in all the courts of this State. (p. 93).
According to the Court of Appeals, the object of the constitutional precept is as follows:
Attorneys, solicitors, etc., were public officers; the power of appointing them had previously rested with the judges, and this was the principal appointing power which they
possessed. The convention was evidently dissatisfied with the manner in which this power had been exercised, and with the restrictions which the judges had imposed
upon admission to practice before them. The prohibitory clause in the section quoted was aimed directly at this power, and the insertion of the provision" expecting the
admission of attorneys, in this particular section of the Constitution, evidently arose from its connection with the object of this prohibitory clause. There is nothing indicative
of confidence in the courts or of a disposition to preserve any portion of their power over this subject, unless the Supreme Court is right in the inference it draws from the
use of the word `admission' in the action referred to. It is urged that the admission spoken of must be by the court; that to admit means to grant leave, and that the power of
granting necessarily implies the power of refusing, and of course the right of determining whether the applicant possesses the requisite qualifications to entitle him to
admission.
These positions may all be conceded, without affecting the validity of the act. (p. 93.)

Now, with respect to the law of April 7, 1860, the decision seems to indicate that it provided that the possession of a diploma of the school of law of Columbia College conferring the
degree of Bachelor of Laws was evidence of the legal qualifications that the constitution required of applicants for admission to the Bar. The decision does not however quote the
text of the law, which we cannot find in any public or accessible private library in the country.
In the case of Cooper, supra, to make the law consistent with the Constitution of New York, the Court of Appeals said of the object of the law:
The motive for passing the act in question is apparent. Columbia College being an institution of established reputation, and having a law department under the charge of
able professors, the students in which department were not only subjected to a formal examination by the law committee of the institution, but to a certain definite period of
study before being entitled to a diploma of being graduates, the Legislature evidently, and no doubt justly, considered this examination, together with the preliminary study
required by the act, as fully equivalent as a test of legal requirements, to the ordinary examination by the court; and as rendering the latter examination, to which no definite
period of preliminary study was essential, unnecessary and burdensome.
The act was obviously passed with reference to the learning and ability of the applicant, and for the mere purpose of substituting the examination by the law committee of
the college for that of the court. It could have had no other object, and hence no greater scope should be given to its provisions. We cannot suppose that the Legislature
designed entirely to dispense with the plain and explicit requirements of the Constitution; and the act contains nothing whatever to indicate an intention that the authorities
of the college should inquire as to the age, citizenship, etc., of the students before granting a diploma. The only rational interpretation of which the act admits is, that it was
intended to make the college diploma competent evidence as to the legal attainments of the applicant, and nothing else. To this extent alone it operates as a modification of
pre-existing statutes, and it is to be read in connection with these statutes and with the Constitution itself in order to determine the present condition of the law on the
subject. (p.89)
xxx

xxx

xxx

The Legislature has not taken from the court its jurisdiction over the question of admission, that has simply prescribed what shall be competent evidence in certain cases
upon that question. (p.93)
From the foregoing, the complete inapplicability of the case of Cooper with that at bar may be clearly seen. Please note only the following distinctions:
(1) The law of New York does not require that any candidate of Columbia College who failed in the bar examinations be admitted to the practice of law.
(2) The law of New York according to the very decision of Cooper, has not taken from the court its jurisdiction over the question of admission of attorney at law; in effect, it does not
decree the admission of any lawyer.
(3) The Constitution of New York at that time and that of the Philippines are entirely different on the matter of admission of the practice of law.
In the judicial system from which ours has been evolved, the admission, suspension, disbarment and reinstatement of attorneys at law in the practice of the profession and their
supervision have been disputably a judicial function and responsibility. Because of this attribute, its continuous and zealous possession and exercise by the judicial power have been
demonstrated during more than six centuries, which certainly "constitutes the most solid of titles." Even considering the power granted to Congress by our Constitution to repeal,
alter supplement the rules promulgated by this Court regarding the admission to the practice of law, to our judgment and proposition that the admission, suspension, disbarment and
reinstatement of the attorneys at law is a legislative function, properly belonging to Congress, is unacceptable. The function requires (1) previously established rules and principles,
(2) concrete facts, whether past or present, affecting determinate individuals. and (3) decision as to whether these facts are governed by the rules and principles; in effect, a judicial
function of the highest degree. And it becomes more undisputably judicial, and not legislative, if previous judicial resolutions on the petitions of these same individuals are attempted
to be revoked or modified.
We have said that in the judicial system from which ours has been derived, the act of admitting, suspending, disbarring and reinstating attorneys at law in the practice of the
profession is concededly judicial. A comprehensive and conscientious study of this matter had been undertaken in the case of State vs. Cannon (1932) 240 NW 441, in which the
validity of a legislative enactment providing that Cannon be permitted to practice before the courts was discussed. From the text of this decision we quote the following paragraphs:

This statute presents an assertion of legislative power without parallel in the history of the English speaking people so far as we have been able to ascertain. There has
been much uncertainty as to the extent of the power of the Legislature to prescribe the ultimate qualifications of attorney at law has been expressly committed to the courts,
and the act of admission has always been regarded as a judicial function. This act purports to constitute Mr. Cannon an attorney at law, and in this respect it stands alone
as an assertion of legislative power. (p. 444)
Under the Constitution all legislative power is vested in a Senate and Assembly. (Section 1, art. 4.) In so far as the prescribing of qualifications for admission to the bar are
legislative in character, the Legislature is acting within its constitutional authority when it sets up and prescribes such qualifications. (p. 444)
But when the Legislature has prescribed those qualifications which in its judgment will serve the purpose of legitimate legislative solicitude, is the power of the court to
impose other and further exactions and qualifications foreclosed or exhausted? (p. 444)
Under our Constitution the judicial and legislative departments are distinct, independent, and coordinate branches of the government. Neither branch enjoys all the powers
of sovereignty which properly belongs to its department. Neither department should so act as to embarrass the other in the discharge of its respective functions. That was
the scheme and thought of the people setting upon the form of government under which we exist. State vs. Hastings, 10 Wis., 525; Attorney General ex rel. Bashford vs.
Barstow, 4 Wis., 567. (p. 445)
The judicial department of government is responsible for the plane upon which the administration of justice is maintained. Its responsibility in this respect is exclusive. By
committing a portion of the powers of sovereignty to the judicial department of our state government, under 42a scheme which it was supposed rendered it immune from
embarrassment or interference by any other department of government, the courts cannot escape responsibility fir the manner in which the powers of sovereignty thus
committed to the judicial department are exercised. (p. 445)
The relation at the bar to the courts is a peculiar and intimate relationship. The bar is an attache of the courts. The quality of justice dispense by the courts depends in no
small degree upon the integrity of its bar. An unfaithful bar may easily bring scandal and reproach to the administration of justice and bring the courts themselves into
disrepute. (p.445)
Through all time courts have exercised a direct and severe supervision over their bars, at least in the English speaking countries. (p. 445)
After explaining the history of the case, the Court ends thus:
Our conclusion may be epitomized as follows: For more than six centuries prior to the adoption of our Constitution, the courts of England, concededly subordinate to
Parliament since the Revolution of 1688, had exercise the right of determining who should be admitted to the practice of law, which, as was said in Matter of the Sergeant's
at Law, 6 Bingham's New Cases 235, "constitutes the most solid of all titles." If the courts and judicial power be regarded as an entity, the power to determine who should
be admitted to practice law is a constituent element of that entity. It may be difficult to isolate that element and say with assurance that it is either a part of the inherent
power of the court, or an essential element of the judicial power exercised by the court, but that it is a power belonging to the judicial entity and made of not only a
sovereign institution, but made of it a separate independent, and coordinate branch of the government. They took this institution along with the power traditionally exercise
to determine who should constitute its attorney at law. There is no express provision in the Constitution which indicates an intent that this traditional power of the judicial
department should in any manner be subject to legislative control. Perhaps the dominant thought of the framers of our constitution was to make the three great departments
of government separate and independent of one another. The idea that the Legislature might embarrass the judicial department by prescribing inadequate qualifications for
attorneys at law is inconsistent with the dominant purpose of making the judicial independent of the legislative department, and such a purpose should not be inferred in the
absence of express constitutional provisions. While the legislature may legislate with respect to the qualifications of attorneys, but is incidental merely to its general and
unquestioned power to protect the public interest. When it does legislate a fixing a standard of qualifications required of attorneys at law in order that public interests may
be protected, such qualifications do not constitute only a minimum standard and limit the class from which the court must make its selection. Such legislative qualifications
do not constitute the ultimate qualifications beyond which the court cannot go in fixing additional qualifications deemed necessary by the course of the proper administration
of judicial functions. There is no legislative power to compel courts to admit to their bars persons deemed by them unfit to exercise the prerogatives of an attorney at law. (p.
450)
Furthermore, it is an unlawful attempt to exercise the power of appointment. It is quite likely true that the legislature may exercise the power of appointment when it is in
pursuance of a legislative functions. However, the authorities are well-nigh unanimous that the power to admit attorneys to the practice of law is a judicial function. In all of
the states, except New Jersey (In re Reisch, 83 N.J. Eq. 82, 90 A. 12), so far as our investigation reveals, attorneys receive their formal license to practice law by their

admission as members of the bar of the court so admitting. Cor. Jur. 572; Ex parte Secombre, 19 How. 9,15 L. Ed. 565; Ex parteGarland, 4 Wall. 333, 18 L. Ed. 366;
Randall vs. Brigham, 7 Wall. 53, 19 L. Ed. 285; Hanson vs. Grattan, 48 Kan, 843, 115 P. 646, 34 L.R.A. 519; Danforth vs. Egan, 23 S. D. 43, 119 N.W. 1021, 130 Am. St.
Rep. 1030, 20 Ann. Cas. 413.
The power of admitting an attorney to practice having been perpetually exercised by the courts, it having been so generally held that the act of the court in admitting an
attorney to practice is the judgment of the court, and an attempt as this on the part of the Legislature to confer such right upon any one being most exceedingly uncommon,
it seems clear that the licensing of an attorney is and always has been a purely judicial function, no matter where the power to determine the qualifications may reside. (p.
451)
In that same year of 1932, the Supreme Court of Massachusetts, in answering a consultation of the Senate of that State, 180 NE 725, said:
It is indispensible to the administration of justice and to interpretation of the laws that there be members of the bar of sufficient ability, adequate learning and sound moral
character. This arises from the need of enlightened assistance to the honest, and restraining authority over the knavish, litigant. It is highly important, also that the public be
protected from incompetent and vicious practitioners, whose opportunity for doing mischief is wide. It was said by Cardoz, C.L., in People ex rel. Karlin vs. Culkin, 242 N.Y.
456, 470, 471, 162 N.E. 487, 489, 60 A.L.R. 851: "Membership in the bar is a privilege burden with conditions." One is admitted to the bar "for something more than private
gain." He becomes an "officer of the court", and ,like the court itself, an instrument or agency to advance the end of justice. His cooperation with the court is due "whenever
justice would be imperiled if cooperation was withheld." Without such attorneys at law the judicial department of government would be hampered in the performance of its
duties. That has been the history of attorneys under the common law, both in this country and England. Admission to practice as an attorney at law is almost without
exception conceded to be a judicial function. Petition to that end is filed in courts, as are other proceedings invoking judicial action. Admission to the bar is accomplish and
made open and notorious by a decision of the court entered upon its records. The establishment by the Constitution of the judicial department conferred authority
necessary to the exercise of its powers as a coordinate department of government. It is an inherent power of such a department of government ultimately to determine the
qualifications of those to be admitted to practice in its courts, for assisting in its work, and to protect itself in this respect from the unfit, those lacking in sufficient learning,
and those not possessing good moral character. Chief Justice Taney stated succinctly and with finality in Ex parte Secombe, 19 How. 9, 13, 15 L. Ed. 565, "It has been well
settled, by the rules and practice of common-law courts, that it rests exclusively with the court to determine who is qualified to become one of its officers, as an attorney and
counselor, and for what cause he ought to be removed." (p.727)
In the case of Day and others who collectively filed a petition to secure license to practice the legal profession by virtue of a law of state (In re Day, 54 NE 646), the court said in part:
In the case of Ex parte Garland, 4 Wall, 333, 18 L. Ed. 366, the court, holding the test oath for attorneys to be unconstitutional, explained the nature of the attorney's office
as follows: "They are officers of the court, admitted as such by its order, upon evidence of their possessing sufficient legal learning and fair private character. It has always
been the general practice in this country to obtain this evidence by an examination of the parties. In this court the fact of the admission of such officers in the highest court
of the states to which they, respectively, belong for, three years preceding their application, is regarded as sufficient evidence of the possession of the requisite legal
learning, and the statement of counsel moving their admission sufficient evidence that their private and professional character is fair. The order of admission is the judgment
of the court that the parties possess the requisite qualifications as attorneys and counselors, and are entitled to appear as such and conduct causes therein. From its entry
the parties become officers of the court, and are responsible to it for professional misconduct. They hold their office during good behavior, and can only be deprived of it for
misconduct ascertained and declared by the judgment of the court after opportunity to be heard has been afforded. Ex parte Hoyfron, admission or their exclusion is not the
exercise of a mere ministerial power. It is the exercise of judicial power, and has been so held in numerous cases. It was so held by the court of appeals of New York in the
matter of the application of Cooper for admission. Re Cooper 22 N. Y. 81. "Attorneys and Counselors", said that court, "are not only officers of the court, but officers whose
duties relate almost exclusively to proceedings of a judicial nature; and hence their appointment may, with propriety, be entrusted to the court, and the latter, in performing
his duty, may very justly considered as engaged in the exercise of their appropriate judicial functions." (pp. 650-651).
We quote from other cases, the following pertinent portions:
Admission to practice of law is almost without exception conceded everywhere to be the exercise of a judicial function, and this opinion need not be burdened with citations
in this point. Admission to practice have also been held to be the exercise of one of the inherent powers of the court. Re Bruen, 102 Wash. 472, 172 Pac. 906.
Admission to the practice of law is the exercise of a judicial function, and is an inherent power of the court. A.C. Brydonjack, vs. State Bar of California, 281 Pac. 1018;
See Annotation on Power of Legislature respecting admission to bar, 65, A.L. R. 1512.

