FIRST DIVISION

SANTOSA B. DATUMAN, G.R. No. 156029

Petitioner,

Present:

PUNO, C.J.,*
versus CARPIO,**
AUSTRIA-MARTINEZ,***
CORONA,
CARPIO MORALES,*** and
LEONARDO-DE CASTRO, JJ.
FIRST COSMOPOLITAN
MANPOWER AND
PROMOTION SERVICES, INC., Promulgated:
Respondent.
November 14, 2008

x-----------------------------------------------------------------------------------------x

DECISION

LEONARDO-DE CASTRO, J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, as amended, assailing the Court of Appeals (CA)
Decision[1] dated August 7, 2002, in CA-G.R. SP No. 59825, setting aside the
Decision of the National Labor Relations Commission (NLRC).

The facts are as follows:

Sometime in 1989, respondent First Cosmopolitan Manpower & Promotion

Services, Inc. recruited petitioner Santosa B. Datuman to work abroad under the
following terms and conditions:
 Site of employment - Bahrain
Employees Classification/Position/Grade - Saleslady
Basic Monthly Salary - US$370.00
Duration of Contract - One (1) year
Foreign Employer - Mohammed Sharif Abbas Ghulam Hussain[2]

On April 17, 1989, petitioner was deployed to Bahrain after paying the
required placement fee. However, her employer Mohammed Hussain took her
passport when she arrived there; and instead of working as a saleslady, she was
forced to work as a domestic helper with a salary of Forty Bahrain Dinar (BD40.00),
equivalent only to One Hundred US Dollars (US$100.00). This was contrary to the
agreed salary of US$370.00 indicated in her Contract of Employment signed in
the Philippines and approved by the Philippine Overseas Employment
Administration (POEA).[3]

On September 1, 1989, her employer compelled her to sign another contract,

transferring her to another employer as housemaid with a salary of BD40.00 for the
duration of two (2) years.[4] She pleaded with him to give her a release paper and to
return her passport but her pleas were unheeded. Left with no choice, she continued
working against her will. Worse, she even worked without compensation from
September 1991 to April 1993 because of her employers continued failure and
refusal to pay her salary despite demand. In May 1993, she was able to finally return
to the Philippines through the help of the Bahrain Passport and Immigration
Department.[5]

In May 1995, petitioner filed a complaint before the POEA Adjudication

Office against respondent for underpayment and nonpayment of salary, vacation
leave pay and refund of her plane fare, docketed as Case No. POEA ADJ. (L) 95-
05-1586.[6] While the case was pending, she filed the instant case before the NLRC
for underpayment of salary for a period of one year and six months, nonpayment of
vacation pay and reimbursement of return airfare.

When the parties failed to arrive at an amicable settlement before the Labor
Arbiter, they were required to file their respective position papers, subsequent
pleadings and documentary exhibits.

In its Position Paper,[7] respondent countered that petitioner actually agreed to

work in Bahrain as a housemaid for one (1) year because it was the only position
available then. However, since such position was not yet allowed by the POEA at
that time, they mutually agreed to submit the contract to the POEA indicating
petitioners position as saleslady. Respondent added that it was actually petitioner
herself who violated the terms of their contract when she allegedly transferred to
another employer without respondents knowledge and approval. Lastly, respondent
raised the defense of prescription of cause of action since the claim was filed beyond
the three (3)-year period from the time the right accrued, reckoned from either 1990
or 1991.[8]

On April 29, 1998, Labor Arbiter Jovencio Mayor, Jr. rendered a Decision
finding respondent liable for violating the terms of the Employment Contract and
ordering it to pay petitioner: (a) the amount of US$4,050.00, or its equivalent rate
prevailing at the time of payment, representing her salary differentials for fifteen
(15) months; and, (b) the amount of BD 180.00 or its equivalent rate prevailing at
the time of payment, representing the refund of plane ticket, thus:
From the foregoing factual backdrop, the only crucial issue for us to resolve
in this case is whether or not complainant is entitled to her monetary claims.

xxx

In the instant case, from the facts and circumstances laid down, it is thus
self-evident that the relationship of the complainant and respondent agency is
governed by the Contract of Employment, the basic terms a covenants of which
provided for the position of saleslady, monthly compensation of US$370.00 and
duration of contract for one (1) year. As it is, when the parties complainant and
respondent Agency signed and executed the POEA approved Contract of
Employment, this agreement is the law that governs them. Thus, when respondent
agency deviated from the terms of the contract by assigning the position of a
housemaid to complainant instead of a saleslady as agreed upon in the POEA-
approved Contract of Employment, respondent Agency committed a breach of said
Employment Contract. Worthy of mention is the fact that respondent agency in
their Position Paper paragraph 2, Brief Statement of the Facts and of the Case
admitted that it had entered into an illegal contract with complainant by
proposing the position of a housemaid which said position was then not
allowed by the POEA, by making it appear in the Employment Contract that
the position being applied for is the position of a saleslady. As it is, we find
indubitably clear that the foreign employer had took advantage to the herein
hopeless complainant and because of this ordeal, the same obviously rendered
complainants continuous employment unreasonable if not downright
impossible. The facts and surrounding circumstances of her ordeal was
convincingly laid down by the complainant in her Position Paper, from which we
find no flaws material enough to disregard the same. Complainant had clearly made
out her case and no amount of persuasion can convince us to tilt the scales of justice
in favor of respondents whose defense was anchored solely on the flimsy
allegations that for a period of more than five (5) years from 1989 until 1995
nothing was heard from her or from her relatives, presuming then that complainant
had no problem with her employment abroad. We also find that the pleadings and
the annexes filed by the parties reveal a total lapse on the part of respondent First
Cosmopolitan Manpower and Promotions their failure to support with substantial
evidence their contention that complainant transferred from one employer to
another without knowledge and approval of respondent agency in contravention of
the terms of the POEA approved Employment Contract. Obviously, respondent
Agency anchored its disquisition on the alleged contracts signed by the complainant
that she agreed with the terms of said contracts one (1) year duration only and as a
housemaid to support its contention that complainant violated the contract
agreement by transferring from one employer to another on her own volition
without the knowledge and consent of respondent agency. To us, this posture of
respondent agency is unavailing. These documents are self-serving. We could not
but rule that the same were fabricated to tailor-fit their defense that complainant
was guilty of violating the terms of the Employment Contract. Consequently, we
could not avoid the inference of a more logical conclusion that complainant was
forced against her will to continue with her employment notwithstanding the
fact that it was in violation of the original Employment Contract including the
illegal withholding of her passport.

With the foregoing, we find and so rule that respondent Agency failed to
discharge the burden of proving with substantial evidence that complainant violated
the terms of the Employment Contract, thus negating respondent Agencys liability
for complainants money claims. All the more, the record is bereft of any evidence
to show that complainant Datuman is either not entitled to her wage differentials or
 have already received the same from respondent. As such, we are perforce
constrained to grant complainants prayer for payment of salary differentials
computed as follows:

January 1992 April 1993 (15 months)

US$370.00 agreed salary
US$100.00 actual paid salary
US$270.00 balance
US$270.00 x 15 months = US$4050.00

We are also inclined to grant complainants entitlement to a refund of her plane

ticket in the amount of BD 180 Bahrain Dinar or the equivalent in Philippine
Currency at the rate of exchange prevailing at the time of payment.

Anent complainants claim for vacation leave pay and overtime pay, we cannot,
however, grant the same for failure on the part of complainant to prove with
particularity the months that she was not granted vacation leave and the day wherein
she did render overtime work.

Also, we could not grant complainants prayer for award of damages and attorneys
fees for lack of factual and legal basis.

WHEREFORE, premises considered, judgment is hereby rendered, finding

respondent Agency liable for violating the term of Employment Contract and
respondent First Cosmopolitan Manpower and Promotions is hereby ordered:

To pay complainant the amount of US$ FOUR THOUSAND AND FIFTY

(US$4,050.00), or its equivalent rate prevailing at the time of payment, representing
her salary differentials for fifteen (15) months;

To pay complainant the amount of BD 180.00 or its equivalent rate prevailing at

the time of payment, representing the refund of plane ticket;

All other claims are hereby dismissed for lack of merit.

SO ORDERED.[9] (emphasis supplied)

On appeal, the NLRC, Second Division, issued a Decision[10] affirming with

modification the Decision of Labor Arbiter Mayor, Jr., by reducing the award of
salary differentials from US$4,050.00 to US$2,970.00 ratiocinating as follows:

Accordingly, we find that the claims for salary differentials accruing earlier
than April of 1993 had indeed prescribed. This is so as complainant had filed her
complaint on May 31, 1995when she arrived from the jobsite in April 1993. Since
 the cause of action for salary differential accrues at the time when it falls due, it is
clear that only the claims for the months of May 1993 to April 1994 have not yet
prescribed. With an approved salary rate of US$370.00 vis--vis the amount of
salary received which was $100.00, complainant is entitled to the salary differential
for the said period in the amount of $2,970.00.

xxx

WHEREFORE, premises considered, judgment is hereby rendered

MODIFYING the assailed Decision by reducing the award of salary differentials
to $2,970.00 to the complainant.

The rest of the disposition is AFFIRMED.

SO ORDERED.[11]

On July 21, 2000, respondent elevated the matter to the CA through a petition
for certiorari under Rule 65.

On August 2, 2000,[12] the CA dismissed the petition for being insufficient in

form pursuant to the last paragraph of Section 3, Rule 42 of the 1997 Rules of Civil
Procedure, as amended.

On October 20, 2000,[13] however, the CA reinstated the petition upon respondents
motion for reconsideration.[14]

On August 7, 2002, the CA issued the assailed Decision[15] granting the

petition and reversing the NLRC and the Labor Arbiter, thus:

Under Section 1 (f), Rule II, Book II of the 1991 POEA Rules and Regulations, the
local agency shall assume joint and solidary liability with the employer for all
claims and liabilities which may arise in connection with the implementation of the
contract, including but not limited to payment of wages, health and disability
compensation and repatriation.

Respondent Commission was correct in declaring that claims of private

respondent for salary differentials accruing earlier than April of 1993 had indeed
prescribed. It must be noted that petitioner company is privy only to the first
contract. Granting arguendo that its liability extends to the acts of its foreign
 principal, the Towering Recruiting Services, which appears to have a hand in the
execution of the second contract, it is Our considered opinion that the same would,
at the most, extend only up to the expiration of the second contract or until 01
September 1991.Clearly, the money claims subject of the complaint filed in 1995
had prescribed.

However, this Court declares respondent Commission as not only having abused
its discretion, but as being without jurisdiction at all, in declaring private respondent
entitled to salary differentials. After decreeing the money claims accruing before
April 1993 as having prescribed, it has no more jurisdiction to hold petitioner
company for salary differentials after that period.To reiterate, the local agency shall
assume joint and solidary liability with the employer for all claims and liabilities
which may arise in connection with the implementation of the contract.Which
contract? Upon a judicious consideration, we so hold that it is only in connection
with the first contract. The provisions in number 2, Section 10 (a), Rule V, Book I
of the Omnibus Rules Implementing the Labor Code Section 1 (f), Rule II, Book II
of the 1991 POEA Rules and Regulations were not made to make the local agency
a perpetual insurer against all untoward acts that may be done by the foreign
principal or the direct employer abroad. It is only as regards the principal contract
to which it is privy shall its liability extend. In Catan v. National Labor Relations
Commission, 160 SCRA 691 (1988), it was held that the responsibilities of the local
agent and the foreign principal towards the contracted employees under the
recruitment agreement extends up to and until the expiration of the employment
contracts of the employees recruited and employed pursuant to the said recruitment
agreement.

xxx

Foregoing considered, the assailed Decision dated 24 February 2000 and the
Resolution dated 23 June 2000 of respondent Commission in NLRC NCR CA
016354-98 are hereby SET ASIDE.

SO ORDERED.[16]
Petitioners Motion for Reconsideration[17] thereon was denied in the assailed
Resolution[18] dated November 14, 2002.

Hence, the present petition based on the following grounds:

I.
 THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE
ERROR WHEN IT ABANDONED THE FACTUAL FINDINGS OF THE
LABOR ARBITER AS AFFIRMED BY THE NATIONAL LABOR RELATIONS
COMMISSION.

II.
THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN HOLDING
THAT THE RESPONDENT AGENCY IS ONLY A [sic] PRIVY AND LIABLE
TO THE PRINCIPAL CONTRACT.

III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT THE CAUSE OF ACTION OF THE PETITIONER ALREADY
PRESCRIBED.

The respondent counters in its Comment that the CA is correct in ruling that
it is not liable for the monetary claims of petitioner as the claim had already
prescribed and had no factual basis.

Simply put, the issues boil down to whether the CA erred in not holding
respondent liable for petitioners money claims pursuant to their Contract of
Employment.

We grant the petition.

On whether respondent is solidarily liable for

petitioners monetary claims

Section 1 of Rule II of the POEA Rules and Regulations states that:

Section 1. Requirements for Issuance of License. Every applicant for license to
operate a private employment agency or manning agency shall submit a written
application together with the following requirements:
xxx
f. A verified undertaking stating that the applicant:
xxx
(3) Shall assume joint and solidary liability with the employer for all claims and
liabilities which may arise in connection with the implementation of the
 contract; including but not limited to payment of wages, death and disability
compensation and repatriation. (emphasis supplied)

The above provisions are clear that the private employment agency shall
assume joint and solidary liability with the employer.[19] This Court has, time and
again, ruled that private employment agencies are held jointly and severally liable
with the foreign-based employer for any violation of the recruitment agreement or
contract of employment.[20] This joint and solidary liability imposed by law against
recruitment agencies and foreign employers is meant to assure the aggrieved worker
of immediate and sufficient payment of what is due him.[21] This is in line with the
policy of the state to protect and alleviate the plight of the working class.

In the assailed Decision, the CA disregarded the aforecited provision of the law and
the policy of the state when it reversed the findings of the NLRC and the Labor
Arbiter. As the agency which recruited petitioner, respondent is jointly and solidarily
liable with the latters principal employer abroad for her (petitioners) money
claims. Respondent cannot, therefore, exempt itself from all the claims and liabilities
arising from the implementation of their POEA-approved Contract of Employment.

We cannot agree with the view of the CA that the solidary liability of
respondent extends only to the first contract (i.e. the original, POEA-approved
contract which had a term of until April 1990). The signing of the substitute
contracts with the foreign employer/principal before the expiration of the POEA-
approved contract and any continuation of petitioners employment beyond the
original one-year term, against the will of petitioner, are continuing breaches of the
original POEA-approved contract. To accept the CAs reasoning will open the
floodgates to even more abuse of our overseas workers at the hands of their foreign
employers and local recruiters, since the recruitment agency could easily escape its
mandated solidary liability for breaches of the POEA-approved contract by
colluding with their foreign principals in substituting the approved contract with
another upon the workers arrival in the country of employment. Such outcome is
certainly contrary to the States policy of extending protection and support to our
overseas workers. To be sure, Republic Act No. 8042 explicitly prohibits the
substitution or alteration to the prejudice of the worker of employment contracts
already approved and verified by the Department of Labor and Employment (DOLE)
from the time of actual signing thereof by the parties up to and including the period
of the expiration of the same without the approval of the DOLE.[22]

Respondents contention that it was petitioner herself who violated their

Contract of Employment when she signed another contract in Bahrain deserves scant
consideration.It is the finding of both the Labor Arbiter and the NLRC which,
significantly, the CA did not disturb that petitioner was forced to work long after the
term of her original POEA-approved contract, through the illegal acts of the foreign
employer.

In Placewell International Services Corporation v. Camote,[23] we held that

the subsequently executed side agreement of an overseas contract worker with her
foreign employer which reduced his salary below the amount approved by the
POEA is void because it is against our existing laws, morals and public policy. The
said side agreement cannot supersede the terms of the standard employment contract
approved by the POEA.

Hence, in the present case, the diminution in the salary of petitioner from
US$370.00 to US$100 (BD 40.00) per month is void for violating the POEA-
approved contract which set the minimum standards, terms, and conditions of her
employment. Consequently, the solidary liability of respondent with petitioners
foreign employer for petitioners money claims continues although she was forced to
sign another contract in Bahrain. It is the terms of the original POEA-approved
employment contract that shall govern the relationship of petitioner with the
respondent recruitment agency and the foreign employer. We agree with the Labor
Arbiter and the NLRC that the precepts of justice and fairness dictate that petitioner
must be compensated for all months worked regardless of the supposed termination
of the original contract in April 1990. It is undisputed that petitioner was compelled
to render service until April 1993 and for the entire period that she worked for the
foreign employer or his unilaterally appointed successor, she should have been paid
US$370/month for every month worked in accordance with her original contract.

Respondent cannot disclaim liability for the acts of the foreign employer
which forced petitioner to remain employed in violation of our laws and under the
most oppressive conditions on the allegation that it purportedly had no knowledge
of, or participation in, the contract unwillingly signed by petitioner abroad. We
cannot give credence to this claim considering that respondent by its own
allegations knew from the outset that the contract submitted to the POEA for
approval was not to be the real contract.Respondent blithely admitted to submitting
to the POEA a contract stating that the position to be filled by petitioner is that of
Saleslady although she was to be employed as a domestic helper since the latter
position was not approved for deployment by the POEA at that time. Respondents
evident bad faith and admitted circumvention of the laws and regulations on migrant
workers belie its protestations of innocence and put petitioner in a position where
she could be exploited and taken advantage of overseas, as what indeed happened to
her in this case.

We look upon with great disfavor the unsubstantiated actuations of innocence

or ignorance on the part of local recruitment agencies of acts of their foreign
principals, as if the agencies responsibility ends with the deployment of the
worker. In the light of the recruitment agencys legally mandated joint and several
liability with the foreign employer for all claims in connection with
the implementation of the contract, it is the recruitment agencys responsibility to
ensure that the terms and conditions of the employment contract, as approved by the
POEA, are faithfully complied with and implemented properly by its foreign
client/principal. Indeed, it is in its best interest to do so to avoid being haled to the
courts or labor tribunals and defend itself from suits for acts of its foreign principal.
On whether petitioners claims for underpaid
salaries have prescribed

It should be recalled that the Labor Arbiter and the NLRC similarly found that
petitioner is entitled to underpaid salaries, albeit they differed in the number of
months for which salary differentials should be paid. The CA, on the other hand,
held that all of petitioners monetary claims have prescribed pursuant to Article 291
of the Labor Code which provides that:

Art. 291. Money Claims. All money claims arising from employer-
employee relations accruing during the effectivity of this Code shall be filed
within three years from the time that cause of action accrued; otherwise, they shall
be forever barred. (emphasis supplied)

We do not agree with the CA when it held that the cause of action of petitioner had
already prescribed as the three-year prescriptive period should be reckoned
from September 1, 1989 when petitioner was forced to sign another contract against
her will. As stated in the complaint, one of petitioners causes of action was for
underpayment of salaries. The NLRC correctly ruled the right to claim unpaid
salaries (or in this case, unpaid salary differentials) accrue as they fall due.[24] Thus,
petitioners cause of action to claim salary differential for October 1989 only accrued
after she had rendered service for that month (or at the end of October 1989). Her
right to claim salary differential for November 1989 only accrued at the end of
November 1989, and so on and so forth.

Both the Labor Arbiter and the NLRC found that petitioner was forced to work until
April 1993. Interestingly, the CA did not disturb this finding but held only that the
extent of respondents liability was limited to the term under the original contract or,
at most, to the term of the subsequent contract entered into with the participation of
respondents foreign principal, i.e. 1991. We have discussed previously the reasons
why (a) the CAs theory of limited liability on the part of respondent is untenable and
(b) the petitioner has a right to be compensated for all months she, in fact, was forced
to work. To determine for which months petitioners right to claim salary differentials
has not prescribed, we must count three years prior to the filing of the complaint
on May 31, 1995. Thus, only claims accruing prior to May 31, 1992 have prescribed
when the complaint was filed on May 31, 1995. Petitioner is entitled to her claims
for salary differentials for the period May 31, 1992 to April 1993, or approximately
eleven (11) months.[25]

We find that the NLRC correctly computed the salary differential due to petitioner
at US$2,970.00 (US$370.00 as approved salary rate US$100.00 as salary received
= US$290 as underpaid salary per month x 11 months). However, it should be for
the period May 31, 1992 to April 1993 and not May 1993 to April 1994 as
erroneously stated in the NLRCs Decision.