On this matter there is certainly a clear distinction between the functions of the judicial and legislative departments of the government.
The distinction between the functions of the legislative and the judicial departments is that it is the province of the legislature to establish rules that shall regulate and
govern in matters of transactions occurring subsequent to the legislative action, while the judiciary determines rights and obligations with reference to transactions that are
past or conditions that exist at the time of the exercise of judicial power, and the distinction is a vital one and not subject to alteration or change either by legislative action or
by judicial decree.
The judiciary cannot consent that its province shall be invaded by either of the other departments of the government. 16 C.J.S., Constitutional Law, p. 229.
If the legislature cannot thus indirectly control the action of the courts by requiring of them construction of the law according to its own views, it is very plain it cannot do so
directly, by settling aside their judgments, compelling them to grant new trials, ordering the discharge of offenders, or directing what particular steps shall be taken in the
progress of a judicial inquiry. Cooley's Constitutional Limitations, 192.
In decreeing the bar candidates who obtained in the bar examinations of 1946 to 1952, a general average of 70 per cent without falling below 50 per cent in any subject, be admitted
in mass to the practice of law, the disputed law is not a legislation; it is a judgment a judgment revoking those promulgated by this Court during the aforecited year affecting the
bar candidates concerned; and although this Court certainly can revoke these judgments even now, for justifiable reasons, it is no less certain that only this Court, and not the
legislative nor executive department, that may be so. Any attempt on the part of any of these departments would be a clear usurpation of its functions, as is the case with the law in
question.
That the Constitution has conferred on Congress the power to repeal, alter or supplement the rule promulgated by this Tribunal, concerning the admission to the practice of law, is no
valid argument. Section 13, article VIII of the Constitution provides:
Section 13. The Supreme Court shall have the power to promulgate rules concerning pleading, practice, and procedure in all courts, and the admission to the practice of
law. Said rules shall be uniform for all courts of the same grade and shall not diminish, increase or modify substantive rights. The existing laws on pleading, practice and
procedure are hereby repealed as statutes, and are declared Rules of Court, subject to the power of the Supreme Court to alter and modify the same. The Congress shall
have the power to repeal, alter, or supplement the rules concerning pleading, practice, and procedure, and the admission to the practice of law in the Philippines.
Constitution of the Philippines, Art. VIII, sec. 13.
It will be noted that the Constitution has not conferred on Congress and this Tribunal equal responsibilities concerning the admission to the practice of law. the primary power and
responsibility which the Constitution recognizes continue to reside in this Court. Had Congress found that this Court has not promulgated any rule on the matter, it would have
nothing over which to exercise the power granted to it. Congress may repeal, alter and supplement the rules promulgated by this Court, but the authority and responsibility over the
admission, suspension, disbarment and reinstatement of attorneys at law and their supervision remain vested in the Supreme Court. The power to repeal, alter and supplement the
rules does not signify nor permit that Congress substitute or take the place of this Tribunal in the exercise of its primary power on the matter. The Constitution does not say nor mean
that Congress may admit, suspend, disbar or reinstate directly attorneys at law, or a determinate group of individuals to the practice of law. Its power is limited to repeal, modify or
supplement the existing rules on the matter, if according to its judgment the need for a better service of the legal profession requires it. But this power does not relieve this Court of
its responsibility to admit, suspend, disbar and reinstate attorneys at law and supervise the practice of the legal profession.
Being coordinate and independent branches, the power to promulgate and enforce rules for the admission to the practice of law and the concurrent power to repeal, alter and
supplement them may and should be exercised with the respect that each owes to the other, giving careful consideration to the responsibility which the nature of each department
requires. These powers have existed together for centuries without diminution on each part; the harmonious delimitation being found in that the legislature may and should examine
if the existing rules on the admission to the Bar respond to the demands which public interest requires of a Bar endowed with high virtues, culture, training and responsibility. The
legislature may, by means of appeal, amendment or supplemental rules, fill up any deficiency that it may find, and the judicial power, which has the inherent responsibility for a good
and efficient administration of justice and the supervision of the practice of the legal profession, should consider these reforms as the minimum standards for the elevation of the
profession, and see to it that with these reforms the lofty objective that is desired in the exercise of its traditional duty of admitting, suspending, disbarring and reinstating attorneys at
law is realized. They are powers which, exercise within their proper constitutional limits, are not repugnant, but rather complementary to each other in attaining the establishment of a
Bar that would respond to the increasing and exacting necessities of the administration of justice.

The case of Guaria (1913) 24 Phil., 37, illustrates our criterion. Guaria took examination and failed by a few points to obtain the general average. A recently enacted law provided
that one who had been appointed to the position of Fiscal may be admitted to the practice of law without a previous examination. The Government appointed Guaria and he
discharged the duties of Fiscal in a remote province. This tribunal refused to give his license without previous examinations. The court said:
Relying upon the provisions of section 2 of Act No. 1597, the applicant in this case seeks admission to the bar, without taking the prescribed examination, on the ground
that he holds the office of provincial fiscal for the Province of Batanes.
Section 2 of Act No. 1597, enacted February 28, 1907, is as follows:
Sec. 2. Paragraph one of section thirteen of Act Numbered One Hundred and ninety, entitled "An Act providing a Code of Procedure in Civil Actions and Special
Proceedings in the Philippine Islands," is hereby amended to read as follows:
1. Those who have been duly licensed under the laws and orders of the Islands under the sovereignty of Spain or of the United States and are in good and regular standing
as members of the bar of the Philippine Islands at the time of the adoption of this code; Provided, That any person who, prior to the passage of this act, or at any time
thereafter, shall have held, under the authority of the United States, the position of justice of the Supreme Court, judge of the Court of First Instance, or judge or associate
judge of the Court of Land Registration, of the Philippine Islands, or the position of Attorney General, Solicitor General, Assistant Attorney General, assistant attorney in the
office of the Attorney General, prosecuting attorney for the City of Manila, city attorney of Manila, assistant city attorney of Manila, provincial fiscal, attorney for the Moro
Province, or assistant attorney for the Moro Province, may be licensed to practice law in the courts of the Philippine Islands without an examination, upon motion before the
Supreme Court and establishing such fact to the satisfaction of said court.
The records of this court disclose that on a former occasion this appellant took, and failed to pass the prescribed examination. The report of the examining board, dated
March 23, 1907, shows that he received an average of only 71 per cent in the various branches of legal learning upon which he was examined, thus falling four points short
of the required percentage of 75. We would be delinquent in the performance of our duty to the public and to the bar, if, in the face of this affirmative indication of the
deficiency of the applicant in the required qualifications of learning in the law at the time when he presented his former application for admission to the bar, we should grant
him license to practice law in the courts of these Islands, without first satisfying ourselves that despite his failure to pass the examination on that occasion, he now
"possesses the necessary qualifications of learning and ability."
But it is contented that under the provisions of the above-cited statute the applicant is entitled as of right to be admitted to the bar without taking the prescribed examination
"upon motion before the Supreme Court" accompanied by satisfactory proof that he has held and now holds the office of provincial fiscal of the Province of Batanes. It is
urged that having in mind the object which the legislator apparently sought to attain in enacting the above-cited amendment to the earlier statute, and in view of the context
generally and especially of the fact that the amendment was inserted as a proviso in that section of the original Act which specifically provides for the admission of certain
candidates without examination. It is contented that this mandatory construction is imperatively required in order to give effect to the apparent intention of the legislator, and
to the candidate's claim de jure to have the power exercised.
And after copying article 9 of Act of July 1, 1902 of the Congress of the United States, articles 2, 16 and 17 of Act No. 136, and articles 13 to 16 of Act 190, the Court continued:
Manifestly, the jurisdiction thus conferred upon this court by the commission and confirmed to it by the Act of Congress would be limited and restricted, and in a case such
as that under consideration wholly destroyed, by giving the word "may," as used in the above citation from Act of Congress of July 1, 1902, or of any Act of Congress
prescribing, defining or limiting the power conferred upon the commission is to that extent invalid and void, as transcending its rightful limits and authority.
Speaking on the application of the law to those who were appointed to the positions enumerated, and with particular emphasis in the case of Guaria, the Court held:
In the various cases wherein applications for the admission to the bar under the provisions of this statute have been considered heretofore, we have accepted the fact that
such appointments had been made as satisfactory evidence of the qualifications of the applicant. But in all of those cases we had reason to believe that the applicants had
been practicing attorneys prior to the date of their appointment.

In the case under consideration, however, it affirmatively appears that the applicant was not and never had been practicing attorney in this or any other jurisdiction prior to
the date of his appointment as provincial fiscal, and it further affirmatively appears that he was deficient in the required qualifications at the time when he last applied for
admission to the bar.
In the light of this affirmative proof of his defieciency on that occasion, we do not think that his appointment to the office of provincial fiscal is in itself satisfactory proof if his
possession of the necessary qualifications of learning and ability. We conclude therefore that this application for license to practice in the courts of the Philippines, should
be denied.
In view, however, of the fact that when he took the examination he fell only four points short of the necessary grade to entitle him to a license to practice; and in view also of
the fact that since that time he has held the responsible office of the governor of the Province of Sorsogon and presumably gave evidence of such marked ability in the
performance of the duties of that office that the Chief Executive, with the consent and approval of the Philippine Commission, sought to retain him in the Government
service by appointing him to the office of provincial fiscal, we think we would be justified under the above-cited provisions of Act No. 1597 in waiving in his case the ordinary
examination prescribed by general rule, provided he offers satisfactory evidence of his proficiency in a special examination which will be given him by a committee of the
court upon his application therefor, without prejudice to his right, if he desires so to do, to present himself at any of the ordinary examinations prescribed by general rule.
(In re Guaria, pp. 48-49.)
It is obvious, therefore, that the ultimate power to grant license for the practice of law belongs exclusively to this Court, and the law passed by Congress on the matter is of
permissive character, or as other authorities say, merely to fix the minimum conditions for the license.
The law in question, like those in the case of Day and Cannon, has been found also to suffer from the fatal defect of being a class legislation, and that if it has intended to make a
classification, it is arbitrary and unreasonable.
In the case of Day, a law enacted on February 21, 1899 required of the Supreme Court, until December 31 of that year, to grant license for the practice of law to those students who
began studying before November 4, 1897, and had studied for two years and presented a diploma issued by a school of law, or to those who had studied in a law office and would
pass an examination, or to those who had studied for three years if they commenced their studies after the aforementioned date. The Supreme Court declared that this law was
unconstitutional being, among others, a class legislation. The Court said:
This is an application to this court for admission to the bar of this state by virtue of diplomas from law schools issued to the applicants. The act of the general assembly
passed in 1899, under which the application is made, is entitled "An act to amend section 1 of an act entitled "An act to revise the law in relation to attorneys and
counselors," approved March 28, 1884, in force July 1, 1874." The amendment, so far as it appears in the enacting clause, consists in the addition to the section of the
following: "And every application for a license who shall comply with the rules of the supreme court in regard to admission to the bar in force at the time such applicant
commend the study of law, either in a law or office or a law school or college, shall be granted a license under this act notwithstanding any subsequent changes in said
rules". In re Day et al, 54 N.Y., p. 646.
. . . After said provision there is a double proviso, one branch of which is that up to December 31, 1899, this court shall grant a license of admittance to the bar to the holder
of every diploma regularly issued by any law school regularly organized under the laws of this state, whose regular course of law studies is two years, and requiring an
attendance by the student of at least 36 weeks in each of such years, and showing that the student began the study of law prior to November 4, 1897, and accompanied
with the usual proofs of good moral character. The other branch of the proviso is that any student who has studied law for two years in a law office, or part of such time in a
law office, "and part in the aforesaid law school," and whose course of study began prior to November 4, 1897, shall be admitted upon a satisfactory examination by the
examining board in the branches now required by the rules of this court. If the right to admission exists at all, it is by virtue of the proviso, which, it is claimed, confers
substantial rights and privileges upon the persons named therein, and establishes rules of legislative creation for their admission to the bar. (p. 647.)
Considering the proviso, however, as an enactment, it is clearly a special legislation, prohibited by the constitution, and invalid as such. If the legislature had any right to
admit attorneys to practice in the courts and take part in the administration of justice, and could prescribe the character of evidence which should be received by the court
as conclusive of the requisite learning and ability of persons to practice law, it could only be done by a general law, persons or classes of persons. Const. art 4, section 2.
The right to practice law is a privilege, and a license for that purpose makes the holder an officer of the court, and confers upon him the right to appear for litigants, to argue
causes, and to collect fees therefor, and creates certain exemptions, such as from jury services and arrest on civil process while attending court. The law conferring such
privileges must be general in its operation. No doubt the legislature, in framing an enactment for that purpose, may classify persons so long as the law establishing classes
in general, and has some reasonable relation to the end sought. There must be some difference which furnishes a reasonable basis for different one, having no just relation

to the subject of the legislation. Braceville Coal Co. vs. People, 147 Ill. 66, 35 N.E. 62; Ritchie vs. People, 155 Ill. 98, 40 N.E. 454; Railroad Co. vs. Ellis, 165 U.S. 150, 17
Sup. Ct. 255.
The length of time a physician has practiced, and the skill acquired by experience, may furnish a basis for classification (Williams vs. People 121 Ill. 48, II N.E. 881); but the
place where such physician has resided and practiced his profession cannot furnish such basis, and is an arbitrary discrimination, making an enactment based upon it void
(State vs. Pennyeor, 65 N.E. 113, 18 Atl. 878). Here the legislature undertakes to say what shall serve as a test of fitness for the profession of the law, and plainly, any
classification must have some reference to learning, character, or ability to engage in such practice. The proviso is limited, first, to a class of persons who began the study
of law prior to November 4, 1897. This class is subdivided into two classes First, those presenting diplomas issued by any law school of this state before December 31,
1899; and, second, those who studied law for the period of two years in a law office, or part of the time in a law school and part in a law office, who are to be admitted upon
examination in the subjects specified in the present rules of this court, and as to this latter subdivision there seems to be no limit of time for making application for
admission. As to both classes, the conditions of the rules are dispensed with, and as between the two different conditions and limits of time are fixed. No course of study is
prescribed for the law school, but a diploma granted upon the completion of any sort of course its managers may prescribe is made all-sufficient. Can there be anything with
relation to the qualifications or fitness of persons to practice law resting upon the mere date of November 4, 1897, which will furnish a basis of classification. Plainly not.
Those who began the study of law November 4th could qualify themselves to practice in two years as well as those who began on the 3rd. The classes named in the
proviso need spend only two years in study, while those who commenced the next day must spend three years, although they would complete two years before the time
limit. The one who commenced on the 3rd. If possessed of a diploma, is to be admitted without examination before December 31, 1899, and without any prescribed course
of study, while as to the other the prescribed course must be pursued, and the diploma is utterly useless. Such classification cannot rest upon any natural reason, or bear
any just relation to the subject sought, and none is suggested. The proviso is for the sole purpose of bestowing privileges upon certain defined persons. (pp. 647-648.)
In the case of Cannon above cited, State vs. Cannon, 240 N.W. 441, where the legislature attempted by law to reinstate Cannon to the practice of law, the court also held with
regards to its aspect of being a class legislation:
But the statute is invalid for another reason. If it be granted that the legislature has power to prescribe ultimately and definitely the qualifications upon which courts must
admit and license those applying as attorneys at law, that power can not be exercised in the manner here attempted. That power must be exercised through general laws
which will apply to all alike and accord equal opportunity to all. Speaking of the right of the Legislature to exact qualifications of those desiring to pursue chosen callings, Mr.
Justice Field in the case of Dent. vs. West Virginia, 129 U.S. 114, 121, 9 S. Ct. 232, 233, 32 L. Ed. 626, said: "It is undoubtedly the right of every citizen of the United States
to follow any lawful calling, business or profession he may choose, subject only to such restrictions as are imposed upon all persons of like age, sex, and condition." This
right may in many respects be considered as a distinguishing feature of our republican institutions. Here all vocations are all open to every one on like conditions. All may
be pursued as sources of livelihood, some requiring years of study and great learning for their successful prosecution. The interest, or, as it is sometimes termed, the
"estate" acquired in them that is, the right to continue their prosecution is often of great value to the possessors and cannot be arbitrarily taken from them, any more
than their real or personal property can be thus taken. It is fundamental under our system of government that all similarly situated and possessing equal qualifications shall
enjoy equal opportunities. Even statutes regulating the practice of medicine, requiring medications to establish the possession on the part of the application of his proper
qualifications before he may be licensed to practice, have been challenged, and courts have seriously considered whether the exemption from such examinations of those
practicing in the state at the time of the enactment of the law rendered such law unconstitutional because of infringement upon this general principle. State vs. Thomas Call,
121 N.C. 643, 28 S.E. 517; see, also, The State ex rel. Winkler vs. Rosenberg, 101 Wis. 172, 76 N.W. 345; State vs. Whitcom, 122 Wis. 110, 99 N.W. 468.
This law singles out Mr. Cannon and assumes to confer upon him the right to practice law and to constitute him an officer of this Court as a mere matter of legislative grace
or favor. It is not material that he had once established his right to practice law and that one time he possessed the requisite learning and other qualifications to entitle him
to that right. That fact in no matter affect the power of the Legislature to select from the great body of the public an individual upon whom it would confer its favors.
A statute of the state of Minnesota (Laws 1929, c. 424) commanded the Supreme Court to admit to the practice of law without examination, all who had served in the
military or naval forces of the United States during the World War and received a honorable discharge therefrom and who (were disabled therein or thereby within the
purview of the Act of Congress approved June 7th, 1924, known as "World War Veteran's Act, 1924 and whose disability is rated at least ten per cent thereunder at the time
of the passage of this Act." This Act was held |unconstitutional on the ground that it clearly violated the quality clauses of the constitution of that state. In re Application of
George W. Humphrey, 178 Minn. 331, 227 N.W. 179.
A good summary of a classification constitutionally acceptable is explained in 12 Am. Jur. 151-153 as follows:

The general rule is well settled by unanimity of the authorities that a classification to be valid must rest upon material differences between the person included in it and
those excluded and, furthermore, must be based upon substantial distinctions. As the rule has sometimes avoided the constitutional prohibition, must be founded upon
pertinent and real differences, as distinguished from irrelevant and artificial ones. Therefore, any law that is made applicable to one class of citizens only must be based on
some substantial difference between the situation of that class and other individuals to which it does not apply and must rest on some reason on which it can be defended.
In other words, there must be such a difference between the situation and circumstances of all the members of the class and the situation and circumstances of all other
members of the state in relation to the subjects of the discriminatory legislation as presents a just and natural cause for the difference made in their liabilities and burdens
and in their rights and privileges. A law is not general because it operates on all within a clause unless there is a substantial reason why it is made to operate on that class
only, and not generally on all. (12 Am. Jur. pp. 151-153.)
Pursuant to the law in question, those who, without a grade below 50 per cent in any subject, have obtained a general average of 69.5 per cent in the bar examinations in 1946 to
1951, 70.5 per cent in 1952, 71.5 per cent in 1953, and those will obtain 72.5 per cent in 1954, and 73.5 per cent in 1955, will be permitted to take and subscribe the corresponding
oath of office as members of the Bar, notwithstanding that the rules require a minimum general average of 75 per cent, which has been invariably followed since 1950. Is there any
motive of the nature indicated by the abovementioned authorities, for this classification ? If there is none, and none has been given, then the classification is fatally defective.
It was indicated that those who failed in 1944, 1941 or the years before, with the general average indicated, were not included because the Tribunal has no record of the
unsuccessful candidates of those years. This fact does not justify the unexplained classification of unsuccessful candidates by years, from 1946-1951, 1952, 1953, 1954, 1955.
Neither is the exclusion of those who failed before said years under the same conditions justified. The fact that this Court has no record of examinations prior to 1946 does not
signify that no one concerned may prove by some other means his right to an equal consideration.
To defend the disputed law from being declared unconstitutional on account of its retroactivity, it is argued that it is curative, and that in such form it is constitutional. What does Rep.
Act 972 intend to cure ? Only from 1946 to 1949 were there cases in which the Tribunal permitted admission to the bar of candidates who did not obtain the general average of 75
per cent: in 1946 those who obtained only 72 per cent; in the 1947 and those who had 69 per cent or more; in 1948, 70 per cent and in 1949, 74 per cent; and in 1950 to 1953, those
who obtained 74 per cent, which was considered by the Court as equivalent to 75 per cent as prescribed by the Rules, by reason of circumstances deemed to be sufficiently
justifiable. These changes in the passing averages during those years were all that could be objected to or criticized. Now, it is desired to undo what had been done cancel the
license that was issued to those who did not obtain the prescribed 75 per cent ? Certainly not. The disputed law clearly does not propose to do so. Concededly, it approves what has
been done by this Tribunal. What Congress lamented is that the Court did not consider 69.5 per cent obtained by those candidates who failed in 1946 to 1952 as sufficient to qualify
them to practice law. Hence, it is the lack of will or defect of judgment of the Court that is being cured, and to complete the cure of this infirmity, the effectivity of the disputed law is
being extended up to the years 1953, 1954 and 1955, increasing each year the general average by one per cent, with the order that said candidates be admitted to the Bar. This
purpose, manifest in the said law, is the best proof that what the law attempts to amend and correct are not the rules promulgated, but the will or judgment of the Court, by means of
simply taking its place. This is doing directly what the Tribunal should have done during those years according to the judgment of Congress. In other words, the power exercised was
not to repeal, alter or supplement the rules, which continue in force. What was done was to stop or suspend them. And this power is not included in what the Constitution has
granted to Congress, because it falls within the power to apply the rules. This power corresponds to the judiciary, to which such duty been confided.
Article 2 of the law in question permits partial passing of examinations, at indefinite intervals. The grave defect of this system is that it does not take into account that the laws and
jurisprudence are not stationary, and when a candidate finally receives his certificate, it may happen that the existing laws and jurisprudence are already different, seriously affecting
in this manner his usefulness. The system that the said law prescribes was used in the first bar examinations of this country, but was abandoned for this and other disadvantages. In
this case, however, the fatal defect is that the article is not expressed in the title will have temporary effect only from 1946 to 1955, the text of article 2 establishes a permanent
system for an indefinite time. This is contrary to Section 21 (1), article VI of the Constitution, which vitiates and annuls article 2 completely; and because it is inseparable from article
1, it is obvious that its nullity affect the entire law.
Laws are unconstitutional on the following grounds: first, because they are not within the legislative powers of Congress to enact, or Congress has exceeded its powers; second,
because they create or establish arbitrary methods or forms that infringe constitutional principles; and third, because their purposes or effects violate the Constitution or its basic
principles. As has already been seen, the contested law suffers from these fatal defects.
Summarizing, we are of the opinion and hereby declare that Republic Act No. 972 is unconstitutional and therefore, void, and without any force nor effect for the following reasons, to
wit:
1. Because its declared purpose is to admit 810 candidates who failed in the bar examinations of 1946-1952, and who, it admits, are certainly inadequately prepared to practice law,
as was exactly found by this Court in the aforesaid years. It decrees the admission to the Bar of these candidates, depriving this Tribunal of the opportunity to determine if they are at

present already prepared to become members of the Bar. It obliges the Tribunal to perform something contrary to reason and in an arbitrary manner. This is a manifest
encroachment on the constitutional responsibility of the Supreme Court.
2. Because it is, in effect, a judgment revoking the resolution of this Court on the petitions of these 810 candidates, without having examined their respective examination papers,
and although it is admitted that this Tribunal may reconsider said resolution at any time for justifiable reasons, only this Court and no other may revise and alter them. In attempting
to do it directly Republic Act No. 972 violated the Constitution.
3. By the disputed law, Congress has exceeded its legislative power to repeal, alter and supplement the rules on admission to the Bar. Such additional or amendatory rules are, as
they ought to be, intended to regulate acts subsequent to its promulgation and should tend to improve and elevate the practice of law, and this Tribunal shall consider these rules as
minimum norms towards that end in the admission, suspension, disbarment and reinstatement of lawyers to the Bar, inasmuch as a good bar assists immensely in the daily
performance of judicial functions and is essential to a worthy administration of justice. It is therefore the primary and inherent prerogative of the Supreme Court to render the ultimate
decision on who may be admitted and may continue in the practice of law according to existing rules.
4. The reason advanced for the pretended classification of candidates, which the law makes, is contrary to facts which are of general knowledge and does not justify the admission
to the Bar of law students inadequately prepared. The pretended classification is arbitrary. It is undoubtedly a class legislation.
5. Article 2 of Republic Act No. 972 is not embraced in the title of the law, contrary to what the Constitution enjoins, and being inseparable from the provisions of article 1, the entire
law is void.
6. Lacking in eight votes to declare the nullity of that part of article 1 referring to the examinations of 1953 to 1955, said part of article 1, insofar as it concerns the examinations in
those years, shall continue in force.

RESOLUTION
Upon mature deliberation by this Court, after hearing and availing of the magnificent and impassioned discussion of the contested law by our Chief Justice at the opening and close
of the debate among the members of the Court, and after hearing the judicious observations of two of our beloved colleagues who since the beginning have announced their
decision not to take part in voting, we, the eight members of the Court who subscribed to this decision have voted and resolved, and have decided for the Court, and under the
authority of the same:
1. That (a) the portion of article 1 of Republic Act No. 972 referring to the examinations of 1946 to 1952, and (b) all of article 2 of said law are unconstitutional and, therefore, void
and without force and effect.
2. That, for lack of unanimity in the eight Justices, that part of article 1 which refers to the examinations subsequent to the approval of the law, that is from 1953 to 1955 inclusive, is
valid and shall continue to be in force, in conformity with section 10, article VII of the Constitution.
Consequently, (1) all the above-mentioned petitions of the candidates who failed in the examinations of 1946 to 1952 inclusive are denied, and (2) all candidates who in the
examinations of 1953 obtained a general average of 71.5 per cent or more, without having a grade below 50 per cent in any subject, are considered as having passed, whether they
have filed petitions for admission or not. After this decision has become final, they shall be permitted to take and subscribe the corresponding oath of office as members of the Bar
on the date or dates that the chief Justice may set. So ordered.
Bengzon, Montemayor, Jugo, Labrador, Pablo, Padilla, and Reyes, JJ., concur.

Republic of the Philippines


Supreme Court
Manila
EN BANC
ANTONIO M. SERRANO,
Petitioner,
- versus GALLANT MARITIME SERVICES,
INC. and MARLOW NAVIGATION
CO., INC.,
Respondents.

G.R. No. 167614

Promulgated:
March 24, 2009
x----------------------------------------------------------x

DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their earnings have built houses, provided health
care, equipped schools and planted the seeds of businesses. They have woven together the world by transmitting ideas and knowledge from country to country.
They have provided the dynamic human link between cultures, societies and economies. Yet, only recently have we begun to understand not only how much
international migration impacts development, but how smart public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 2007[1]
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042,[2] to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the
workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of
his employment contract or for three (3) months for every year of the unexpired term, whichever is less.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but exacerbates the hardships borne by them by unduly limiting their entitlement in
case of illegal dismissal to their lump-sum salary either for the unexpired portion of their employment contract or for three months for every year of the unexpired term, whichever is less
(subject clause).Petitioner claims that the last clause violates the OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of equal protection and denies
them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004 Decision[3] and April 1, 2005 Resolution[4] of the Court of Appeals
(CA), which applied the subject clause, entreating this Court to declare the subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a Philippine Overseas Employment Administration (POEA)approved Contract of Employment with the following terms and conditions:
Duration of contract 12 months
Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month[5]
On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly
salary of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer by the end of April 1998.[6]
Respondents did not deliver on their promise to make petitioner Chief Officer. [7] Hence, petitioner refused to stay on as Second Officer and was repatriated to
the Philippines on May 26, 1998.[8]
Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had
served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint[9] against respondents for constructive dismissal and for payment of his money claims in the total amount of
US$26,442.73, broken down as follows:
May 27/31, 1998 (5 days) incl. Leave pay
June 01/30, 1998
July 01/31, 1998
August 01/31, 1998
Sept. 01/30, 1998
Oct. 01/31, 1998
Nov. 01/30, 1998
Dec. 01/31, 1998
Jan. 01/31, 1999
Feb. 01/28, 1999
Mar. 1/19, 1999 (19 days) incl. leave pay
Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) +
TOTAL CLAIM

US$ 413.90
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
1,640.00
25,382.23
--------------------------------------------------------------------------------

1,060.50[10]
US$ 26,442.73[11]
----------------------------------------------------------------------------------------------

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


The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding him monetary benefits, to wit:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant (petitioner) by the respondents in the aboveentitled case was illegal and the respondents are hereby ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of
exchange prevailing at the time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing
the complainants salary for three (3) months of the unexpired portion of the aforesaid contract of employment.

The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange prevailing at the
time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00), [12] representing the complainants claim for a salary differential. In addition, the
respondents are hereby ordered to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate prevailing at the time of payment, the
complainants (petitioner's) claim for attorneys fees equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under this Decision.
The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.[13] (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire unexpired portion of
nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's [b]asic
salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month.[14]
Respondents appealed[15] to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed[16] to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations
Commission[17] 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% Attorneys 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 Certiorari[23] 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 Reconsideration[26] 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
petitioners award the overtime pay and vacation pay provided in his contract since under the contract they form part of his salary.[28]
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he intends to make use of the monetary award for his medical
treatment and medication.[29] Required to comment, counsel for petitioner filed a motion, urging the court to allow partial execution of the undisputed monetary award and, at the same
time, praying that the constitutional question be resolved.[30]
Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional
question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the salary differential of US$45.00 awarded
to petitioner in all three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1,400.00 covering the period of three months out of
the unexpired portion of nine months and 23 days of his employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to
US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment contract, computed at the monthly rate of
US$2,590.00.[31]
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate for and stipulate in their overseas employment
contracts a determinate employment period and a fixed salary package. [32] It also impinges on the equal protection clause, for it treats OFWs differently from local Filipino workers (local
workers) by putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary award for local workers
when their dismissal is declared illegal; that the disparate treatment is not reasonable as there is no substantial distinction between the two groups;[33] and that it defeats Section 18,
[34]
Article II of the Constitution which guarantees the protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas.[35]
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing jurisprudence on the issue of money claims of illegally dismissed
OFWs.Though there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected OFWs.[36]

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to benefit local placement agencies. He marks the
statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are
unnecessarily penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino
migrant workers, liability for money claims was reduced under Section 10 of R.A. No. 8042. [37] (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign
employers better off than local employers because in cases involving the illegal dismissal of employees, foreign employers are liable for salaries covering a maximum of only three
months of the unexpired employment contract while local employers are liable for the full lump-sum salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of backwages they have to give their employees they have illegally
dismissed, following well-entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be limited to giving the illegally
dismissed migrant workers the maximum of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that can be more than three (3)
months.[38]
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the salaries and other emoluments he is entitled to under his fixed-period
employment contract.[39]
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should not be entertained, for this was belatedly interposed by petitioner in his appeal
before the CA, and not at the earliest opportunity, which was when he filed an appeal before the NLRC.[40]
The Arguments of the Solicitor General
The Solicitor General (OSG)[41] points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not have impaired petitioner's 1998 employment
contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms of petitioner's employment, especially on the
matter of money claims, as this was not stipulated upon by the parties.[42]
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such that their rights to monetary benefits must necessarily be
treated differently. The OSG enumerates the essential elements that distinguish OFWs from local workers: first, while local workers perform their jobs within Philippine territory, OFWs
perform their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost impossible to enforce judgment; and second, as held
in Coyoca v. National Labor Relations Commission[43] and Millares v. National Labor Relations Commission,[44] OFWs are contractual employees who can never acquire regular
employment status, unlike local workers who are or can become regular employees. Hence, the OSG posits that there are rights and privileges exclusive to local workers, but not
available to OFWs; that these peculiarities make for a reasonable and valid basis for the differentiated treatment under the subject clause of the money claims of OFWs who are
illegally dismissed. Thus, the provision does not violate the equal protection clause nor Section 18, Article II of the Constitution.[45]
Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the solidary liability of placement agencies for this redounds to
the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers
are properly deployed and are employed under decent and humane conditions.[46]
The Court's Ruling
The Court sustains petitioner on the first and second issues.