A final note

This Court reminds local recruitment agencies that it is their bounden duty to
guarantee our overseas workers that they are being recruited for bona fide jobs
with bona fideemployers. Local agencies should never allow themselves to be
instruments of exploitation or oppression of their compatriots at the hands of foreign
employers. Indeed, being the ones who profit most from the exodus of Filipino
workers to find greener pastures abroad, recruiters should be first to ensure the
welfare of the very people that keep their industry alive.

WHEREFORE, the petition is GRANTED. The assailed Decision of the

Court of Appeals dated August 7, 2002 and Resolution dated November 14, 2002 in
CA-G.R. SP No. 59825 are REVERSED AND SET ASIDE. The Decision of the
National Labor Relations Commission dated February 24,
2000 is REINSTATED with a qualification with respect to the award of salary
differentials, which should be granted for the period May 31, 1992 to April 1993 and
not May 1993 to April 1994.

THIRD DIVISION

BECMEN SERVICE EXPORTER G.R. Nos. 182978-79

AND PROMOTION, INC.,
Petitioner, Present:
Ynares-Santiago, J.(Chairperson),
- versus - Carpio Morales,*
Chico-Nazario,
Nachura, and
Peralta, JJ.
SPOUSES SIMPLICIO and MILA
CUARESMA (for and in behalf of
their daughter, Jasmin G. Cuaresma),
WHITE FALCON SERVICES, INC.
and JAIME ORTIZ (President,
White Falcon Services, Inc.),
Respondents.

x ------------------------------------------------------ x

SPOUSES SIMPLICIO and MILA G.R. Nos. 184298-99

CUARESMA (for and in behalf of
their daughter, Jasmin G. Cuaresma),
Petitioners,

- versus -
WHITE FALCON SERVICES, INC. Promulgated:
and BECMEN SERVICE EXPORTER
AND PROMOTION, INC.,
Respondents. April 7, 2009

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

These consolidated petitions assail the Amended Decision[1] of the Court of

Appeals dated May 14, 2008 in CA-G.R. SP No. 80619 and CA-G.R. SP No. 81030
finding White Falcon Services, Inc. and Becmen Service Exporter and Promotion,
Inc. solidarily liable to indemnify spouses Simplicio and Mila Cuaresma the amount
of US$4,686.73 in actual damages with interest.

On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen

Service Exporter and Promotion, Inc.[2] (Becmen) to serve as assistant nurse in Al-
Birk Hospital in the Kingdom of Saudi Arabia (KSA), for a contract duration of three
years, with a corresponding salary of US$247.00 per month.
 Over a year later, she died allegedly of poisoning.

Jessie Fajardo, a co-worker of Jasmin, narrated that on June 21, 1998, Jasmin
was found dead by a female cleaner lying on the floor inside her dormitory room
with her mouth foaming and smelling of poison.[3]

Based on the police report and the medical report of the examining physician
of the Al-Birk Hospital, who conducted an autopsy of Jasmins body, the likely cause
of her death was poisoning. Thus:

According to letter No. 199, dated 27.2.1419H, issued by Al-Birk Police Station,
for examining the corpse of Jasmin Cuaresma, 12.20 P.M. 27.2.1419H, Sunday, at Al-Birk
Hospital.

1. The Police Report on the Death

2. The Medical Diagnosis

Sex: Female Age: 25 years Relg: Christian

The said person was brought to the Emergency Room of the hospital; time 12.20
P.M. and she was unconscious, blue, no pulse, no respiration and the first aid esd
undertaken but without success.

3. Diagnosis and Opinion: Halt in blood circulation respiratory system and brain
damage due to an apparent poisoning which is under investigation.[4]

Name: Jasmin Cuaresma

Sex: Female

Marital Status: Single Nationality: Philipino (sic)

Religion: Christian Profession: Nurse

 Address: Al-Birk Genrl. Hospital Birth Place: The Philippines

On 27.2.1419H, Dr. Tariq Abdulminnem and Dr. Ashoki Komar, both have
examined the dead body of Jasmin Cuaresma, at 12.20 P.M., Sunday,
22.2.14189H, and the result was:

1. Report of the Police on the death

2. Medical Examination: Blue skin and paleness on the Extrimes (sic), total halt to
blood circulation and respiratory system and brain damage. There were no
external injuries. Likelypoisoning by taking poisonous substance, yet not
determined. There was a bad smell in the mouth and unknown to us.[5] (Emphasis
supplied)

Jasmins body was repatriated to Manila on September 3, 1998. The following

day, the City Health Officer of Cabanatuan City conducted an autopsy and the
resulting medical report indicated that Jasmin died under violent circumstances,
and not poisoning as originally found by the KSA examining physician. The City
Health Officer found that Jasmin had abrasions at her inner lip and gums; lacerated
wounds and abrasions on her left and right ears; lacerated wounds and hematoma
(contusions) on her elbows; abrasions and hematoma on her thigh and legs; intra-
muscular hemorrhage at the anterior chest; rib fracture; puncture wounds; and
abrasions on the labia minora of the vaginal area.[6]

On March 11, 1999, Jasmins remains were exhumed and examined by the
National Bureau of Investigation (NBI). The toxicology report of the NBI, however,
tested negative for non-volatile, metallic poison and insecticides.[7]

Simplicio and Mila Cuaresma (the Cuaresmas), Jasmins parents and her
surviving heirs, received from the Overseas Workers Welfare Administration
(OWWA) the following amounts: P50,000.00 for death benefits; P50,000.00 for loss
of life; P20,000.00 for funeral expenses; and P10,000.00 for medical
reimbursement.
 On November 22, 1999, the Cuaresmas filed a complaint against Becmen and
its principal in the KSA, Rajab & Silsilah Company (Rajab), claiming death and
insurance benefits, as well as moral and exemplary damages for Jasmins death.[8]

In their complaint, the Cuaresmas claim that Jasmins death was work-
related, having occurred at the employers premises;[9] that under Jasmins contract
with Becmen, she is entitled to iqama insurance coverage; that Jasmin is entitled
to compensatory damages in the amount of US$103,740.00, which is the sum total
of her monthly salary of US$247.00 per month under her employment contract,
multiplied by 35 years (or the remaining years of her productive life had death not
supervened at age 25, assuming that she lived and would have retired at age 60).

The Cuaresmas assert that as a result of Jasmins death under mysterious

circumstances, they suffered sleepless nights and mental anguish. The situation,
they claim, was aggravated by findings in the autopsy and exhumation reports
which evidently show that a grave injustice has been committed against them and
their daughter, for which those responsible should likewise be made to pay moral
and exemplary damages and attorneys fees.

In their position paper, Becmen and Rajab insist that Jasmin committed
suicide, citing a prior unsuccessful suicide attempt sometime in March or April 1998
and relying on the medical report of the examining physician of the Al-Birk
Hospital. They likewise deny liability because the Cuaresmas already recovered
death and other benefits totaling P130,000.00 from the OWWA. They insist that
the Cuaresmas are not entitled to iqama insurance because this refers to the
issuance not insurance of iqama, or residency/work permit required in the KSA. On
the issue of moral and exemplary damages, they claim that the Cuaresmas are not
entitled to the same because they have not acted with fraud, nor have they been
in bad faith in handling Jasmins case.

While the case was pending, Becmen filed a manifestation and motion for
substitution alleging that Rajab terminated their agency relationship and had
appointed White Falcon Services, Inc. (White Falcon) as its new recruitment agent
in the Philippines. Thus, White Falcon was impleaded as respondent as well, and it
adopted and reiterated Becmens arguments in the position paper it subsequently
filed.

On February 28, 2001, the Labor Arbiter rendered a Decision[10] dismissing

the complaint for lack of merit. Giving weight to the medical report of the Al-Birk
Hospital finding that Jasmin died of poisoning, the Labor Arbiter concluded that
Jasmin committed suicide. In any case, Jasmins death was not service-connected,
nor was it shown that it occurred while she was on duty; besides, her parents have
received all corresponding benefits they were entitled to under the law. In regard
to damages, the Labor Arbiter found no legal basis to warrant a grant thereof.

On appeal, the National Labor Relations Commission (Commission) reversed

the decision of the Labor Arbiter. Relying on the findings of the City Health Officer
of Cabanatuan City and the NBI as contained in their autopsy and toxicology report,
respectively, the Commission, via its November 22, 2002 Resolution[11] declared
that, based on substantial evidence adduced, Jasmin was the victim of
compensable work-connected criminal aggression. It disregarded the Al-Birk
Hospital attending physicians report as well as the KSA police report, finding the
same to be inconclusive. It declared that Jasmins death was the result of an
accident occurring within the employers premises that is attributable to her
employment, or to the conditions under which she lived, and thus arose out of and
in the course of her employment as nurse. Thus, the Cuaresmas are entitled to
actual damages in the form of Jasmins lost earnings, including future earnings, in
the total amount of US$113,000.00. The Commission, however, dismissed all other
claims in the complaint.

Becmen, Rajab and White Falcon moved for reconsideration, whereupon the
Commission issued its October 9, 2003 Resolution[12] reducing the award of
US$113,000.00 as actual damages to US$80,000.00.[13] The NLRC likewise declared
Becmen and White Falcon as solidarily liable for payment of the award.
 Becmen and White Falcon brought separate petitions for certiorari to the
Court of Appeals.[14] On June 28, 2006, the appellate court rendered its
Decision,[15] the dispositive portion of which reads, as follows:

WHEREFORE, the subject petitions are DENIED but in the execution of the
decision, it should first be enforced against White Falcon Services and then against
Becmen Services when it is already impossible, impractical and futile to go against it
(White Falcon).

SO ORDERED.[16]

The appellate court affirmed the NLRCs findings that Jasmins death was
compensable, the same having occurred at the dormitory, which was contractually
provided by the employer. Thus her death should be considered to have occurred
within the employers premises, arising out of and in the course of her employment.

Becmen and White Falcon moved for reconsideration. On May 14, 2008, the
appellate court rendered the assailed Amended Decision, the dispositive portion of
which reads, as follows:

WHEREFORE, the motions for reconsideration are GRANTED. Accordingly, the

award of US$80,000.00 in actual damages is hereby reduced to US$4,686.73 plus interest
at the legal rate computed from the time it became due until fully paid. Petitioners are
hereby adjudged jointly and solidarily liable with the employer for the monetary awards
with Becmen Service Exporter and Promotions, Inc. having a right of reimbursement from
White Falcon Services, Inc.

SO ORDERED.[17]

In the Amended Decision, the Court of Appeals found that although Jasmins
death was compensable, however, there is no evidentiary basis to support an
award of actual damages in the amount of US$80,000.00. Nor may lost earnings be
collected, because the same may be charged only against the perpetrator of the
crime or quasi-delict. Instead, the appellate court held that Jasmins beneficiaries
should be entitled only to the sum equivalent of the remainder of her 36-month
employment contract, or her monthly salary of US$247.00 multiplied by nineteen
(19) months, with legal interest.

Becmen filed the instant petition for review on certiorari (G.R. Nos. 182978-
79). The Cuaresmas, on the other hand, moved for a reconsideration of the
amended decision, but it was denied. They are now before us via G.R. Nos. 184298-
99.

On October 6, 2008, the Court resolved to consolidate G.R. Nos. 184298-99

with G.R. Nos. 182978-79.

In G.R. Nos. 182978-79, Becmen raises the following issues for our
resolution:

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT GAVE MORE CREDENCE AND
WEIGHT TO THE AUTOPSY REPORT CONDUCTED BY THE CABANATUAN CITY HEALTH
OFFICE THAN THE MEDICAL AND POLICE REPORTS ISSUED BY THE MINISTRY OF HEALTH
OF KINGDOM OF SAUDI ARABIA AND AL-BIRK HOSPITAL.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN ON THE BASIS OF THE POSITION
PAPERS AND ANNEXES THERETO INCLUDING THE AUTOPSY REPORT, IT CONCLUDED THAT
THE DEATH OF JASMIN CUARESMA WAS CAUSED BY CRIMINAL AGGRESSION.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD THAT THE DEATH OF
JASMIN CUARESMA WAS COMPENSABLE PURSUANT TO THE RULING OF THE SUPREME
COURT IN TALLER VS. YNCHAUSTI, G.R. NO. 35741, DECEMBER 20, 1932, WHICH IT FOUND
TO BE STILL GOOD LAW.
 (THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD BECMEN LIABLE FOR
THE DEATH OF JASMIN CUARESMA NOTWITHSTANDING ITS ADMISSIONS THAT IQAMA
INSURANCE WAS A TYPOGRAPHICAL ERROR SINCE IQAMA IS NOT AN INSURANCE.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT CONCLUDED THAT THE

DEATH OF JASMIN WAS WORK RELATED.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD BECMEN LIABLE TO

JASMINS BENEFICIARIES FOR THE REMAINDER OF HER 36-MONTH CONTRACT COMPUTED
IN THIS MANNER: MONTHLY SALARY OF US$246.67 MULTIPLIED BY 19 MONTHS, THE
REMAINDER OF THE TERM OF JASMINS EMPLOYMENT CONTRACT, IS EQUAL TO
US$4,686.73.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD BECMEN LIABLE TO

PAY INTEREST AT THE LEGAL RATE FROM THE TIME IT WAS DUE UNTIL FULLY PAID.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD BECMEN AND WHITE
FALCON JOINTLY AND SEVERALLY LIABLE WITH THE EMPLOYER NOTWITHSTANDING THE
ASSUMPTION OF LIABILITY EXECUTED BY WHITE FALCON IN FAVOR OF BECMEN.

On the other hand, in G.R. Nos. 184298-99, the Cuaresmas raise the following
issues:

(THE COURT OF APPEALS) GRAVELY ERRED IN APPLYING THE PROVISIONS OF THE

CIVIL CODE CONSIDERED GENERAL LAW DESPITE THE CASE BEING COVERED BY E.O. 247,
R.A. 8042 AND LABOR CODE CONSIDERED AS SPECIAL LAWS.

(THE COURT OF APPEALS) GRAVELY ERRED IN NOT APPLYING THE DECEASEDS

FUTURE EARNINGS WHICH IS (AN) INHERENT FACTOR IN THE COMPUTATION OF DEATH
BENEFITS OF OVERSEAS FILIPINO CONTRACT WORKERS.

(THE COURT OF APPEALS) GRAVELY ERRED IN REDUCING THE DEATH BENEFITS

AWARDED BY NLRC CONSIDERED FINDINGS OF FACT THAT CANNOT BE DISTURBED
THROUGH CERTIORARI UNDER RULE 65 OF THE RULES OF COURT.
 The issue for resolution is whether the Cuaresmas are entitled to monetary
claims, by way of benefits and damages, for the death of their daughter Jasmin.

The terms and conditions of Jasmins 1996 Employment Agreement which

she and her employer Rajab freely entered into constitute the law between
them. As a rule, stipulations in an employment contract not contrary to statutes,
public policy, public order or morals have the force of law between the contracting
parties.[18] An examination of said employment agreement shows that it provides
for no other monetary or other benefits/privileges than the following:

1. 1,300 rials (or US$247.00) monthly salary;

2. Free air tickets to KSA at the start of her contract and to the Philippines at the
end thereof, as well as for her vacation at the end of each twenty four-month
service;

3. Transportation to and from work;

4. Free living accommodations;

5. Free medical treatment, except for optical and dental operations, plastic surgery
charges and lenses, and medical treatment obtained outside of KSA;

6. Entry visa fees will be shared equally between her and her employer, but the
exit/re-entry visa fees, fees for Iqama issuance, renewal, replacement, passport
renewal, sponsorship transfer and other liabilities shall be borne by her;

7. Thirty days paid vacation leave with round trip tickets to Manila after twenty
four-months of continuous service;
 8. Eight days public holidays per year;

9. The indemnity benefit due her at the end of her service will be calculated as per
labor laws of KSA.

Thus, the agreement does not include provisions for insurance, or for
accident, death or other benefits that the Cuaresmas seek to recover, and which
the labor tribunals and appellate court granted variably in the guise of
compensatory damages.

However, the absence of provisions for social security and other benefits
does not make Jasmins employment contract infirm. Under KSA law, her foreign
employer is not obliged to provide her these benefits; and neither is Jasmin entitled
to minimum wage unless of course the KSA labor laws have been amended to the
opposite effect, or that a bilateral wage agreement has been entered into.

Our next inquiry is, should Jasmins death be considered as work-connected

and thus compensable? The evidence indicates that it is not. At the time of her
death, she was not on duty, or else evidence to the contrary would have been
adduced. Neither was she within hospital premises at the time. Instead, she was at
her dormitory room on personal time when she died. Neither has it been shown,
nor does the evidence suggest, that at the time she died, Jasmin was performing
an act reasonably necessary or incidental to her employment as nurse, because she
was at her dormitory room. It is reasonable to suppose that all her work is
performed at the Al-birk Hospital, and not at her dormitory room.

We cannot expect that the foreign employer should ensure her safety even
while she is not on duty. It is not fair to require employers to answer even for their
employees personal time away from work, which the latter are free to spend of
their own choosing. Whether they choose to spend their free time in the pursuit of
safe or perilous undertakings, in the company of friends or strangers, lovers or
enemies, this is not one area which their employers should be made accountable
for. While we have emphasized the need to observe official work time
strictly,[19] what an employee does on free time is beyond the employers sphere of
inquiry.

While the employers premises may be defined very broadly not only to
include premises owned by it, but also premises it leases, hires, supplies or
uses,[20] we are not prepared to rule that the dormitory wherein Jasmin stayed
should constitute employers premises as would allow a finding that death or injury
therein is considered to have been incurred or sustained in the course of or arose
out of her employment. There are certainly exceptions,[21] but they do not appear
to apply here. Moreover, a complete determination would have to depend on the
unique circumstances obtaining and the overall factual environment of the case,
which are here lacking.

But, did Jasmin commit suicide? Rajab, Becmen and White Falcon
vehemently insist that she did; thus, her heirs may not claim benefits or damages
based on criminal aggression. On the other hand, the Cuaresmas do not believe so.

The Court cannot subscribe to the idea that Jasmin committed suicide while
halfway into her employment contract. It is beyond human comprehension that a
25-year old Filipina, in the prime of her life and working abroad with a chance at
making a decent living with a high-paying job which she could not find in her own
country, would simply commit suicide for no compelling reason.

The Saudi police and autopsy reports which state that Jasmin is a likely/or
apparent victim of poisoning are patently inconclusive. They are thus unreliable as
evidence.

On the contrary, the autopsy report of the Cabanatuan City Health Officer
and the exhumation report of the NBI categorically and unqualifiedly show that
Jasmin sustained external and internal injuries, specifically abrasions at her inner
lip and gums; lacerated wounds and abrasions on her left and right
ears; lacerated wounds and hematoma (contusions) on her elbows; abrasions
and hematoma on her thigh and legs; intra-muscular hemorrhage at the anterior
chest; a fractured rib; puncture wounds; and abrasions on the labia minora of the
vaginal area. The NBI toxicology report came up negative on the presence of
poison.

All these show that Jasmin was manhandled and possibly raped prior to her
death.

Even if we were to agree with the Saudi police and autopsy reports that
indicate Jasmin was poisoned to death, we do not believe that it was self-induced. If
ever Jasmin was poisoned, the assailants who beat her up and possibly raped her
are certainly responsible therefor.

We are not exactly ignorant of what goes on with our OFWs. Nor is the rest
of the world blind to the realities of life being suffered by migrant workers in the
hands of some foreign employers. It is inconceivable that our Filipina women would
seek employment abroad and face uncertainty in a foreign land, only to commit
suicide for unexplained reasons. Deciding to leave their family, loved ones, and the
comfort and safety of home, to work in a strange land requires unrivaled strength
and courage. Indeed, many of our women OFWs who are unfortunate to end up
with undesirable employers have been there more times than they care to, beaten
up and broken in body yet they have remained strong in mind, refusing to give up
the will to live. Raped, burned with cigarettes, kicked in the chest with sharp high-
heeled shoes, starved for days or even weeks, stabbed, slaved with incessant work,
locked in their rooms, forced to serve their masters naked, grossly debased,
dehumanized and insulted, their spirits fought on and they lived for the day that
they would once again be reunited with their families and loved ones. Their bodies
surrendered, but their will to survive remained strong.
 It is surprising, therefore, that Rajab, Becmen and White Falcon should insist
on suicide, without even lifting a finger to help solve the mystery of Jasmins
death. Being in the business of sending OFWs to work abroad, Becmen and White
Falcon should know what happens to some of our OFWs. It is impossible for them
to be completely unaware that cruelties and inhumanities are inflicted on OFWs
who are unfortunate to be employed by vicious employers, or upon those who
work in communities or environments where they are liable to become victims of
crime. By now they should know that our women OFWs do not readily succumb to
the temptation of killing themselves even when assaulted, abused, starved,
debased and, worst, raped.