When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the Congress, it does so only when these conditions obtain: (1) that
there is an actual case or controversy involving a conflict of rights susceptible of judicial determination; [47] (2) that the constitutional question is raised by a proper party [48] 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 quasijudicial function its function in the present case is limited to determining questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions
in accordance with the standards laid down by the law itself;[55]thus, its foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the validity of its
provisions. The CA, on the other hand, is vested with the power of judicial review or the power to declare unconstitutional a law or a provision thereof, such as the subject clause.
[56]
Petitioner's interposition of the constitutional issue before the CA was undoubtedly seasonable.The CA was therefore remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because the monetary claim of petitioner to his lump-sum salary for the
entire unexpired portion of his 12-month employment contract, and not just for a period of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will receive [57] is
not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation, [58] and cannot affect acts or contracts already perfected;
however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof. [60] Thus, the non-impairment clause under Section 10, Article II is limited
in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties
thereto.
[59]

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in
1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties executed their 1998
employment contract, they were deemed to have incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the
law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end

in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed. [61] Police power legislations adopted by the State to promote the health, morals,
peace, education, good order, safety, and general welfare of the people are generally applicable not only to future contracts but even to those already in existence, for all private
contracts must yield to the superior and legitimate measures taken by the State to promote public welfare.[62]
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal protection of the law.
Section 18,[63] Article II and Section 3,[64] Article XIII accord all members of the labor sector, without distinction as to place of deployment, full protection of their rights and
welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary benefits should be equally
enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by,
or spared the burden imposed on, others in like circumstances.[65]
Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its legislation; however, to be valid, the
classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and
4) it applies equally to all members of the class.[66]
There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or rational basis scrutiny in which the
challenged classification needs only be shown to be rationally related to serving a legitimate state interest;[67] b) the middle-tier or intermediate scrutiny in which the government must
show that the challenged classification serves an important state interest and that the classification is at least substantially related to serving that interest; [68] and c) strict
judicial scrutiny[69] in whicha legislative classification which impermissibly interferes with the exercise of a fundamental right[70] or operates to the peculiar disadvantage of a suspect
class[71] is presumed unconstitutional, and the burden is upon the government to prove that the classification is necessary to achieve a compelling state interest and that it is
the least restrictive means to protect such interest.[72]
Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications[73] based on race[74] or gender[75] but not when the classification is drawn along
income categories.[76]
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas,[77] the constitutionality of a
provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was challenged for maintaining its rank-and-file employees under the Salary
Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been exempted from the SSL by their respective charters. Finding that the disputed provision
contained a suspect classification based on salary grade, the Court deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said
provision. More significantly, it was in this case that the Court revealed the broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and respect by the courts of justice
except when they run afoul of the Constitution.The deference stops where the classification violates a fundamental right, or prejudices persons accorded special
protection by the Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of constitutional guaranties, and require a
stricter and more exacting adherence to constitutional limitations. Rational basis should not suffice.

Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter judicial scrutiny finds no
support in American or English jurisprudence. Nevertheless, these foreign decisions and authorities are not per se controlling in this jurisdiction. At
best, they are persuasive and have been used to support many of our decisions. We should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own decisions through the employment of our own endowments. We live in a different
ambience and must decide our own problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and always with
our own concept of law and justice. Our laws must be construed in accordance with the intention of our own lawmakers and such intent may be deduced from the
language of each law and the context of other local legislation related thereto. More importantly, they must be construed to serve our own public interest which is the
be-all and the end-all of all our laws. And it need not be stressed that our public interest is distinct and different from others.
xxxx
Further, the quest for a better and more equal world calls for the use of equal protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims equality as an ideal precisely in protest
against crushing inequities in Philippine society. The command to promote social justice in Article II, Section 10, in all phases of national development, further
explicitated in Article XIII, are clear commands to the State to take affirmative action in the direction of greater equality. x x x [T]here is thus in the Philippine
Constitution no lack of doctrinal support for a more vigorous state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society, including labor.
Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that
those with less privilege in life should have more in law. And the obligation to afford protection to labor is incumbent not only on the legislative and
executive branches but also on the judiciary to translate this pledge into a living reality. Social justice calls for the humanization of laws and the
equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the broad discretion given to
Congress in exercising its legislative power. Judicial scrutiny would be based on the rational basis test, and the legislative discretion would be given deferential
treatment.
But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice against persons favored by the
Constitution with special protection, judicial scrutiny ought to be more strict. A weak and watered down view would call for the abdication of this Courts
solemn duty to strike down any law repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a
private person or the government itself or one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin to a distinction based on
economic class and status, with the higher grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP now receive
higher compensation packages that are competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The
implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank - possessing higher
and better education and opportunities for career advancement - are given higher compensation packages to entice them to stay. Considering that majority, if
not all, the rank-and-file employees consist of people whose status and rank in life are less and limited, especially in terms of job marketability, it is they
- and not the officers - who have the real economic and financial need for the adjustment . This is in accord with the policy of the Constitution "to free the

people from poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of life for all. Any act of Congress that
runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass muster. (Emphasis supplied)
Imbued with the same sense of obligation to afford protection to labor, the Court in the present case also employs the standard of strict judicial scrutiny, for it perceives in the
subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--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--vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or
more
As pointed out by petitioner,[78] it was in Marsaman Manning Agency, Inc. v. National Labor Relations Commission [79] (Second Division, 1999) that the Court laid down the
following rules on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e.,
whether his salaries for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term, whichever is
less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the words for
every year of the unexpired term which follows the words salaries x x x for three months. To follow petitioners thinking that private respondent is entitled to
three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to
some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given
effect since the law-making body is presumed to know the meaning of the words employed in the statue and to have used them advisedly. Ut res magis valeat quam
pereat.[80] (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract.
Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on Section 10(5). One was Asian Center for Career and Employment System
and Services v. National Labor Relations Commission (Second Division, October 1998),[81] which involved an OFW who was awarded a two-year employment contract, but was
dismissed after working for one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary covering eight months, the unexpired
portion of his contract. On appeal, the Court reduced the award to SR3,600.00 equivalent to his three months salary, this being the lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just, valid or authorized cause is entitled to his salary for the
unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.
In the case at bar, the unexpired portion of private respondents employment contract is eight (8) months. Private respondent should therefore be paid his
basic salary corresponding to three (3) months or a total of SR3,600.[82]
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division, December 1998),[83] which involved an OFW (therein respondent
Erlinda Osdana) who was originally granted a 12-month contract, which was deemed renewed for another 12 months. After serving for one year and seven-and-a-half months,
respondent Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired portion of four and one-half months of her contract.

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

Contract Period

Period of Service

Unexpired Period

Period Applied in the


Computation of the Monetary
Award

Skippers v. Maguad[84]

6 months

2 months

4 months

4 months

Bahia Shipping v.
Reynaldo Chua [85]

9 months

8 months

4 months

4 months

Centennial Transmarine
v. dela Cruz l[86]

9 months

4 months

5 months

5 months

Talidano v. Falcon[87]

12 months

3 months

9 months

3 months

Univan v.
CA [88]

12 months

3 months

9 months

3 months

Oriental v.
CA [89]

12 months

more than 2 months

10 months

3 months

PCL v. NLRC[90]

12 months

more than 2 months

more or less 9 months

3 months

Olarte v. Nayona[91]

12 months

21 days

11 months and 9 days

3 months

JSS v.
Ferrer[92]

12 months

16 days

11 months and 24 days

3 months

9 months and 7 days

2 months and 23 days

2 months and 23 days

Pentagon v. Adelantar[93]

12 months

Phil. Employ v. Paramio,


et al.[94]

12 months

10 months

2 months

Unexpired portion

Flourish Maritime v.
Almanzor [95]

2 years

26 days

23 months and 4 days

6 months or 3 months for


each year of contract

Athenna Manpower v.
Villanos [96]

1 year, 10 months
and 28 days

1 month

1 year, 9 months and 28


days

6 months or 3 months for


each year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first category includes OFWs with fixed-period employment contracts of
less than one year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second category consists of OFWs with fixedperiod employment contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired portion of their
contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent OFW worked for only 2 months out of his 6-month contract, but was
awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for about 2 months out of their 12-month contracts
were awarded their salaries for only 3 months of the unexpired portion of their contracts. Even the OFWs involved in Talidano and Univan who had worked for a longer period of 3
months out of their 12-month contracts before being illegally dismissed were awarded their salaries for only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment contract of 10 months at a monthly salary rate of US$1,000.00 and
a hypothetical OFW-B with an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced work on the same day and under the same
employer, and were illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months
of his contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the
unexpired portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.

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

Contract Period

Period of Service

Unexpired Period

Period Applied in the Computation


of the Monetary Award

ATCI v. CA,
et al.[98]

2 years

2 months

22 months

22 months

Phil. Integrated v. NLRC[99]

2 years

7 days

23 months and 23 days

23 months and 23 days

2 years

9 months

15 months

15 months

2 years

2 months

22 months

22 months

JGB v. NLC

[100]

Agoy v. NLRC[101]
EDI v. NLRC, et al.

[102]

2 years

5 months

19 months

19 months

Barros v. NLRC, et al.[103]

12 months

4 months

8 months

8 months

Philippine Transmarine v.
Carilla[104]

12 months

6 months and 22
days

5 months and 18 days

5 months and 18 days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of their
employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of
having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while sparing the other category from such
prejudice, simply because the latter's unexpired contractsfall short of one year.
Among OFWs With Employment
Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause or for three (3) months for every year of the unexpired term, whichever is less contains the qualifying phrases every year and
unexpired term. By its ordinary meaning, the word term means a limited or definite extent of time. [105] Corollarily, that every year is but part of an unexpired term is significant in many
ways: first, the unexpired term must be at least one year, for if it were any shorter, there would be no occasion for such unexpired term to be measured by every year; and second,
the original term must be more than one year, for otherwise, whatever would be the unexpired term thereof will not reach even a year. Consequently, the more decisive factor in the
determination of when the subject clause for three (3) months forevery year of the unexpired term, whichever is less shall apply is not the length of the original contract period as held
in Marsaman,[106] but the length of the unexpired portion of the contract period -- the subject clause applies in cases when the unexpired portion of the contract period is at least one
year, which arithmetically requires that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one year or
more remaining in their contracts shall be covered by the subject clause, and their monetary benefits limited to their salaries for three months only.

To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month
contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there is at least 12 months
remaining in the contract period of OFW-C, the subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the
latter's total salaries for the 12 months unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired
term of the contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be
entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired portion.
OFWs vis--vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in place. This uniform system was
applicable even to local workers with fixed-term employment.[107]
The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce (1888),[108] to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees should have been made of a fixed period, none of the
contracting parties, without the consent of the other, may withdraw from the fulfillment of said contract until the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the provisions contained in the following
articles.
In Reyes v. The Compaia 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. Alkan[112] 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. Gay[114] held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the contrary under Spanish jurisprudence, that
when an employee is wrongfully discharged it is his duty to seek other employment of the same kind in the same community, for the purpose of reducing the
damages resulting from such wrongful discharge. However, while this is the general rule, the burden of showing that he failed to make an effort to secure other
employment of a like nature, and that other employment of a like nature was obtainable, is upon the defendant. When an employee is wrongfully discharged

under a contract of employment his prima facie damage is the amount which he would be entitled to had he continued in such employment until the
termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.)[115] (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2
(Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.[116] Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do not
expressly provide for the remedies available to a fixed-term worker who is illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich,[117] the Court
carried over the principles on the payment of damages underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving the illegal discharge of a local worker
whose fixed-period employmentcontract was entered into in 1952, when the new Civil Code was already in effect.[118]
More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-term employment contracts were illegally terminated, such as
in First Asian Trans & Shipping Agency, Inc. v. Ople,[119] involving seafarers who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations
Commission,[120] an OFW who was illegally dismissed prior to the expiration of her fixed-period employment contract as a baby sitter, was awarded salaries corresponding to the
unexpired portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor Relations Commission,[121] which involved a foreman hired in 1988 in Saudi Arabia
for a fixed term of two years, but who was illegally dismissed after only nine months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired portion of
his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission,[122] a Filipino working as a security officer in 1989 in Angola was awarded his salaries for the
remaining period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor Relations Commission,[123] an OFW whose 12-month
contract was illegally cut short in the second month was declared entitled to his salaries for the remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their
money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the
subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are
subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who
are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other
OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by history.[124] It is akin to the paramount
interest of the state[125] for which some individual liberties must give way, such as the public interest in safeguarding health or maintaining medical standards,[126] or in maintaining access
to information on matters of public concern.[127]
In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure designed to protect the employment of Filipino seafarers overseas x x x. By limiting the liability to three
months [sic], Filipino seafarers have better chance of getting hired by foreign employers. The limitation also protects the interest of local placement agencies, which otherwise may be
made to shoulder millions of pesos in termination pay.[128]
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are
unnecessarily penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino
migrant workers, liability for money are reduced under Section 10 of RA 8042.