Indeed, what we have seen is Rajab and Becmens revolting scheme of

conveniently avoiding responsibility by clinging to the absurd theory that Jasmin
took her own life. Abandoning their legal, moral and social obligation (as employer
and recruiter) to assist Jasmins family in obtaining justice for her death, they
immediately gave up on Jasmins case, which has remained under investigation as
the autopsy and police reports themselves indicate. Instead of taking the cudgels
for Jasmin, who had no relative or representative in the KSA who would naturally
demand and seek an investigation of her case, Rajab and Becmen chose to take the
most convenient route to avoiding and denying liability, by casting Jasmins fate to
oblivion. It appears from the record that to this date, no follow up of Jasmins case
was ever made at all by them, and they seem to have expediently treated Jasmins
death as a closed case. Despite being given the lead via the autopsy and toxicology
reports of the Philippine authorities, they failed and refused to act and pursue
justice for Jasmins sake and to restore honor to her name.

Indeed, their nonchalant and uncaring attitude may be seen from how
Jasmins remains were repatriated. No official representative from Rajab or Becmen
was kind enough to make personal representations with Jasmins parents, if only to
extend their condolences or sympathies; instead, a mere colleague, nurse Jessie
Fajardo, was designated to accompany Jasmins body home.
 Of all lifes tragedies, the death of ones own child must be the most painful
for a parent. Not knowing why or how Jasmins life was snuffed out makes the pain
doubly unbearable for Jasmins parents, and further aggravated by Rajab, Becmen,
and White Falcons baseless insistence and accusation that it was a self-inflicted
death, a mortal sin by any religious standard.

Thus we categorically hold, based on the evidence; the actual experiences of

our OFWs; and the resilient and courageous spirit of the Filipina that transcends
the vilest desecration of her physical self, that Jasmin did not commit suicide but a
victim of murderous aggression.

Rajab, Becmen, and White Falcons indifference to Jasmins case has caused
unfathomable pain and suffering upon her parents. They have turned away from
their moral obligation, as employer and recruiter and as entities laden with social
and civic obligations in society, to pursue justice for and in behalf of Jasmin, her
parents and those she left behind. Possessed with the resources to determine the
truth and to pursue justice, they chose to stand idly for the sake of convenience
and in order that they may avoid pecuniary liability, turning a blind eye to the
Philippine authorities autopsy and toxicology reports instead of taking action upon
them as leads in pursuing justice for Jasmins death. They have placed their own
financial and corporate interests above their moral and social obligations, and
chose to secure and insulate themselves from the perceived responsibility of having
to answer for and indemnify Jasmins heirs for her death.

Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers and
Overseas Filipinos Act of 1995,[22] the State shall, at all times, uphold the dignity of
its citizens whether in country or overseas, in general, and Filipino migrant workers,
in particular.[23] The State shall provide adequate and timely social, economic and
legal services to Filipino migrant workers.[24] The rights and interest
of distressed[25] overseas Filipinos, in general, and Filipino migrant workers, in
particular, documented or undocumented, are adequately protected and
safeguarded.[26]
 Becmen and White Falcon, as licensed local recruitment agencies, miserably
failed to abide by the provisions of R.A. 8042. Recruitment agencies are expected
to extend assistance to their deployed OFWs, especially those in distress. Instead,
they abandoned Jasmins case and allowed it to remain unsolved to further their
interests and avoid anticipated liability which parents or relatives of Jasmin would
certainly exact from them. They willfully refused to protect and tend to the welfare
of the deceased Jasmin, treating her case as just one of those unsolved crimes that
is not worth wasting their time and resources on. The evidence does not even show
that Becmen and Rajab lifted a finger to provide legal representation and seek an
investigation of Jasmins case. Worst of all, they unnecessarily trampled upon the
person and dignity of Jasmin by standing pat on the argument that Jasmin
committed suicide, which is a grave accusation given its un-Christian nature.

We cannot reasonably expect that Jasmins parents should be the ones to

actively pursue a just resolution of her case in the KSA, unless they are provided
with the finances to undertake this herculean task. Sadly, Becmen and Rajab did
not lend any assistance at all in this respect. The most Jasmins parents can do is to
coordinate with Philippine authorities as mandated under R.A. 8042, obtain free
legal assistance and secure the aid of the Department of Foreign Affairs, the
Department of Labor and Employment, the POEA and the OWWA in trying to solve
the case or obtain relief, in accordance with Section 23[27] of R.A. 8042. To our mind,
the Cuaresmas did all that was within their power, short of actually flying to the
KSA. Indeed, the Cuaresmas went even further. To the best of their abilities and
capacities, they ventured to investigate Jasmins case on their own: they caused
another autopsy on Jasmins remains as soon as it arrived to inquire into the true
cause of her death. Beyond that, they subjected themselves to the painful and
distressful experience of exhuming Jasmins remains in order to obtain another
autopsy for the sole purpose of determining whether or not their daughter was
poisoned. Their quest for the truth and justice is equally to be expected of all loving
parents. All this time, Rajab and Becmen instead of extending their full cooperation
to the Cuaresma family merely sat on their laurels in seeming unconcern.
 In Interorient Maritime Enterprises, Inc. v. NLRC,[28] a seaman who was being
repatriated after his employment contract expired, failed to make his Bangkok to
Manila connecting flight as he began to wander the streets of Bangkok
aimlessly. He was shot to death by Thai police four days after, on account of
running amuck with a knife in hand and threatening to harm anybody within
sight. The employer, sued for death and other benefits as well as damages,
interposed as defense the provision in the seafarer agreement which provides that
no compensation shall be payable in respect of any injury, incapacity, disability or
death resulting from a willful act on his own life by the seaman. The Court rejected
the defense on the view, among others, that the recruitment agency should have
observed some precautionary measures and should not have allowed the seaman,
who was later on found to be mentally ill, to travel home alone, and its failure to
do so rendered it liable for the seamans death. We ruled therein that

The foreign employer may not have been obligated by its contract to provide a
companion for a returning employee, but it cannot deny that it was expressly tasked by
its agreement to assure the safe return of said worker. The uncaring attitude displayed
by petitioners who, knowing fully well that its employee had been suffering from some
mental disorder, nevertheless still allowed him to travel home alone, is appalling to say
the least. Such attitude harks back to another time when the landed gentry practically
owned the serfs, and disposed of them when the latter had grown old, sick or otherwise
lost their usefulness.[29] (Emphasis supplied)

Thus, more than just recruiting and deploying OFWs to their foreign
principals, recruitment agencies have equally significant responsibilities. In a
foreign land where OFWs are likely to encounter uneven if not discriminatory
treatment from the foreign government, and certainly a delayed access to language
interpretation, legal aid, and the Philippine consulate, the recruitment agencies
should be the first to come to the rescue of our distressed OFWs since they know
the employers and the addresses where they are deployed or stationed. Upon
them lies the primary obligation to protect the rights and ensure the welfare of our
OFWs, whether distressed or not. Who else is in a better position, if not these
recruitment agencies, to render immediate aid to their deployed OFWs abroad?
 Article 19 of the Civil Code provides that every person must, in the exercise
of his rights and in the performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith. Article 21 of the Code states that any
person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the
damage. And, lastly, Article 24 requires that in all contractual, property or other
relations, when one of the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender age or other
handicap, the courts must be vigilant for his protection.

Clearly, Rajab, Becmen and White Falcons acts and omissions are against
public policy because they undermine and subvert the interest and general welfare
of our OFWs abroad, who are entitled to full protection under the law. They set an
awful example of how foreign employers and recruitment agencies should treat
and act with respect to their distressed employees and workers abroad. Their
shabby and callous treatment of Jasmins case; their uncaring attitude; their
unjustified failure and refusal to assist in the determination of the true
circumstances surrounding her mysterious death, and instead finding satisfaction
in the unreasonable insistence that she committed suicide just so they can
conveniently avoid pecuniary liability; placing their own corporate interests above
of the welfare of their employees all these are contrary to morals, good customs
and public policy, and constitute taking advantage of the poor employee and her
familys ignorance, helplessness, indigence and lack of power and resources to seek
the truth and obtain justice for the death of a loved one.

Giving in handily to the idea that Jasmin committed suicide, and adamantly
insisting on it just to protect Rajab and Becmens material interest despite evidence
to the contrary is against the moral law and runs contrary to the good custom of
not denouncing ones fellowmen for alleged grave wrongdoings that undermine
their good name and honor.[30]

Whether employed locally or overseas, all Filipino workers enjoy the

protective mantle of Philippine labor and social legislation, contract stipulations to
the contrary notwithstanding. This pronouncement is in keeping with the basic
public policy of the State to afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers. This ruling is likewise rendered
imperative by Article 17 of the Civil Code which states that laws which have for
their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions
agreed upon in a foreign country.[31]

The relations between capital and labor are so impressed with public
interest,[32] and neither shall act oppressively against the other, or impair the
interest or convenience of the public.[33] In case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and decent living for the
laborer.[34]

The grant of moral damages to the employee by reason of misconduct on the

part of the employer is sanctioned by Article 2219 (10)[35] of the Civil Code, which
allows recovery of such damages in actions referred to in Article 21.[36]

Thus, in view of the foregoing, the Court holds that the Cuaresmas are
entitled to moral damages, which Becmen and White Falcon are jointly and
solidarily liable to pay, together with exemplary damages for wanton and
oppressive behavior, and by way of example for the public good.

Private employment agencies are held jointly and severally liable with the
foreign-based employer for any violation of the recruitment agreement or contract
of employment. This joint and solidary liability imposed by law against recruitment
agencies and foreign employers is meant to assure the aggrieved worker of
immediate and sufficient payment of what is due him.[37] 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.[38]
 White Falcons assumption of Becmens liability does not automatically result
in Becmens freedom or release from liability. This has been ruled in ABD Overseas
Manpower Corporation v. NLRC.[39] Instead, both Becmen and White Falcon should
be held liable solidarily, without prejudice to each having the right to be reimbursed
under the provision of the Civil Code that whoever pays for another may demand
from the debtor what he has paid.[40]

WHEREFORE, the Amended Decision of the Court of Appeals dated May 14,
2008 in CA-G.R. SP No. 80619 and CA-G.R. SP No. 81030 is SET ASIDE. Rajab &
Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter and
Promotion, Inc., and their corporate directors and officers are found jointly and
solidarily liable and ORDERED to indemnify the heirs of Jasmin Cuaresma, spouses
Simplicio and Mila Cuaresma, the following amounts:

1) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as

moral damages;

2) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as

exemplary damages;

3) Attorneys fees equivalent to ten percent (10%) of the total monetary

award; and,

4) Costs of suit.

THIRD DIVISION

SUNACE INTERNATIONAL G.R. No. 161757

MANAGEMENT SERVICES, INC.
 Petitioner, Present:

QUISUMBING, J., Chairperson,

- versus - CARPIO,
CARPIO MORALES, and
TINGA, JJ.
NATIONAL LABOR RELATIONS
COMMISSION, Second
Division; HON. ERNESTO S.
DINOPOL, in his capacity as Labor
Arbiter, NLRC; NCR, Arbitration
Branch, Quezon City and DIVINA A.
MONTEHERMOZO, Promulgated:
Respondents.
January 25, 2006

x - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CARPIO MORALES, J.:

Petitioner, Sunace International Management Services (Sunace), a

corporation duly organized and existing under the laws of the Philippines, deployed
to Taiwan Divina A. Montehermozo (Divina) as a domestic helper under a 12-month
contract effective February 1, 1997. The deployment was with the assistance of a
[1]

Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd.

After her 12-month contract expired on February 1, 1998, Divina continued

working for her Taiwanese employer, Hang Rui Xiong, for two more years, after
which she returned to the Philippines on February 4, 2000.

Shortly after her return or on February 14, 2000, Divina filed a

complaint before the National Labor Relations Commission (NLRC) against
[2]

Sunace, one Adelaide Perez, the Taiwanese broker, and the employer-foreign
principal alleging that she was jailed for three months and that she was underpaid.
 The following day or on February 15, 2000, Labor Arbitration Associate
Regina T. Gavin issued Summons to the Manager of Sunace, furnishing it with a
[3]

copy of Divinas complaint and directing it to appear for mandatory conference on

February 28, 2000.

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

concluded, however.

On April 6, 2000, Divina filed her Position Paper claiming that under her
[4]

original one-year contract and the 2-year extended contract which was with the
knowledge and consent of Sunace, the following amounts representing income tax
and savings were deducted:

Year Deduction for Deduction for Savings

Income Tax

1997 NT10,450.00 NT23,100.00

1998 NT9,500.00 NT36,000.00
1999 NT13,300.00 NT36,000.00;[5]

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

follows, quoted verbatim:

COMPLAINANT IS NOT ENTITLED

FOR THE REFUND OF HER 24 MONTHS
SAVINGS

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

COMPLAINANT IS NOT ENTITLED

TO REFUND OF HER 14 MONTHS TAX
AND PAYMENT OF ATTORNEYS FEES
4. There is no basis for the grant of tax refund to the complainant as the she finished her one
year contract and hence, was not illegally dismissed by her employer. She could
only lay claim over the tax refund or much more be awarded of damages such as
attorneys fees as said reliefs are available only when the dismissal of a migrant
worker is without just valid or lawful cause as defined by law or contract.

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

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

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

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

x x x x (Emphasis and underscoring supplied)

Reacting to Divinas Position Paper, Sunace filed on April 25, 2000 an . . . ANSWER
TO COMPLAINANTS POSITION PAPER alleging that Divinas 2-year extension of her
[7]

contract was without its knowledge and consent, hence, it had no liability attaching
to any claim arising therefrom, and Divina in fact executed a Waiver/Quitclaim and
Release of Responsibility and an Affidavit of Desistance, copy of each document
was annexed to said . . . ANSWER TO COMPLAINANTS POSITION PAPER.

To Sunaces . . . ANSWER TO COMPLAINANTS POSITION PAPER, Divina filed a 2-page

reply, without, however, refuting Sunaces disclaimer of knowledge of the extension
[8]

of her contract and without saying anything about the Release, Waiver and Quitclaim
and Affidavit of Desistance.
The Labor Arbiter, rejected Sunaces claim that the extension of Divinas contract for
two more years was without its knowledge and consent in this wise:

We reject Sunaces submission that it should not be held responsible

for the amount withheld because her contract was extended for 2 more years
without its knowledge and consent because as Annex B[9] shows, Sunace and
Edmund Wang have not stopped communicating with each other and yet the
matter of the contracts extension and Sunaces alleged non-consent thereto
has not been categorically established.

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

And because it did not, it is presumed to have consented to the

extension and should be liable for anything that resulted thereform
(sic).[10] (Underscoring supplied)

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

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

The settlement shall be approved by the Labor Arbiter after being satisfied
that it was voluntarily entered into by the parties and after having explained to them
the terms and consequences thereof.

A compromise agreement entered into by the parties not in the presence of

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

And because no consideration is indicated in the documents, we strike them

down as contrary to law, morals, and public policy.[11]

He accordingly decided in favor of Divina, by decision of October 9, 2000, the [12]

dispositive portion of which reads:

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

SO ORDERED.[13] (Underescoring supplied)

On appeal of Sunace, the NLRC, by Resolution of April 30, 2002, affirmed [14]

the Labor Arbiters decision.

Via petition for certiorari, Sunace elevated the case to the Court of Appeals
[15]

which dismissed it outright by Resolution of November 12, 2002, the full text of
[16]

which reads:

The petition for certiorari faces outright dismissal.

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

ACCORDINGLY, the petition is hereby DENIED DUE

COURSE and DISMISSED.[17]

SO ORDERED.

(Emphasis on words in capital letters in the original; emphasis on words in

small letters and underscoring supplied)
Its Motion for Reconsideration having been denied by the appellate court by
Resolution of January 14, 2004, Sunace filed the present petition for review on
[18]

certiorari.

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

Contrary to the Court of Appeals finding, the alleged continuous

communication was with the Taiwanese broker Wang, not with the foreign employer
Xiong.

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

xxxx

Regarding to Divina, she did not say anything about her

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

Thank you and best regards.

(sgd.)
Edmund Wang
President[19]

The finding of the Court of Appeals solely on the basis of the above-quoted
telefax message, that Sunace continually communicated with the foreign principal
(sic) and therefore was aware of and had consented to the execution of the extension
of the contract is misplaced. The message does not provide evidence that Sunace
was privy to the new contract executed after the expiration on February 1, 1998 of
the original contract. That Sunace and the Taiwanese broker communicated
regarding Divinas allegedly withheld savings does not necessarily mean that Sunace
ratified the extension of the contract. As Sunace points out in its Reply filed before
[20]

the Court of Appeals,

As can be seen from that letter communication, it was just an

information given to the petitioner that the private respondent had t[aken]
already her savings from her foreign employer and that no deduction was
made on her salary. It contains nothing about the extension or the petitioners
consent thereto.[21]

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

Respecting the Court of Appeals following dictum:

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

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

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to
the principal, employer Xiong, not the other way around. The knowledge of the
[23]

principal-foreign employer cannot, therefore, be imputed to its agent Sunace.

There being no substantial proof that Sunace knew of and consented to be

bound under the 2-year employment contract extension, it cannot be said to be privy
thereto. As such, it and its owner cannot be held solidarily liable for any of Divinas
claims arising from the 2-year employment extension. As the New Civil Code
provides,

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

Furthermore, as Sunace correctly points out, there was an implied revocation

of its agency relationship with its foreign principal when, after the termination of the
original employment contract, the foreign principal directly negotiated with Divina
and entered into a new and separate employment contract in Taiwan. Article 1924
of the New Civil Code reading

The agency is revoked if the principal directly manages the business

entrusted to the agent, dealing directly with third persons.

thus applies.

In light of the foregoing discussions, consideration of the validity of the

Waiver and Affidavit of Desistance which Divina executed in favor of Sunace is
rendered unnecessary.

WHEREFORE, the petition is GRANTED. The challenged resolutions of

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

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO DANTE O. TINGA

Associate Justice Associate Justice
 ATTESTATION

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

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

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

ARTEMIO V. PANGANIBAN
Chief Justice

SECOND DIVISION

SKIPPERS UNITED PACIFIC, INC. and G.R. No. 175558

SKIPPERS MARITIME SERVICES,

INC., LTD., Present:

Petitioners,

NAPOLEON DE GRACIA,

ISIDRO L. LATA, and

CHARLIE APROSTA, Promulgated:

Respondents. February 8, 2012

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

The Facts

Skippers United Pacific, Inc. deployed, in behalf of Skippers, De Gracia, Lata,

and Aprosta to work on board the vessel MV Wisdom Star, under the following terms
and conditions:

Name: Napoleon O. De Gracia

Position: 3rd Engineer

Contract Duration: 10 months

Basic Monthly Salary: US$800.00

Contract Date: 17 July 199814

Name: Isidro L. Lata

Position: 4th Engineer

Contract Duration: 12 months

Basic Monthly Salary: US$600.00

Contract Date: 17 April 199815

Name: Charlie A. Aprosta

Position: Third Officer

Contract Duration: 12 months

Basic Monthly Salary: US$600.00

Contract Date: 17 April 199816

Paragraph 2 of all the employment contracts stated that: The terms and conditions of
the Revised Employment Contract Governing the Employment of All Seafarers
approved per Department Order No. 33 and Memorandum Circular No. 55, both
series of 1996 shall be strictly and faithfully observed.17 No employment contract was
submitted for Nathaniel Doza.