This measure redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement
agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions. [129] (Emphasis
supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;
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.
[130]

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 employeremployee relationship or by virtue of the complaint, the claim arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas employment including claims for actual, moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of damages under this Section shall not be less than fifty
percent (50%) of such money claims: Provided, That any installment payments, if applicable, to satisfy any such compromise or voluntary settlement shall not be
more than two (2) months. Any compromise/voluntary agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under this Section shall subject the responsible officials to any or all of the
following penalties:
(1) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be, withheld until
the said official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may have incurred under other
existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money claims.
A rule on the computation of money claims containing the subject clause was inserted and eventually adopted as the 5 th 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.
Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the subject clause from the lone perspective that the clause directly violates
state policy on labor under Section 3,[131] Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing, ,[132] there are some which this Court has declared not judicially enforceable, Article XIII being one,
[133]
particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor Relations Commission,[134] has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the sense that these are automatically
acknowledged and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the full
exercise of the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents
the dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when examined in isolation, are
facially unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal regardless of circumstance. This
interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers.
Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure the protection and promotion, not only the rights of the labor
sector, but of the employers' as well. Without specific and pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at least
the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable right to stave off the dismissal of an
employee for just cause owing to the failure to serve proper notice or hearing. As manifested by several framers of the 1987 Constitution, the provisions on social
justice require legislative enactments for their enforceability.[135] (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of which the questioned clause may be declared
unconstitutional. It may unwittingly risk opening the floodgates of litigation to every worker or union over every conceivable violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working class any actual enforceable right, but merely clothes it with the status of a
sector for whom the Constitution urges protection through executive or legislative action and judicial recognition. Its utility is best limited to being an impetus not just for the
executive and legislative departments, but for the judiciary as well, to protect the welfare of the working class. And it was in fact consistent with that constitutional agenda that
the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice
Reynato S. Puno, formulated the judicial precept that when the challenge to a statute is premised on the perpetuation of prejudice against persons favored by the Constitution

with special protection -- such as the working class or a section thereof -- the Court may recognize the existence of a suspect classification and subject the same to strict
judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee Association exaggerate the significance of Section 3,
Article XIII is a groundless apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause. Article XIII, by itself, without the application of the equal
protection clause, has no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's right to substantive due process, for it deprives him of property, consisting
of monetary benefits, without any existing valid governmental purpose.[136]
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement of OFWs to their three-month salary in case of illegal dismissal, is
to give them a better chance of getting hired by foreign employers. This is plain speculation. As earlier discussed, there is nothing in the text of the law or the records of the
deliberations leading to its enactment or the pleadings of respondent that would indicate that there is an existing governmental purpose for the subject clause, or even just a pretext of
one.
The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause violates not just petitioner's right to equal
protection, but also her right to substantive due process under Section 1,[137] Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant
to law and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary award, because these are fixed benefits that have
been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard
Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all
work performed in excess of the regular eight hours, and holiday pay is compensation for any work performed on designated rest days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's monetary award, unless there is
evidence that he performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,[138]
However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. National Labor Relations Commission, to
wit:
The rendition of overtime work and the submission of sufficient proof that said was actually performed are conditions to be satisfied before a seaman could be entitled to overtime
pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must
first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted since the same is given during the actual service of the seamen.

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

No costs.
SO ORDERED.

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


SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. JOY C. CABILES, Respondent.
DECISION
LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our duty, given the facts and the law, to approximate justice for her.
We are asked to decide a petition for review1 on certiorari assailing the Court of Appeals decision2dated June 27, 2005. This decision partially affirmed the National
Labor Relations Commissions resolution dated March 31, 2004,3 declaring respondents dismissal illegal, directing petitioner to pay respondents 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 attorneys fees. 4

cralawred

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. 6
cralawred

Joys application was accepted.7 Joy was later asked to sign a one-year employment contract for a monthly salary of NT$15,360.00. 8 She alleged that Sameer Overseas
Agency required her to pay a placement fee of P70,000.00 when she signed the employment contract. 9
cralawred

Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. 10 She alleged that in her employment contract, she agreed to work as quality control
for one year.11 In Taiwan, she was asked to work as a cutter.12
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Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without prior notice, that she was terminated and
that she should immediately report to their office to get her salary and passport.13 She was asked to prepare for immediate repatriation.14
cralawred

Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of NT$9,000. 15 According to her, Wacoal deducted NT$3,000 to cover her plane
ticket to Manila.16
cralawred

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

Sameer Overseas Placement Agency alleged that respondent's termination was due to her inefficiency, negligence in her duties, and her failure to comply with the
work requirements [of] her foreign [employer].21 The agency also claimed that it did not ask for a placement fee of ?70,000.00. 22 As evidence, it showed Official
Receipt No. 14860 dated June 10, 1997, bearing the amount of ?20,360.00. 23 Petitioner added that Wacoal's accreditation with petitioner had already been transferred
to the Pacific Manpower & Management Services, Inc. (Pacific) as of August 6, 1997. 24 Thus, petitioner asserts that it was already substituted by Pacific Manpower.25
cralawred

Pacific Manpower moved for the dismissal of petitioners 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
employers contractual obligations might be identified. 29 It further denied that it assumed liability for petitioners illegal acts. 30
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On July 29, 1998, the Labor Arbiter dismissed Joys 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 petitioners transfer of obligations to Pacific 34 and considered the matter immaterial in view of the dismissal of respondents
complaint.35
cralawre d

Joy appealed36 to the National Labor Relations Commission.

In a resolution37 dated March 31, 2004, the National Labor Relations Commission declared that Joy was illegally dismissed. 38 It reiterated the doctrine that the burden
of proof to show that the dismissal was based on a just or valid cause belongs to the employer.39 It found that Sameer Overseas Placement Agency failed to prove that
there were just causes for termination.40 There was no sufficient proof to show that respondent was inefficient in her work and that she failed to comply with company
requirements.41 Furthermore, procedural due process was not observed in terminating respondent. 42
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The National Labor Relations Commission did not rule on the issue of reimbursement of placement fees for lack of jurisdiction. 43 It refused to entertain the issue of the
alleged transfer of obligations to Pacific.44 It did not acquire jurisdiction over that issue because Sameer Overseas Placement Agency failed to appeal the Labor Arbiters
decision not to rule on the matter.45
cralawre d

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

The Commission denied the agencys motion for reconsideration 47 dated May 12, 2004 through a resolution48 dated July 2, 2004.
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition 49 for certiorari with the Court of Appeals assailing the National Labor
Relations Commissions resolutions dated March 31, 2004 and July 2, 2004.
The Court of Appeals50 affirmed the decision of the National Labor Relations Commission with respect to the finding of illegal dismissal, Joys entitlement to the
equivalent of three months worth of salary, reimbursement of withheld repatriation expense, and attorneys fees. 51 The Court of Appeals remanded the case to the
National Labor Relations Commission to address the validity of petitioner's allegations against Pacific. 52 The Court of Appeals held, thus:
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Although the public respondent found the dismissal of the complainant-respondent illegal, we should point out that the NLRC merely awarded her three (3) months
backwages or the amount of NT$46,080.00, which was based upon its finding that she was dismissed without due process, a finding that we uphold, given petitioners
lack of worthwhile discussion upon the same in the proceedings below or before us. Likewise we sustain NLRCs finding in regard to the reimbursement of her fare,
which is squarely based on the law; as well as the award of attorneys 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
petitioners third-party complaint against the transferee agent or the Pacific Manpower & Management Services, Inc. and Lea G. Manabat. We should emphasize that as
far as the decision of the NLRC on the claims of Joy Cabiles, is concerned, the same is hereby affirmed with finality, and we hold petitioner liable thereon, but without
prejudice to further hearings on its third party complaint against Pacific for reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby partlyAFFIRMED in accordance with the foregoing discussion, but subject to the caveat
embodied in the last sentence. No costs.
SO ORDERED.53
Dissatisfied, Sameer Overseas Placement Agency filed this petition. 54

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We are asked to determine whether the Court of Appeals erred when it affirmed the ruling of the National Labor Relations Commission finding respondent illegally
dismissed and awarding her three months worth of salary, the reimbursement of the cost of her repatriation, and attorneys fees despite the alleged existence of just
causes of termination.
Petitioner reiterates that there was just cause for termination because there was a finding of Wacoal that respondent was inefficient in her work. 55 Therefore, it claims
that respondents dismissal was valid.56
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Petitioner also reiterates that since Wacoals accreditation was validly transferred to Pacific at the time respondent filed her complaint, it should be Pacific that should
now assume responsibility for Wacoals contractual obligations to the workers originally recruited by petitioner.57
cralawred

Sameer Overseas Placement Agencys petition is without merit. We find for respondent.
I

Sameer Overseas Placement Agency failed to show that there was just cause for causing Joys dismissal. The employer, Wacoal, also failed to accord her due process of
law.
Indeed, employers have the prerogative to impose productivity and quality standards at work. 58They may also impose reasonable rules to ensure that the employees
comply with these standards.59Failure to comply may be a just cause for their dismissal. 60 Certainly, employers cannot be compelled to retain the services of an
employee who is guilty of acts that are inimical to the interest of the employer.61 While the law acknowledges the plight and vulnerability of workers, it does not
authorize the oppression or self-destruction of the employer.62 Management prerogative is recognized in law and in our jurisprudence.
This prerogative, however, should not be abused. It is tempered with the employees right to security of tenure.63 Workers are entitled to substantive and procedural
due process before termination. They may not be removed from employment without a valid or just cause as determined by law and without going through the proper
procedure.
Security of tenure for labor is guaranteed by our Constitution. 64

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Employees are not stripped of their security of tenure when they move to work in a different jurisdiction. With respect to the rights of overseas Filipino workers, we
follow the principle of lex loci contractus.
Thus, in Triple Eight Integrated Services, Inc. v. NLRC, 65 this court noted:

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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, petitioners 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
forums 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:
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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 decisionmaking processes affecting their rights and benefits as may be provided by law.
....

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This public policy should be borne in mind in this case because to allow foreign employers to determine for and by themselves whether an overseas contract worker
may be dismissed on the ground of illness would encourage illegal or arbitrary pre-termination of employment contracts. 66 (Emphasis supplied, citation omitted)
Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping Philippines, Inc. v. NLRC,67 to wit:

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Petitioners admit that they did not inform private respondent in writing of the charges against him and that they failed to conduct a formal investigation to give him
opportunity to air his side. However, petitioners contend that the twin requirements of notice and hearing applies strictly only when the employment is within the
Philippines and that these need not be strictly observed in cases of international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the Labor Code which afford protection to labor apply to Filipino employees

whether working within the Philippines or abroad. Moreover, the principle of lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. In the present case, it is not disputed that the Contract of Employment entered into by and between petitioners and private respondent
was executed here in the Philippines with the approval of the Philippine Overseas Employment Administration (POEA). Hence, the Labor Code together with its
implementing rules and regulations and other laws affecting labor apply in this case. 68 (Emphasis supplied, citations omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and after compliance with procedural due process requirements.
Article 282 of the Labor Code enumerates the just causes of termination by the employer. Thus:

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

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(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;

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

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(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized
representatives; and
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(e) Other causes analogous to the foregoing.


Petitioners allegation that respondent was inefficient in her work and negligent in her duties 69 may, therefore, constitute a just cause for termination under Article
282(b), but only if petitioner was able to prove it.
The burden of proving that there is just cause for termination is on the employer. The employer must affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause.70Failure to show that there was valid or just cause for termination would necessarily mean that the dismissal was illegal. 71

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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 employees performance assessment.
This is similar to the law and jurisprudence on probationary employees, which allow termination of the employee only when there is just cause or when [the
probationary employee] fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of
his [or her] engagement.72
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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 employees 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 employees qualifications will be evaluated will increase ones
chances of being positively assessed for regularization by his or her employer.
Assessing an employees 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 employers failure to communicate work
standards that would govern ones employment if [these are] to discharge in good faith [their] duty to adjudicate.73
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In this case, petitioner merely alleged that respondent failed to comply with her foreign employers 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
Respondents dismissal less than one year from hiring and her repatriation on the same day show not only failure on the part of petitioner to comply with the
requirement of the existence of just cause for termination. They patently show that the employers did not comply with the due process requirement.
A valid dismissal requires both a valid cause and adherence to the valid procedure of dismissal. 75The employer is required to give the charged employee at least two
written notices before termination.76 One of the written notices must inform the employee of the particular acts that may cause his or her dismissal. 77 The other notice
must [inform] the employee of the employers decision.78 Aside from the notice requirement, the employee must also be given an opportunity to be heard.79
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Petitioner failed to comply with the twin notices and hearing requirements. Respondent started working on June 26, 1997. She was told that she was terminated on
July 14, 1997 effective on the same day and barely a month from her first workday. She was also repatriated on the same day that she was informed of her
termination. The abruptness of the termination negated any finding that she was properly notified and given the opportunity to be heard. Her constitutional right to
due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired portion of the employment contract that was violated together with
attorneys fees and reimbursement of amounts withheld from her salary.
Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, states that overseas workers who were terminated
without just, valid, or authorized cause shall be entitled to the full reimbursement of his placement fee with interest of twelve (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.
Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damages.
The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provisions [sic]
shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable
with the corporation or partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification
made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within four (4) months from the
approval of the settlement by the appropriate authority.

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

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Section 15 of Republic Act No. 8042 states that repatriation of the worker and the transport of his [or her] personal belongings shall be the primary responsibility of
the agency which recruited or deployed the worker overseas. The exception is when termination of employment is due solely to the fault of the worker,80 which as we
have established, is not the case. It reads:
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SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. The repatriation of the worker and the transport of his personal belongings shall be the
primary responsibility of the agency which recruited or deployed the worker overseas. All costs attendant to repatriation shall be borne by or charged to the agency
concerned and/or its principal. Likewise, the repatriation of remains and transport of the personal belongings of a deceased worker and all costs attendant thereto shall
be borne by the principal and/or local agency. However, in cases where the termination of employment is due solely to the fault of the worker, the principal/employer
or agency shall not in any manner be responsible for the repatriation of the former and/or his belongings.
....
The Labor Code81 also entitles the employee to 10% of the amount of withheld wages as attorneys fees when the withholding is unlawful.
The Court of Appeals affirmed the National Labor Relations Commissions decision to award respondent NT$46,080.00 or the three-month equivalent of her salary,
attorneys fees of NT$300.00, and the reimbursement of the withheld NT$3,000.00 salary, which answered for her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The award of the three-month equivalent of respondents salary should, however, be
increased to the amount equivalent to the unexpired term of the employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc.,82 this court ruled that the clause or for three (3) months for every year of the unexpired
term, whichever is less83 is unconstitutional for violating the equal protection clause and substantive due process. 84
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A statute or provision which was declared unconstitutional is not a law. It confers no rights; it imposes no duties; it affords no protection; it creates no office; it is
inoperative as if it has not been passed at all.85
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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:
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Section 7. Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows:

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SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damage. Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with the developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to de [sic] filed by the
recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable
with the corporation or partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification

made locally or in a foreign country of the said contract.


Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within thirty (30) days from
approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant
workers 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:
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(a) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be, withheld until the said official
complies therewith;
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(b) Suspension for not more than ninety (90) days; or


(c) Dismissal from the service with disqualification to hold any appointive public office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may have incured [sic] under other existing
laws or rules and regulations as a consequence of violating the provisions of this paragraph. (Emphasis supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of the clause in Republic Act No. 8042 was not yet in effect at the time
of respondents termination from work in 1997.86 Republic Act No. 8042 before it was amended by Republic Act No. 10022 governs this case.
When a law is passed, this court awaits an actual case that clearly raises adversarial positions in their proper context before considering a prayer to declare it as
unconstitutional.
However, we are confronted with a unique situation. The law passed incorporates the exact clause already declared as unconstitutional, without any perceived
substantial change in the circumstances.
This may cause confusion on the part of the National Labor Relations Commission and the Court of Appeals. At minimum, the existence of Republic Act No. 10022 may
delay the execution of the judgment in this case, further frustrating remedies to assuage the wrong done to petitioner. Hence, there is a necessity to decide this
constitutional issue.
Moreover, this court is possessed with the constitutional duty to [p]romulgate rules concerning the protection and enforcement of constitutional rights.87 When cases
become moot and academic, we do not hesitate to provide for guidance to bench and bar in situations where the same violations are capable of repetition but will
evade review. This is analogous to cases where there are millions of Filipinos working abroad who are bound to suffer from the lack of protection because of the
restoration of an identical clause in a provision previously declared as unconstitutional.
In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may exercise its powers in any manner inconsistent with the Constitution,
regardless of the existence of any law that supports such exercise. The Constitution cannot be trumped by any other law. All laws must be read in light of the
Constitution. Any law that is inconsistent with it is a nullity.
Thus, when a law or a provision of law is null because it is inconsistent with the Constitution, the nullity cannot be cured by reincorporation or reenactment of the same
or a similar law or provision. A law or provision of law that was already declared unconstitutional remains as such unless circumstances have so changed as to warrant
a reverse conclusion.
We are not convinced by the pleadings submitted by the parties that the situation has so changed so as to cause us to reverse binding precedent.

Likewise, there are special reasons of judicial efficiency and economy that attend to these cases.
The new law puts our overseas workers in the same vulnerable position as they were prior toSerrano. Failure to reiterate the very ratio decidendi of that case will result
in the same untold economic hardships that our reading of the Constitution intended to avoid. Obviously, we cannot countenance added expenses for further litigation
that will reduce their hard-earned wages as well as add to the indignity of having been deprived of the protection of our laws simply because our precedents have not
been followed. There is no constitutional doctrine that causes injustice in the face of empty procedural niceties. Constitutional interpretation is complex, but it is never
unreasonable.
Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the Office of the Solicitor General to comment on the constitutionality of the reinstated
clause in Republic Act No. 10022.
In its comment,89 petitioner argued that the clause was constitutional.90 The legislators intended a balance between the employers and the employees rights by not
unduly burdening the local recruitment agency.91 Petitioner is also of the view that the clause was already declared as constitutional in Serrano.92
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The Office of the Solicitor General also argued that the clause was valid and constitutional. 93However, since the parties never raised the issue of the constitutionality of
the clause as reinstated in Republic Act No. 10022, its contention is that it is beyond judicial review. 94
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On the other hand, respondent argued that the clause was unconstitutional because it infringed on workers right to contract. 95

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We observe that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the constitutional rights to equal protection and due
process.96 Petitioner as well as the Solicitor General have failed to show any compelling change in the circumstances that would warrant us to revisit the precedent.
We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered by an illegally dismissed overseas worker to
three months is both a violation of due process and the equal protection clauses of the Constitution.
Equal protection of the law is a guarantee that persons under like circumstances and falling within the same class are treated alike, in terms of privileges conferred
and liabilities enforced.97 It is a guarantee against undue favor and individual or class privilege, as well as hostile discrimination or the oppression of inequality.98
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In creating laws, the legislature has the power to make distinctions and classifications.99 In exercising such power, it has a wide discretion.100

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The equal protection clause does not infringe on this legislative power.101 A law is void on this basis, only if classifications are made arbitrarily.102 There is no violation of
the equal protection clause if the law applies equally to persons within the same class and if there are reasonable grounds for distinguishing between those falling
within the class and those who do not fall within the class. 103 A law that does not violate the equal protection clause prescribes a reasonable classification. 104
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A reasonable classification (1) must rest on substantial distinctions; (2) must be germane to the purposes of the law; (3) must not be limited to existing conditions
only; and (4) must apply equally to all members of the same class.105
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The reinstated clause does not satisfy the requirement of reasonable classification.
In Serrano, we identified the classifications made by the reinstated clause. It distinguished between fixed-period overseas workers and fixed-period local workers. 106 It
also distinguished between overseas workers with employment contracts of less than one year and overseas workers with employment contracts of at least one
year.107 Within the class of overseas workers with at least one-year employment contracts, there was a distinction between those with at least a year left in their
contracts and those with less than a year left in their contracts when they were illegally dismissed. 108
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The Congress classification may be subjected to judicial review. In Serrano, there is a legislative classification which impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar disadvantage of a suspect class.109
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Under the Constitution, labor is afforded special protection. 110 Thus, this court in Serrano, [i]mbued with the same sense of obligation to afford protection to
labor, . . . employ[ed] the standard of strict judicial scrutiny, for it perceive[d] in the subject clause a suspect classification prejudicial to OFWs. 111
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We also noted in Serrano that before the passage of Republic Act No. 8042, the money claims of illegally terminated overseas and local workers with fixed-term

employment were computed in the same manner.112 Their money claims were computed based on the unexpired portions of their contracts.113 The adoption of the
reinstated clause in Republic Act No. 8042 subjected the money claims of illegally dismissed overseas workers with an unexpired term of at least a year to a cap of
three months worth of their salary.114 There was no such limitation on the money claims of illegally terminated local workers with fixed-term employment. 115
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We observed that illegally dismissed overseas workers whose employment contracts had a term of less than one year were granted the amount equivalent to the
unexpired portion of their employment contracts.116 Meanwhile, illegally dismissed overseas workers with employment terms of at least a year were granted a cap
equivalent to three months of their salary for the unexpired portions of their contracts. 117
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Observing the terminologies used in the clause, we also found that the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are
for more than one year: those who are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired
portion thereof, while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the reinstated clause, and their
monetary benefits limited to their salaries for three months only.118
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We do not need strict scrutiny to conclude that these classifications do not rest on any real or substantial distinctions that would justify different treatments in terms of
the computation of money claims resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to security of tenure, at least for the period agreed upon in their contracts. This means that they
cannot be dismissed before the end of their contract terms without due process. If they were illegally dismissed, the workers right to security of tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated are neither greater than nor less than the rights violated when a fixed-period overseas
worker is illegally terminated. It is state policy to protect the rights of workers without qualification as to the place of employment. 119In both cases, the workers are
deprived of their expected salary, which they could have earned had they not been illegally dismissed. For both workers, this deprivation translates to economic
insecurity and disparity.120 The same is true for the distinctions between overseas workers with an employment contract of less than one year and overseas workers
with at least one year of employment contract, and between overseas workers with at least a year left in their contracts and overseas workers with less than a year left
in their contracts when they were illegally dismissed.
For this reason, we cannot subscribe to the argument that [overseas workers] are contractual employees who can never acquire regular employment status, unlike
local workers121 because it already justifies differentiated treatment in terms of the computation of money claims. 122
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Likewise, the jurisdictional and enforcement issues on overseas workers money claims do not justify a differentiated treatment in the computation of their money
claims.123 If anything, these issues justify an equal, if not greater protection and assistance to overseas workers who generally are more prone to exploitation given
their physical distance from our government.
We also find that the classifications are not relevant to the purpose of the law, which is to establish a higher standard of protection and promotion of the welfare of
migrant workers, their families and overseas Filipinos in distress, and for other purposes.124 Further, we find specious the argument that reducing the liability of
placement agencies redounds to the benefit of the [overseas] workers.125
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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:

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Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a hidden twist affecting the principal/employers 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 laws intent to encourage greater deployment efforts. Thus, the incentive, from a more practical and
realistic view, is really part of a scheme to sell Filipino overseas labor at a bargain for purposes solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the OFWs the benefits accruing to the recruitment/manning agencies and their principals are
taken from the pockets of the OFWs to whom the full salaries for the unexpired portion of the contract rightfully belong. Thus, the principals/employers and the
recruitment/manning agencies even profit from their violation of the security of tenure that an employment contract embodies. Conversely, lesser protection is
afforded the OFW, not only because of the lessened recovery afforded him or her by operation of law, but also because this same lessened recovery renders a wrongful
dismissal easier and less onerous to undertake; the lesser cost of dismissing a Filipino will always be a consideration a foreign employer will take into account in
termination of employment decisions. . . .126
Further, [t]here can never be a justification for any form of government action that alleviates the burden of one sector, but imposes the same burden on another
sector, especially when the favored sector is composed of private businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose
protection no less than the Constitution commands. The idea that private business interest can be elevated to the level of a compelling state interest is odious. 127
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Along the same line, we held that the reinstated clause violates due process rights. It is arbitrary as it deprives overseas workers of their monetary claims without any
discernable valid purpose.128
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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 respondents 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 OFWs security of tenure which an employment contract embodies
and actually profit from such violation based on an unconstitutional provision of law.129
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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:
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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:
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Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as
to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations
for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines in computing legal interest in Nacar v. Gallery Frames:130

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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:
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1.

When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which
may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of

stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2.

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the
demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run
from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time
the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3.

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

And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall continue to be implemented
applying the rate of interest fixed therein.131
Circular No. 799 is applicable only in loans and forbearance of money, goods, or credits, and in judgments when there is no stipulation on the applicable interest rate.
Further, it is only applicable if the judgment did not become final and executory before July 1, 2013. 132
cralawred

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

For example, Section 10 of Republic Act No. 8042 provides that unlawfully terminated overseas workers are entitled to the reimbursement of his or her placement fee
with an interest of 12% per annum. Since Bangko Sentral ng Pilipinas circulars cannot repeal Republic Act No. 8042, the issuance of Circular No. 799 does not have the
effect of changing the interest on awards for reimbursement of placement fees from 12% to 6%. This is despite Section 1 of Circular No. 799, which provides that the
6% interest rate applies even to judgments.
Moreover, laws are deemed incorporated in contracts. The contracting parties need not repeat them. They do not even have to be referred to. Every contract, thus,
contains not only what has been explicitly stipulated, but the statutory provisions that have any bearing on the matter.135 There is, therefore, an implied stipulation in
contracts between the placement agency and the overseas worker that in case the overseas worker is adjudged as entitled to reimbursement of his or her placement
fees, the amount shall be subject to a 12% interest per annum. This implied stipulation has the effect of removing awards for reimbursement of placement fees from
Circular No. 799s coverage.
The same cannot be said for awards of salary for the unexpired portion of the employment contract under Republic Act No. 8042. These awards are covered by Circular
No. 799 because the law does not provide for a specific interest rate that should apply.
In sum, if judgment did not become final and executory before July 1, 2013 and there was no stipulation in the contract providing for a different interest rate, other
money claims under Section 10 of Republic Act No. 8042 shall be subject to the 6% interest per annum in accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum on her money claims from the finality of this judgment.
IV
Finally, we clarify the liabilities of Wacoal as principal and petitioner as the employment agency that facilitated respondents overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign employer and the local employment agency are jointly and severally
liable for money claims including claims arising out of an employer-employee relationship and/or damages. This section also provides that the performance bond filed

by the local agency shall be answerable for such money claims or damages if they were awarded to the employee.
This provision is in line with the states policy of affording protection to labor and alleviating workers plight. 136

cralawre d

In overseas employment, the filing of money claims against the foreign employer is attended by practical and legal complications. The distance of the foreign employer
alone makes it difficult for an overseas worker to reach it and make it liable for violations of the Labor Code. There are also possible conflict of laws, jurisdictional
issues, and procedural rules that may be raised to frustrate an overseas workers attempt to advance his or her claims.
It may be argued, for instance, that the foreign employer must be impleaded in the complaint as an indispensable party without which no final determination can be
had of an action.137
cralawre d

The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995 assures overseas workers that their rights will not be frustrated
with these complications.
The fundamental effect of joint and several liability is that each of the debtors is liable for the entire obligation.138 A final determination may, therefore, be achieved
even if only one of the joint and several debtors are impleaded in an action. Hence, in the case of overseas employment, either the local agency or the foreign
employer may be sued for all claims arising from the foreign employers labor law violations. This way, the overseas workers are assured that someone the foreign
employers local agent may be made to answer for violations that the foreign employer may have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas workers have recourse in law despite the circumstances of their employment. By
providing that the liability of the foreign employer may be enforced to the full extent 139 against the local agent, the overseas worker is assured of immediate and
sufficient payment of what is due them. 140
cralawre d

Corollary to the assurance of immediate recourse in law, the provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995 shifts the
burden of going after the foreign employer from the overseas worker to the local employment agency. However, it must be emphasized that the local agency that is
held to answer for the overseas workers money claims is not left without remedy. The law does not preclude it from going after the foreign employer for
reimbursement of whatever payment it has made to the employee to answer for the money claims against the foreign employer.
A further implication of making local agencies jointly and severally liable with the foreign employer is that an additional layer of protection is afforded to overseas
workers. Local agencies, which are businesses by nature, are inoculated with interest in being always on the lookout against foreign employers that tend to violate
labor law. Lest they risk their reputation or finances, local agencies must already have mechanisms for guarding against unscrupulous foreign employers even at the
level prior to overseas employment applications.
With the present state of the pleadings, it is not possible to determine whether there was indeed a transfer of obligations from petitioner to Pacific. This should not be
an obstacle for the respondent overseas worker to proceed with the enforcement of this judgment. Petitioner is possessed with the resources to determine the proper
legal remedies to enforce its rights against Pacific, if any.
V
Many times, this court has spoken on what Filipinos may encounter as they travel into the farthest and most difficult reaches of our planet to provide for their families.
In Prieto v. NLRC:141
cralawre d

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

But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be told a million times over; each of their stories as real as any other. Overseas Filipino workers
brave alien cultures and the heartbreak of families left behind daily. They would count the minutes, hours, days, months, and years yearning to see their sons and
daughters. We all know of the joy and sadness when they come home to see them all grown up and, being so, they remember what their work has cost them. Twitter
accounts, Facetime, and many other gadgets and online applications will never substitute for their lost physical presence.
Unknown to them, they keep our economy afloat through the ebb and flow of political and economic crises. They are our true diplomats, they who show the world the
resilience, patience, and creativity of our people. Indeed, we are a people who contribute much to the provision of material creations of this world.
This government loses its soul if we fail to ensure decent treatment for all Filipinos. We default by limiting the contractual wages that should be paid to our workers
when their contracts are breached by the foreign employers. While we sit, this court will ensure that our laws will reward our overseas workers with what they deserve:
their dignity.
Inevitably, their dignity is ours as well.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED with modification. Petitioner Sameer Overseas Placement Agency
is ORDERED to pay respondent Joy C. Cabiles the amount equivalent to her salary for the unexpired portion of her employment contract at an interest of 6% per
annum from the finality of this judgment. Petitioner is also ORDERED to reimburse respondent the withheld NT$3,000.00 salary and pay respondent attorneys fees of
NT$300.00 at an interest of 6% per annum from the finality of this judgment.
The clause, or for three (3) months for every year of the unexpired term, whichever is less in Section 7 of Republic Act No. 10022 amending Section 10 of Republic
Act No. 8042 is declared unconstitutional and, therefore, null and void.
SO ORDERED.