De Gracia, et al. claimed that Skippers failed to remit their respective allotments for
almost five months, compelling them to air their grievances with the Romanian
Seafarers Free Union.18 On 16 December 1998, ITF Inspector Adrian Mihalcioiu of
the Romanian Seafarers Union sent Captain Savvas of Cosmos Shipping a fax letter,
relaying the complaints of his crew, namely: home allotment delay, unpaid salaries
(only advances), late provisions, lack of laundry services (only one washing machine),
and lack of maintenance of the vessel (perforated and unrepaired deck).19 To date,
however, Skippers only failed to remit the home allotment for the month of December
1998.20 On 28 January 1999, De Gracia, et al. were unceremoniously discharged from
MV Wisdom Stars and immediately repatriated.21 Upon arrival in the Philippines,
De Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter on 4
April 1999 and prayed for payment of their home allotment for the month of
December 1998, salaries for the unexpired portion of their contracts, moral damages,
exemplary damages, and attorneys fees.22
Skippers, on the other hand, claims that at around 2:00 a.m. on 3 December 1998,
De Gracia, smelling strongly of alcohol, went to the cabin of Gabriel Oleszek, Master
of MV Wisdom Stars, and was rude, shouting noisily to the master.23 De Gracia left
the masters cabin after a few minutes and was heard shouting very loudly somewhere
down the corridors.24 This incident was evidenced by the Captains Report sent via
telex to Skippers on said date.25

Skippers also claims that at 12:00 noon on 22 January 1999, four Filipino seafarers,
namely Aprosta, De Gracia, Lata and Doza, arrived in the masters cabin and
demanded immediate repatriation because they were not satisfied with the
ship.26 De Gracia, et al. threatened that they may become crazy any moment and
demanded for all outstanding payments due to them.27 This is evidenced by a telex
of Cosmoship MV Wisdom to Skippers, which however bears conflicting dates of 22
January 1998 and 22 January 1999.28

Skippers also claims that, due to the disembarkation of De Gracia, et al., 17 other
seafarers disembarked under abnormal circumstsances.29 For this reason, it was
suggested that Polish seafarers be utilized instead of Filipino seamen.30 This is again
evidenced by a fax of Cosmoship MV Wisdom to Skippers, which bears conflicting
dates of 24 January 1998 and 24 January 1999.31

Skippers, in its Position Paper, admitted non-payment of home allotment for the
month of December 1998, but prayed for the offsetting of such amount with the
repatriation expenses in the following manner:32

Seafarer Repatriation Home Allotment Balance

Expense
De Gracia US$1,340.00 US$900.00 US$440.00
Aprosta US$1,340.00 US$600.00 US$740.00
Lata US$1,340.00 US$600.00 US$740.00

Since De Gracia, et al. pre-terminated their contracts, Skippers claims they are liable
for their repatriation expenses33 in accordance with Section 19(G) of Philippine
Overseas Employment Administration (POEA) Memorandum Circular No. 55, series
of 1996 which states:

G. A seaman who requests for early termination of his contract shall be liable
for his repatriation cost as well as the transportation cost of his replacement.
The employer may, in case of compassionate grounds, assume the
transportation cost of the seafarers replacement.

Skippers also prayed for payment of moral damages and attorneys fees.34

The Decision of the Labor Arbiter

The Labor Arbiter rendered his Decision on 18 February 2002, with its dispositive
portion declaring:

WHEREFORE, judgment is hereby rendered dismissing herein action for lack

of merit. Respondents claim for reimbursement of the expenses they incurred in
the repatriation of complainant Nathaniel Doza is likewise dismissed.

SO ORDERED.35

The Labor Arbiter dismissed De Gracia, et al.s complaint for illegal dismissal because
the seafarers voluntarily pre-terminated their employment contracts by demanding for
immediate repatriation due to dissatisfaction with the ship.36 The Labor Arbiter held
that such voluntary pre-termination of employment contract is akin to resignation,37 a
form of termination by employee of his employment contract under Article 285 of
the Labor Code. The Labor Arbiter gave weight and credibility to the telex of the
master of the vessel to Skippers, claiming that De Gracia, et al. demanded for
immediate repatriation.38 Due to the absence of illegal dismissal, De Gracia, et. al.s
claim for salaries representing the unexpired portion of their employment contracts
was dismissed.39

The Labor Arbiter also dismissed De Gracia et al.s claim for home allotment for
December 1998.40 The Labor Arbiter explained that payment for home allotment is in
the nature of extraordinary money where the burden of proof is shifted to the worker
who must prove he is entitled to such monetary benefit.41 Since De Gracia, et al. were
not able to prove their entitlement to home allotment, such claim was dismissed.42

Lastly, Skippers claim for reimbursement of repatriation expenses was likewise

denied, since Article 19(G) of POEA Memorandum Circular No. 55, Series of 1996
allows the employer, in case the seafarer voluntarily pre-terminates his contract, to
assume the repatriation cost of the seafarer on compassionate grounds.43

The Decision of the NLRC

The NLRC, on 28 October 2002, dismissed De Gracia, et al.s appeal for lack of merit
and affirmed the Labor Arbiters decision.44 The NLRC considered De Gracia, et al.s
claim for home allotment for December 1998 unsubstantiated, since home allotment is
a benefit which De Gracia, et al. must prove their entitlement to.45 The NLRC also
denied the claim for illegal dismissal because De Gracia, et al. were not able to refute
the telex received by Skippers from the vessels master that De Gracia, et al.
voluntarily pre-terminated their contracts and demanded immediate repatriation due to
their dissatisfaction with the ships operations.46

The Issues
Skippers, in its Petition for Review on Certiorari, assigned the following errors in the
CA Decision:

a) The Court of Appeals seriously erred in not giving due credence to the
masters telex message showing that the respondents voluntarily requested to be
repatriated.

b) The Court of Appeals seriously erred in finding petitioners liable to

pay backwages and the alleged unremitted home allotment pay despite the
finding of the Labor Arbiter and the NLRC that the claims are baseless.

The Ruling of this Court

We deny the petition and affirm the CA Decision, but modify the award.

For a workers dismissal to be considered valid, it must comply with both procedural
and substantive due process. The legality of the manner of dismissal constitutes
procedural due process, while the legality of the act of dismissal constitutes
substantive due process.56

Procedural due process in dismissal cases consists of the twin requirements of notice
and hearing. The employer must furnish the employee with two written notices before
the termination of employment can be effected: (1) the first notice apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2)
the second notice informs the employee of the employers decision to dismiss him.
Before the issuance of the second notice, the requirement of a hearing must be
complied with by giving the worker an opportunity to be heard. It is not necessary that
an actual hearing be conducted.57
Substantive due process, on the other hand, requires that dismissal by the employer be
made under a just or authorized cause under Articles 282 to 284 of the Labor Code.

In this case, there was no written notice furnished to De Gracia, et al. regarding the
cause of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the
local manning agency, claiming that De Gracia, et al. were repatriated because the
latter voluntarily pre-terminated their contracts. This telex was given credibility and
weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of
the employment contract akin to resignation and no illegal dismissal. However, as
correctly ruled by the CA, the telex message is a biased and self-serving document
that does not satisfy the requirement of substantial evidence. If, indeed, De Gracia, et
al. voluntarily pre-terminated their contracts, then De Gracia, et al. should have
submitted their written resignations.

Article 285 of the Labor Code recognizes termination by the employee of the
employment contract by serving written notice on the employer at least one (1) month
in advance. Given that provision, the law contemplates the requirement of a written
notice of resignation. In the absence of a written resignation, it is safe to presume that
the employer terminated the seafarers. In addition, the telex message relied upon by
the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22
January 1999, giving doubt to the veracity and authenticity of the document. In 22
January 1998, De Gracia, et al. were not even employed yet by the foreign principal.
For these reasons, the dismissal of De Gracia, et al. was illegal.

On the issue of home allotment pay, Skippers effectively admitted non-remittance of

home allotment pay for the month of December 1998 in its Position Paper. Skippers
sought the repatriation expenses to be offset with the home allotment pay. However,
since De Gracia, et al.s dismissal was illegal, their repatriation expenses were for the
account of Skippers and could not be offset with the home allotment pay.

Contrary to the claim of the Labor Arbiter and NLRC that the home allotment pay is
in the nature of extraordinary money where the burden of proof is shifted to the
worker who must prove he is entitled to such monetary benefit, Section 8 of POEA
Memorandum Circular No. 55, series of 1996, states that the allotment actually
constitutes at least eighty percent (80%) of the seafarers salary:
 The seafarer is required to make an allotment which is payable once a month to
his designated allottee in the Philippines through any authorized Philippine
bank. The master/employer/agency shall provide the seafarer with facilities to
do so at no expense to the seafarer. The allotment shall be at least eighty
percent (80%) of the seafarers monthly basic salary including backwages, if

THIRD DIVISION

[G.R. No. 138193. March 5, 2003]

OSM SHIPPING PHILIPPINES, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION (Third Division) and FERMIN F.
GUERRERO, respondents.

DECISION
PANGANIBAN, J.:

The Rules of Court do not require that all supporting papers and documents
accompanying a petition for certiorari should be duplicate originals or certified true copies.
Furthermore, unilateral decisions to alter the use of a vessel from overseas service to
coastwise shipping will not affect the validity of an existing employment contract validly
executed. Workers should not be prejudiced by actions done solely by employers without
the formers consent or participation.

The Case

The Facts

This case originated from a Complaint filed by Fermin F. Guerrero against OSM
Shipping Philippines, Inc.; and its principal, Philippine Carrier Shipping Agency Services
Co. The Complaint was for illegal dismissal and non-payment of salaries, overtime pay
and vacation pay. The facts are summarized in the NLRC Decision as follows:
[Private respondent] was hired by [Petitioner] OSM for and in behalf of its principal,
Phil Carrier Shipping Agency Services Co. (PC-SLC) to board its vessel M/V
[Princess] Hoa as a Master Mariner for a contract period of ten (10) months. Under
the said contract, his basic monthly salary is US$1,070.00, US$220.00 allowance,
US$321.00 fixed overtime, US$89 vacation leave pay per month for x x x 44 hours f]
work per week. He boarded the vessel on July 21, 1994 and complied faithfully with
the duties assigned to him.