EN BANC

[G.R. No. 122156. February 3, 1997]

MANILA PRINCE HOTEL, petitioner, vs. GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE
OF THE GOVERNMENT CORPORATE COUNSEL, respondents.
DECISION
BELLOSILLO, J.:
The Filipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall
give preference to qualified Filipinos,[1] is invoked by petitioner in its bid to acquire 51% of the shares of the Manila Hotel Corporation (MHC) which owns the historic Manila
Hotel. Opposing, respondents maintain that the provision is not self-executing but requires an implementing legislation for its enforcement. Corollarily, they ask whether the 51%
shares form part of the national economy and patrimony covered by the protective mantle of the Constitution.
The controversy arose when respondent Government Service Insurance System (GSIS), pursuant to the privatization program of the Philippine Government under
Proclamation No. 50 dated 8 December 1986, decided to sell through public bidding 30% to 51% of the issued and outstanding shares of respondent MHC. The winning bidder, or
the eventual strategic partner, is to provide management expertise and/or an international marketing/reservation system, and financial support to strengthen the profitability and
performance of the Manila Hotel.[2] In a close bidding held on 18 September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipino corporation,
which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the
same number of shares at P44.00 per share, orP2.42 more than the bid of petitioner.
Pertinent provisions of the bidding rules prepared by respondent GSIS state I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC 1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 (reset to November 3, 1995) or the Highest Bidder will lose the right to purchase the Block of Shares and
GSIS will instead offer the Block of Shares to the other Qualified Bidders:
a. The Highest Bidder must negotiate and execute with the GSIS/MHC the Management Contract, International Marketing/Reservation System Contract or other type of contract specified by the
Highest Bidder in its strategic plan for the Manila Hotel x x x x
b. The Highest Bidder must execute the Stock Purchase and Sale Agreement with GSIS x x x x
K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following conditions are met:
a. Execution of the necessary contracts with GSIS/MHC not later than October 23, 1995 (reset to November 3, 1995); and
b. Requisite approvals from the GSIS/MHC and COP (Committee on Privatization)/ OGCC (Office of the Government Corporate Counsel) are obtained. [3]

Pending the declaration of Renong Berhard as the winning bidder/strategic partner and the execution of the necessary contracts, petitioner in a letter to respondent GSIS dated
28 September 1995 matched the bid price of P44.00 per share tendered by Renong Berhad.[4] In a subsequent letter dated 10 October 1995 petitioner sent a managers check
issued by Philtrust Bank for Thirty-three Million Pesos (P33,000,000.00) as Bid Security to match the bid of the Malaysian Group, Messrs. Renong Berhad x x x x[5] which respondent
GSIS refused to accept.
On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of the matching bid and that the sale of 51% of the MHC may be hastened by
respondent GSIS and consummated with Renong Berhad, petitioner came to this Court on prohibition and mandamus. On 18 October 1995 the Court issued a temporary restraining
order enjoining respondents from perfecting and consummating the sale to the Malaysian firm.
On 10 September 1996 the instant case was accepted by the Court En Banc after it was referred to it by the First Division. The case was then set for oral arguments with
former Chief Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J., as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution and submits that the Manila Hotel has been identified with the Filipino nation and has
practically become a historical monument which reflects the vibrancy of Philippine heritage and culture. It is a proud legacy of an earlier generation of Filipinos who believed in the
nobility and sacredness of independence and its power and capacity to release the full potential of the Filipino people. To all intents and purposes, it has become a part of the
national patrimony.[6]Petitioner also argues that since 51% of the shares of the MHC carries with it the ownership of the business of the hotel which is owned by respondent GSIS, a
government-owned and controlled corporation, the hotel business of respondent GSIS being a part of the tourism industry is unquestionably a part of the national economy. Thus,
any transaction involving 51% of the shares of stock of the MHC is clearly covered by the term national economy, to which Sec. 10, second par., Art. XII, 1987 Constitution, applies. [7]
It is also the thesis of petitioner that since Manila Hotel is part of the national patrimony and its business also unquestionably part of the national economy petitioner should be
preferred after it has matched the bid offer of the Malaysian firm. For the bidding rules mandate that if for any reason, the Highest Bidder cannot be awarded the Block of Shares,
GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per
share.[8]
Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of the 1987 Constitution is merely a statement of principle and policy since it is not a selfexecuting provision and requires implementing legislation(s) x x x x Thus, for the said provision to operate, there must be existing laws to lay down conditions under which business
may be done.[9]
Second, granting that this provision is self-executing, Manila Hotel does not fall under the term national patrimony which only refers to lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna and all marine wealth in its territorial sea, and
exclusive marine zone as cited in the first and second paragraphs of Sec. 2, Art. XII, 1987 Constitution. According to respondents, while petitioner speaks of the guests who have
slept in the hotel and the events that have transpired therein which make the hotel historic, these alone do not make the hotel fall under the patrimony of the nation. What is more,
the mandate of the Constitution is addressed to the State, not to respondent GSIS which possesses a personality of its own separate and distinct from the Philippines as a State.
Third, granting that the Manila Hotel forms part of the national patrimony, the constitutional provision invoked is still inapplicable since what is being sold is only 51% of the
outstanding shares of the corporation, not the hotel building nor the land upon which the building stands. Certainly, 51% of the equity of the MHC cannot be considered part of
the national patrimony.Moreover, if the disposition of the shares of the MHC is really contrary to the Constitution, petitioner should have questioned it right from the beginning and not
after it had lost in the bidding.
Fourth, the reliance by petitioner on par. V., subpar. J. 1., of the bidding rules which provides that if for any reason, the Highest Bidder cannot be awarded the Block of Shares,
GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per
share, is misplaced. Respondents postulate that the privilege of submitting a matching bid has not yet arisen since it only takes place if for any reason, the Highest Bidder cannot be
awarded the Block of Shares. Thus the submission by petitioner of a matching bid is premature since Renong Berhad could still very well be awarded the block of shares and the
condition giving rise to the exercise of the privilege to submit a matching bid had not yet taken place.
Finally, the prayer for prohibition grounded on grave abuse of discretion should fail since respondent GSIS did not exercise its discretion in a capricious, whimsical manner, and
if ever it did abuse its discretion it was not so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law. Similarly, the
petition for mandamus should fail as petitioner has no clear legal right to what it demands and respondents do not have an imperative duty to perform the act required of them by
petitioner.
We now resolve. A constitution is a system of fundamental laws for the governance and administration of a nation. It is supreme, imperious, absolute and unalterable except by
the authority from which it emanates. It has been defined as the fundamental and paramount law of the nation.[10] It prescribes the permanent framework of a system of government,
assigns to the different departments their respective powers and duties, and establishes certain fixed principles on which government is founded. The fundamental conception in
other words is that it is a supreme law to which all other laws must conform and in accordance with which all private rights must be determined and all public authority administered.
[11]
Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the constitution that law or contract whether promulgated by the legislative or by the

executive branch or entered into by private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is the fundamental, paramount
and supreme law of the nation, it is deemed written in every statute and contract.
Admittedly, some constitutions are merely declarations of policies and principles. Their provisions command the legislature to enact laws and carry out the purposes of the
framers who merely establish an outline of government providing for the different departments of the governmental machinery and securing certain fundamental and inalienable
rights of citizens.[12] A provision which lays down a general principle, such as those found in Art. II of the 1987 Constitution, is usually not self-executing. But a provision which is
complete in itself and becomes operative without the aid of supplementary or enabling legislation, or that which supplies sufficient rule by means of which the right it grants may be
enjoyed or protected, is self-executing.Thus a constitutional provision is self-executing if the nature and extent of the right conferred and the liability imposed are fixed by the
constitution itself, so that they can be determined by an examination and construction of its terms, and there is no language indicating that the subject is referred to the legislature for
action.[13]
As against constitutions of the past, modern constitutions have been generally drafted upon a different principle and have often become in effect extensive codes of laws
intended to operate directly upon the people in a manner similar to that of statutory enactments, and the function of constitutional conventions has evolved into one more like that of
a legislative body.Hence, unless it is expressly provided that a legislative act is necessary to enforce a constitutional mandate, the presumption now is that all provisions of the
constitution are self-executing.If the constitutional provisions are treated as requiring legislation instead of self-executing, the legislature would have the power to ignore and
practically nullify the mandate of the fundamental law.[14] This can be cataclysmic. That is why the prevailing view is, as it has always been, that x x x x in case of doubt, the Constitution should be considered self-executing rather than non-self-executing x x x x Unless the contrary is clearly intended, the provisions of the Constitution should be
considered self-executing, as a contrary rule would give the legislature discretion to determine when, or whether, they shall be effective. These provisions would be subordinated to the will of the
lawmaking body, which could make them entirely meaningless by simply refusing to pass the needed implementing statute. [15]
Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution is clearly not self-executing, as they quote from discussions on the floor of the 1986
Constitutional Commission MR. RODRIGO. Madam President, I am asking this question as the Chairman of the Committee on Style. If the wording of PREFERENCE is given to QUALIFIED
FILIPINOS, can it be understood as a preference to qualified Filipinos vis-a-vis Filipinos who are not qualified. So, why do we not make it clear? To qualified Filipinos
as against aliens?
THE PRESIDENT. What is the question of Commissioner Rodrigo? Is it to remove the word QUALIFIED?
MR. RODRIGO. No, no, but say definitely TO QUALIFIED FILIPINOS as against whom? As against aliens or over aliens ?
MR. NOLLEDO. Madam President, I think that is understood. We use the word QUALIFIED because the existing laws or prospective laws will always lay down conditions
under which business may be done. For example, qualifications on capital, qualifications on the setting up of other financial structures, et cetera (underscoring
supplied by respondents).
MR. RODRIGO. It is just a matter of style.
MR. NOLLEDO. Yes.[16]
Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as not to make it appear that it is non-self-executing but simply for purposes of style. But, certainly,
the legislature is not precluded from enacting further laws to enforce the constitutional provision so long as the contemplated statute squares with the Constitution. Minor details may
be left to the legislature without impairing the self-executing nature of constitutional provisions.
In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the exercise of powers directly granted by the constitution, further the operation
of such a provision, prescribe a practice to be used for its enforcement, provide a convenient remedy for the protection of the rights secured or the determination thereof, or place
reasonable safeguards around the exercise of the right. The mere fact that legislation may supplement and add to or prescribe a penalty for the violation of a self-executing
constitutional provision does not render such a provision ineffective in the absence of such legislation. The omission from a constitution of any express provision for a remedy for
enforcing a right or liability is not necessarily an indication that it was not intended to be self-executing. The rule is that a self-executing provision of the constitution does not
necessarily exhaust legislative power on the subject, but any legislation must be in harmony with the constitution, further the exercise of constitutional right and make it more
available.[17] Subsequent legislation however does not necessarily mean that the subject constitutional provision is not, by itself, fully enforceable.
Respondents also argue that the non-self-executing nature of Sec. 10, second par., of Art. XII is implied from the tenor of the first and third paragraphs of the same section
which undoubtedly are not self-executing.[18] The argument is flawed. If the first and third paragraphs are not self-executing because Congress is still to enact measures to

encourage the formation and operation of enterprises fully owned by Filipinos, as in the first paragraph, and the State still needs legislation to regulate and exercise authority over
foreign investments within its national jurisdiction, as in the third paragraph, then a fortiori, by the same logic, the second paragraph can only be self-executing as it does not by its
language require any legislation in order to give preference to qualified Filipinos in the grant of rights, privileges and concessions covering the national economy and patrimony. A
constitutional provision may be self-executing in one part and non-self-executing in another.[19]
Even the cases cited by respondents holding that certain constitutional provisions are merely statements of principles and policies, which are basically not self-executing and
only placed in the Constitution as moral incentives to legislation, not as judicially enforceable rights - are simply not in point. Basco v. Philippine Amusements and Gaming
Corporation[20] speaks of constitutional provisions on personal dignity,[21] the sanctity of family life,[22] the vital role of the youth in nation-building, [23] the promotion of social justice,
[24]
and the values of education.[25]Tolentino v. Secretary of Finance[26] refers to constitutional provisions on social justice and human rights [27] and on education.[28] Lastly, Kilosbayan,
Inc. v. Morato[29] cites provisions on the promotion of general welfare, [30] the sanctity of family life,[31] the vital role of the youth in nation-building [32] and the promotion of total human
liberation and development.[33] A reading of these provisions indeed clearly shows that they are not judicially enforceable constitutional rights but merely guidelines for
legislation. The very terms of the provisions manifest that they are only principles upon which legislations must be based. Res ipsa loquitur.
On the other hand, Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command which is complete in itself and which needs no further guidelines or
implementing laws or rules for its enforcement. From its very words the provision does not require any legislation to put it in operation. It is per se judicially enforceable. When our
Constitution mandates that [i]n the grant of rights, privileges, and concessions covering national economy and patrimony, the State shall give preference to qualified Filipinos, it
means just that - qualified Filipinos shall be preferred. And when our Constitution declares that a right exists in certain specified circumstances an action may be maintained to
enforce such right notwithstanding the absence of any legislation on the subject; consequently, if there is no statute especially enacted to enforce such constitutional right, such right
enforces itself by its own inherent potency and puissance, and from which all legislations must take their bearings. Where there is a right there is a remedy. Ubi jus ibi remedium.
As regards our national patrimony, a member of the 1986 Constitutional Commission[34] explains The patrimony of the Nation that should be conserved and developed refers not only to our rich natural resources but also to the cultural heritage of our race. It also refers to our
intelligence in arts, sciences and letters. Therefore, we should develop not only our lands, forests, mines and other natural resources but also the mental ability or faculty of our people.
We agree. In its plain and ordinary meaning, the term patrimony pertains to heritage.[35] When the Constitution speaks of national patrimony, it refers not only to the natural
resources of the Philippines, as the Constitution could have very well used the term natural resources, but also to the cultural heritage of the Filipinos.
Manila Hotel has become a landmark - a living testimonial of Philippine heritage. While it was restrictively an American hotel when it first opened in 1912, it immediately evolved
to be truly Filipino. Formerly a concourse for the elite, it has since then become the venue of various significant events which have shaped Philippine history. It was called
the Cultural Center of the 1930s. It was the site of the festivities during the inauguration of the Philippine Commonwealth. Dubbed as the Official Guest House of the Philippine
Government it plays host to dignitaries and official visitors who are accorded the traditional Philippine hospitality.[36]
The history of the hotel has been chronicled in the book The Manila Hotel: The Heart and Memory of a City.[37] During World War II the hotel was converted by the Japanese
Military Administration into a military headquarters. When the American forces returned to recapture Manila the hotel was selected by the Japanese together with Intramuros as the
two (2) places for their final stand. Thereafter, in the 1950s and 1960s, the hotel became the center of political activities, playing host to almost every political convention. In 1970 the
hotel reopened after a renovation and reaped numerous international recognitions, an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was the site of a
failed coup d etat where an aspirant for vice-president was proclaimed President of the Philippine Republic.
For more than eight (8) decades Manila Hotel has bore mute witness to the triumphs and failures, loves and frustrations of the Filipinos; its existence is impressed with public
interest; its own historicity associated with our struggle for sovereignty, independence and nationhood. Verily, Manila Hotel has become part of our national economy and
patrimony. For sure, 51% of the equity of the MHC comes within the purview of the constitutional shelter for it comprises the majority and controlling stock, so that anyone who
acquires or owns the 51% will have actual control and management of the hotel. In this instance, 51% of the MHC cannot be disassociated from the hotel and the land on which the
hotel edifice stands. Consequently, we cannot sustain respondents claim that the Filipino First Policy provision is not applicable since what is being sold is only 51% of the
outstanding shares of the corporation, not the Hotel building nor the land upon which the building stands.[38]
The argument is pure sophistry. The term qualified Filipinos as used in our Constitution also includes corporations at least 60% of which is owned by Filipinos. This is very clear
from the proceedings of the 1986 Constitutional Commission THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I would like to introduce an amendment to the Nolledo amendment. And the amendment would consist in substituting the words QUALIFIED FILIPINOS
with the following: CITIZENS OF THE PHILIPPINES OR CORPORATIONS OR ASSOCIATIONS WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY
OWNED BY SUCH CITIZENS.

xxxx
MR. MONSOD. Madam President, apparently the proponent is agreeable, but we have to raise a question. Suppose it is a corporation that is 80-percent Filipino, do we
not give it preference?
MR. DAVIDE. The Nolledo amendment would refer to an individual Filipino. What about a corporation wholly owned by Filipino citizens?
MR. MONSOD. At least 60 percent, Madam President.
MR. DAVIDE. Is that the intention?
MR. MONSOD. Yes, because, in fact, we would be limiting it if we say that the preference should only be 100-percent Filipino.
MR. DAVIDE. I want to get that meaning clear because QUALIFIED FILIPINOS may refer only to individuals and not to juridical personalities or entities.
MR. MONSOD. We agree, Madam President.[39]
xxxx
MR. RODRIGO. Before we vote, may I request that the amendment be read again.
MR. NOLLEDO. The amendment will read: IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND
PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS. And the word Filipinos here, as intended by the proponents, will include not
only individual Filipinos but also Filipino-controlled entities or entities fully-controlled by Filipinos.[40]
The phrase preference to qualified Filipinos was explained thus MR. FOZ. Madam President, I would like to request Commissioner Nolledo to please restate his amendment so that I can ask a question.
MR. NOLLEDO. IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL
GIVE PREFERENCE TO QUALIFIED FILIPINOS.
MR. FOZ. In connection with that amendment, if a foreign enterprise is qualified and a Filipino enterprise is also qualified, will the Filipino enterprise still be given a
preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner is more qualified in some aspects than the Filipino enterprise, will the Filipino still be preferred?
MR. NOLLEDO. The answer is yes.
MR. FOZ. Thank you.[41]
Expounding further on the Filipino First Policy provision Commissioner Nolledo continues
MR. NOLLEDO. Yes, Madam President. Instead of MUST, it will be SHALL - THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS. This embodies the socalled Filipino First policy.That means that Filipinos should be given preference in the grant of concessions, privileges and rights covering the national patrimony.[42]
The exchange of views in the sessions of the Constitutional Commission regarding the subject provision was still further clarified by Commissioner Nolledo [43] Paragraph 2 of Section 10 explicitly mandates the Pro-Filipino bias in all economic concerns. It is better known as the FILIPINO FIRST Policy x x x x This provision was never found in previous
Constitutions x x x x
The term qualified Filipinos simply means that preference shall be given to those citizens who can make a viable contribution to the common good, because of credible competence and efficiency. It
certainly does NOT mandate the pampering and preferential treatment to Filipino citizens or organizations that are incompetent or inefficient, since such an indiscriminate preference would be
counterproductive and inimical to the common good.

In the granting of economic rights, privileges, and concessions, when a choice has to be made between a qualified foreigner and a qualified Filipino, the latter shall be chosen over the former.
Lastly, the word qualified is also determinable. Petitioner was so considered by respondent GSIS and selected as one of the qualified bidders. It was pre-qualified by
respondent GSIS in accordance with its own guidelines so that the sole inference here is that petitioner has been found to be possessed of proven management expertise in the
hotel industry, or it has significant equity ownership in another hotel company, or it has an overall management and marketing proficiency to successfully operate the Manila Hotel.[44]
The penchant to try to whittle away the mandate of the Constitution by arguing that the subject provision is not self-executory and requires implementing legislation is quite
disturbing.The attempt to violate a clear constitutional provision - by the government itself - is only too distressing. To adopt such a line of reasoning is to renounce the duty to ensure
faithfulness to the Constitution. For, even some of the provisions of the Constitution which evidently need implementing legislation have juridical life of their own and can be the
source of a judicial remedy.We cannot simply afford the government a defense that arises out of the failure to enact further enabling, implementing or guiding legislation. In fine, the
discourse of Fr. Joaquin G. Bernas, S.J., on constitutional government is apt The executive department has a constitutional duty to implement laws, including the Constitution, even before Congress acts - provided that there are discoverable legal standards for executive
action. When the executive acts, it must be guided by its own understanding of the constitutional command and of applicable laws. The responsibility for reading and understanding the Constitution
and the laws is not the sole prerogative of Congress. If it were, the executive would have to ask Congress, or perhaps the Court, for an interpretation every time the executive is confronted by a
constitutional command. That is not how constitutional government operates. [45]
Respondents further argue that the constitutional provision is addressed to the State, not to respondent GSIS which by itself possesses a separate and distinct
personality. This argument again is at best specious. It is undisputed that the sale of 51% of the MHC could only be carried out with the prior approval of the State acting through
respondent Committee on Privatization. As correctly pointed out by Fr. Joaquin G. Bernas, S.J., this fact alone makes the sale of the assets of respondents GSIS and MHC a state
action. In constitutional jurisprudence, the acts of persons distinct from the government are considered state action covered by the Constitution (1) when the activity it engages in is
a public function; (2) when the government is so significantly involved with the private actor as to make the government responsible for his action; and, (3) when the government has
approved or authorized the action. It is evident that the act of respondent GSIS in selling 51% of its share in respondent MHC comes under the second and third categories of state
action. Without doubt therefore the transaction, although entered into by respondent GSIS, is in fact a transaction of the State and therefore subject to the constitutional command.[46]
When the Constitution addresses the State it refers not only to the people but also to the government as elements of the State. After all, government is composed of three (3)
divisions of power - legislative, executive and judicial. Accordingly, a constitutional mandate directed to the State is correspondingly directed to the three (3) branches of
government. It is undeniable that in this case the subject constitutional injunction is addressed among others to the Executive Department and respondent GSIS, a government
instrumentality deriving its authority from the State.
It should be stressed that while the Malaysian firm offered the higher bid it is not yet the winning bidder. The bidding rules expressly provide that the highest bidder shall only be
declared the winning bidder after it has negotiated and executed the necessary contracts, and secured the requisite approvals. Since the Filipino First Policy provision of the
Constitution bestows preference on qualified Filipinos the mere tending of the highest bid is not an assurance that the highest bidder will be declared the winning bidder. Resultantly,
respondents are not bound to make the award yet, nor are they under obligation to enter into one with the highest bidder. For in choosing the awardee respondents are mandated to
abide by the dictates of the 1987 Constitution the provisions of which are presumed to be known to all the bidders and other interested parties.
Adhering to the doctrine of constitutional supremacy, the subject constitutional provision is, as it should be, impliedly written in the bidding rules issued by respondent GSIS,
lest the bidding rules be nullified for being violative of the Constitution. It is a basic principle in constitutional law that all laws and contracts must conform with the fundamental law of
the land.Those which violate the Constitution lose their reason for being.
Paragraph V. J. 1 of the bidding rules provides that [i]f for any reason the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to other Qualified Bidders
that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per share. [47] Certainly, the constitutional mandate itself
is reason enough not to award the block of shares immediately to the foreign bidder notwithstanding its submission of a higher, or even the highest, bid. In fact, we cannot conceive
of a strongerreason than the constitutional injunction itself.
In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the grant of rights, privileges and concessions covering the national economy
and patrimony, thereby exceeding the bid of a Filipino, there is no question that the Filipino will have to be allowed to match the bid of the foreign entity. And if the Filipino matches
the bid of a foreign firm the award should go to the Filipino. It must be so if we are to give life and meaning to the Filipino First Policy provision of the 1987 Constitution. For, while
this may neither be expressly stated nor contemplated in the bidding rules, the constitutional fiat is omnipresent to be simply disregarded. To ignore it would be to sanction a perilous
skirting of the basic law.

This Court does not discount the apprehension that this policy may discourage foreign investors. But the Constitution and laws of the Philippines are understood to be always
open to public scrutiny. These are given factors which investors must consider when venturing into business in a foreign jurisdiction. Any person therefore desiring to do business in
the Philippines or with any of its agencies or instrumentalities is presumed to know his rights and obligations under the Constitution and the laws of the forum.
The argument of respondents that petitioner is now estopped from questioning the sale to Renong Berhad since petitioner was well aware from the beginning that a foreigner
could participate in the bidding is meritless. Undoubtedly, Filipinos and foreigners alike were invited to the bidding. But foreigners may be awarded the sale only if no Filipino
qualifies, or if the qualified Filipino fails to match the highest bid tendered by the foreign entity. In the case before us, while petitioner was already preferred at the inception of the
bidding because of the constitutional mandate, petitioner had not yet matched the bid offered by Renong Berhad. Thus it did not have the right or personality then to compel
respondent GSIS to accept its earlier bid. Rightly, only after it had matched the bid of the foreign firm and the apparent disregard by respondent GSIS of petitioners matching bid did
the latter have a cause of action.
Besides, there is no time frame for invoking the constitutional safeguard unless perhaps the award has been finally made. To insist on selling the Manila Hotel to foreigners
when there is a Filipino group willing to match the bid of the foreign group is to insist that government be treated as any other ordinary market player, and bound by its mistakes or
gross errors of judgment, regardless of the consequences to the Filipino people. The miscomprehension of the Constitution is regrettable. Thus we would rather remedy the
indiscretion while there is still an opportunity to do so than let the government develop the habit of forgetting that the Constitution lays down the basic conditions and parameters for
its actions.
Since petitioner has already matched the bid price tendered by Renong Berhad pursuant to the bidding rules, respondent GSIS is left with no alternative but to award to
petitioner the block of shares of MHC and to execute the necessary agreements and documents to effect the sale in accordance not only with the bidding guidelines and procedures
but with the Constitution as well. The refusal of respondent GSIS to execute the corresponding documents with petitioner as provided in the bidding rules after the latter has
matched the bid of the Malaysian firm clearly constitutes grave abuse of discretion.
The Filipino First Policy is a product of Philippine nationalism. It is embodied in the 1987 Constitution not merely to be used as a guideline for future legislation but primarily to
be enforced; so must it be enforced. This Court as the ultimate guardian of the Constitution will never shun, under any reasonable circumstance, the duty of upholding the majesty of
the Constitution which it is tasked to defend. It is worth emphasizing that it is not the intention of this Court to impede and diminish, much less undermine, the influx of foreign
investments. Far from it, the Court encourages and welcomes more business opportunities but avowedly sanctions the preference for Filipinos whenever such preference is
ordained by the Constitution. The position of the Court on this matter could have not been more appropriately articulated by Chief Justice Narvasa As scrupulously as it has tried to observe that it is not its function to substitute its judgment for that of the legislature or the executive about the wisdom and feasibility of legislation economic in
nature, the Supreme Court has not been spared criticism for decisions perceived as obstacles to economic progress and development x x x x in connection with a temporary injunction issued by the
Courts First Division against the sale of the Manila Hotel to a Malaysian Firm and its partner, certain statements were published in a major daily to the effect that that injunction again demonstrates
that the Philippine legal system can be a major obstacle to doing business here.
Let it be stated for the record once again that while it is no business of the Court to intervene in contracts of the kind referred to or set itself up as the judge of whether they are viable or attainable, it is
its bounden duty to make sure that they do not violate the Constitution or the laws, or are not adopted or implemented with grave abuse of discretion amounting to lack or excess of jurisdiction. It will
never shirk that duty, no matter how buffeted by winds of unfair and ill-informed criticism. [48]
Privatization of a business asset for purposes of enhancing its business viability and preventing further losses, regardless of the character of the asset, should not take
precedence over non-material values. A commercial, nay even a budgetary, objective should not be pursued at the expense of national pride and dignity. For the Constitution
enshrines higher and nobler non-material values. Indeed, the Court will always defer to the Constitution in the proper governance of a free society; after all, there is nothing
so sacrosanct in any economic policy as to draw itself beyond judicial review when the Constitution is involved.[49]
Nationalism is inherent in the very concept of the Philippines being a democratic and republican state, with sovereignty residing in the Filipino people and from whom all
government authority emanates. In nationalism, the happiness and welfare of the people must be the goal. The nation-state can have no higher purpose. Any interpretation of any
constitutional provision must adhere to such basic concept. Protection of foreign investments, while laudible, is merely a policy. It cannot override the demands of nationalism.[50]
The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be sold to the highest bidder solely for the sake of privatization. We are not talking about an
ordinary piece of property in a commercial district. We are talking about a historic relic that has hosted many of the most important events in the short history of the Philippines as a
nation. We are talking about a hotel where heads of states would prefer to be housed as a strong manifestation of their desire to cloak the dignity of the highest state function to their
official visits to the Philippines. Thus the Manila Hotel has played and continues to play a significant role as an authentic repository of twentieth century Philippine history and
culture. In this sense, it has become truly a reflection of the Filipino soul - a place with a history of grandeur; a most historical setting that has played a part in the shaping of a
country.[51]

This Court cannot extract rhyme nor reason from the determined efforts of respondents to sell the historical landmark - this Grand Old Dame of hotels in Asia - to a total
stranger. For, indeed, the conveyance of this epic exponent of the Filipino psyche to alien hands cannot be less than mephistophelian for it is, in whatever manner viewed, a
veritable alienation of a nations soul for some pieces of foreign silver. And so we ask: What advantage, which cannot be equally drawn from a qualified Filipino, can be gained by the
Filipinos if Manila Hotel - and all that it stands for - is sold to a non-Filipino? How much of national pride will vanish if the nations cultural heritage is entrusted to a foreign entity? On
the other hand, how much dignity will be preserved and realized if the national patrimony is safekept in the hands of a qualified, zealous and well-meaning Filipino? This is the plain
and simple meaning of the Filipino First Policyprovision of the Philippine Constitution. And this Court, heeding the clarion call of the Constitution and accepting the duty of being the
elderly watchman of the nation, will continue to respect and protect the sanctity of the Constitution.
WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL are directed to CEASE and DESIST from selling 51% of the shares of the Manila Hotel Corporation to RENONG BERHAD, and to
ACCEPT the matching bid of petitioner MANILA PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares of the Manila Hotel Corporation at P44.00 per share
and thereafter to execute the necessary agreements and documents to effect the sale, to issue the necessary clearances and to do such other acts and deeds as may be necessary
for the purpose.
SO ORDERED.