[Private respondent] alleged that from the start of his work with M/V Princess Hoa, he
was not paid any compensation at all and was forced to disembark the vessel
sometime in January 1995 because he cannot even buy his basic personal
necessities. For almost seven (7) months, i.e. from July 1994 to January 1995,
despite the services he rendered, no compensation or remuneration was ever paid to
him. Hence, this case for illegal dismissal, [non-payment] of salaries, overtime pay
and vacation pay.

[Petitioner] OSM, for its part, alleged that on July 26, 1994, Concorde Pacific, an
American company which owns M/V Princess Hoa, then a foreign registered vessel,
appointed x x x Philippine Carrier Shipping Agency Services Co. (PC-SASCO) as
ship manager particularly to negotiate, transact and deal with any third persons,
entities or corporations in the planning of crewing selection or determination of
qualifications of Filipino Seamen. On the same date, [Petitioner] OSM entered into a
Crew Agreement with x x x PC-SASCO for the purpose of processing the documents
of crew members of M/V Princess Hoa. The initial plan of the [s]hip-owner was to use
the vessel in the overseas trade, particularly the East Asian Growth Area. Thereafter,
the contract of [private respondent] was processed before the POEA on September 20,
1994.

OSM alleged further that the shipowner changed its plans on the use of the
vessel. Instead of using it for overseas trade, it decided to use it in the coastwise trade,
thus, the crewmembers hired never left the Philippines and were merely used by the
shipowner in the coastwise trade. Considering that the M/V Princess Hoa was a
foreign registered vessel and could not be used in the coastwise trade, the shipowner
converted the vessel to Philippine registry on September 28, 1994 by way of bareboat
chartering it out to another entity named Philippine Carrier Shipping Lines Co.
(PCSLC). To do this, the shipowner through Conrado V. Tendido had to terminate its
management agreement with x x x PC-SASCO on September 28, 1994 by a letter of
termination dated September 20, 1994. In the same letter of termination, the ship
owner stated that it has bareboat chartered out the vessel to said [PCSLC] and
converted it into Philippine registry. Consequently, x x x PC-SASCO terminated its
crew agreement with OSM in a letter dated December 5, 1994. Because of the
bareboat charter of the vessel to PCSLC and its subsequent conversion to Philippine
registry and use in coastwise trade as well as to the termination of the management
agreement and crew agency agreement, a termination of contract ensued whereby
PCSLC, the bareboat charterer, became the disponent owner/employer of the
crew.

As a disponent owner/employer, PCSLC is now responsible for the payment of

complainants wages. x x x. [5]

Labor Arbiter (LA) Manuel R. Caday rendered a Decision [6] in favor of Private
Respondent Guerrero. Petitioner and its principal, Philippine Carrier Shipping Agency
Services, Co. (PC-SASCO), were ordered to jointly and severally pay Guerrero his unpaid
salaries and allowances, accrued fixed overtime pay, vacation leave pay and termination
pay. The Decision held that there was a constructive dismissal of private respondent,
since he had not been paid his salary for seven months. It also dismissed petitioners
contention that there was a novation of the employment contract.
had not indicated the actual address of Private Respondent Fermin F. Guerrero.[8]
Hence, this Petition.[9]

Substantive Issue:

Liability of Petitioner for Unpaid Salaries

It is worthwhile to note that what is involved in this case is the recovery of unpaid
salaries and other monetary benefits. The Court is mindful of the plight of private
respondent and, indeed, of workers in general who are seeking to recover wages that are
being unlawfully withheld from them. Such recovery should not be needlessly delayed at
the expense of their survival. This case is now on its ninth year since its inception at the
LAs office. Its remand to the CA will only unduly delay its disposition. In the interest of
substantial justice,[20] this Court will decide the case on the merits based upon the records
of the case, particularly those relating to the OSM Shipping Philippines Petition before the
CA.
On behalf of its principal, PC-SASCO, petitioner does not deny hiring Private
Respondent Guerrero as master mariner. However, it argues that since he was not
deployed overseas, his employment contract became ineffective, because its object was
allegedly absent. Petitioner contends that using the vessel in coastwise trade and
subsequently chartering it to another principal had the effect of novating the
employment contract. We are not persuaded.
As approved by the Philippine Overseas Employment Agency (POEA), petitioner was
the legitimate manning agent of PC-SASCO.[21] As such, it was allowed to select, recruit,
hire and deploy seamen on board the vessel M/V Princess Hoa, which was managed by
its principal, PC-SASCO.[22] It was in this capacity that petitioner hired private respondent
as master mariner. They then executed and agreed upon an employment contract.
An employment contract, like any other contract, is perfected at the moment (1) the
parties come to agree upon its terms; and (2) concur in the essential elements thereof:
(a) consent of the contracting parties, (b) object certain which is the subject matter of the
contract and (c) cause of the obligation.[23] Based on the perfected contract, Private
Respondent Guerrero complied with his obligations thereunder and rendered his
services on board the vessel. Contrary to petitioners contention, the contract had an
object, which was the rendition of service by private respondent on board the vessel. The
non-deployment of the ship overseas did not affect the validity of the perfected
employment contract. After all, the decision to use the vessel for coastwise shipping was
made by petitioner only and did not bear the written conformity of private respondent. A
contract cannot be novated by the will of only one party.[24] The claim of petitioner that it
processed the contract of private respondent with the POEA only after he had started
working is also without merit. Petitioner cannot use its own misfeasance to defeat his
claim.
Petitioner, as manning agent, is jointly and severally liable with its principal, [25] PC-
SASCO, for private respondents claim. This conclusion is in accordance with Section 1
of Rule II of the POEA Rules and Regulations.[26] Joint and solidary liability is meant to
assure aggrieved workers of immediate and sufficient payment of what is due them.[27] The
fact that petitioner and its principal have already terminated their agency agreement does
not relieve the former of its liability. The reason for this ruling was given by this Court
in Catan National Labor Relations Commission,[28] which we reproduce in part as follows:

This must be so, because the obligations covenanted in the [manning] agreement
between the local agent and its foreign principal are not coterminus with the term of
such agreement so that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees under the agreement
do not at all end, but the same extends up to and until the expiration of the,
employment contracts of the employees recruited and employed pursuant to the said
recruitment agreement. Otherwise, this will render nugatory the very purpose for
which the law governing the employment of workers for foreign jobs abroad was
enacted. [29]

SECOND DIVISION
PAUL V. SANTIAGO, G.R. No. 162419
Petitioner,
Present:

QUISUMBING,* J.,
- versus - Chairperson,
CARPIO,**
CARPIO MORALES,
TINGA, and
CF SHARP CREW MANAGEMENT, VELASCO, JR., JJ.
INC.,
Respondent.
Promulgated:
July 10, 2007

x----------------------------------------------------------------------------x

DECISION

TINGA, J.:

At the heart of this case involving a contract between a seafarer, on one hand,
and the manning agent and the foreign principal, on the other, is this erstwhile
unsettled legal quandary: whether the seafarer, who was prevented from
leaving the port of Manila and refused deployment without valid reason but
whose POEA-approved employment contract provides that the employer-
employee relationship shall commence only upon the seafarers actual
departure from the port in the point of hire, is entitled to relief?

Petitioner had been working as a seafarer for Smith Bell Management,

Inc. (respondent) for about five (5) years.[2] On 3 February 1998, petitioner signed a
new contract of employment with respondent, with the duration of nine (9)
months. He was assured of a monthly salary of US$515.00, overtime pay and other
benefits. The following day or on 4 February 1998, the contract was approved by the
Philippine Overseas Employment Administration (POEA). Petitioner was to be
deployed on board the MSV Seaspread which was scheduled to leave
the port of Manila for Canada on 13 February 1998.
A week before the scheduled date of departure, Capt. Pacifico
Fernandez, respondents Vice President, sent a facsimile message to the captain
of MSV Seaspread, which reads:

I received a phone call today from the wife of Paul Santiago

in Masbate asking me not to send her husband to MSV Seaspread
anymore. Other callers who did not reveal their identity gave me some
feedbacks that Paul Santiago this time if allowed to depart will jump
ship in Canada like his brother Christopher Santiago, O/S who
jumped ship from the C.S. Nexus in Kita-kyushu, Japanlast December,
1997.

We do not want this to happen again and have the vessel penalized
like the C.S. Nexus in Japan.
Forewarned is forearmed like his brother when his brother when he
was applying he behaved like a Saint but in his heart he was a serpent. If
you agree with me then we will send his replacement.
Kindly advise.[3]

To this message the captain of MSV Seaspread replied:

Many thanks for your advice concerning P. Santiago, A/B. Please cancel
plans for him to return to Seaspread.[4]

On 9 February 1998, petitioner was thus told that he would not be leaving
for Canada anymore, but he was reassured that he might be considered for
deployment at some future date.

Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees
against respondent and its foreign principal, Cable and Wireless (Marine)
Ltd.[5] The case was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled that
the employment contract remained valid but had not commenced since petitioner
was not deployed. According to her, respondent violated the rules and regulations
governing overseas employment when it did not deploy petitioner, causing
petitioner to suffer actual damages representing lost salary income
for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00.

The labor arbiter held respondent liable. The dispositive portion of her

On appeal by respondent, the National Labor Relations Commission (NLRC) ruled

that there is no employer-employee relationship between petitioner
and respondent because under the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean Going Vessels (POEA Standard
Contract), the employment contract shall commence upon actual departure of the
seafarer from the airport or seaport at the point of hire and with a POEA-approved
contract. In the absence of an employer-employee relationship between the
parties, the claims for illegal dismissal, actual damages, and attorneys fees
should be dismissed.[7] On the other hand, the NLRC found respondents decision
not to deploy petitioner to be a valid exercise of its management
prerogative.[8] The NLRC disposed of the appeal in this wise:

According to the appellate court CA, petitioner is not entitled to actual damages
because damages are not recoverable by a worker who was not deployed by his
agency within the period prescribed in
the POEA Rules.[13] It agreed with the NLRCs finding that petitioners non-
deployment was a valid exercise of respondents management prerogative.[14] It
added that since petitioner had not departed from the Port of Manila, no employer-
employee relationship between the parties arose and any claim for damages against
the so-called employercould have no leg to stand on.[15]

Petitioners subsequent motion for reconsideration was denied on 19 February

2004.[16]

The present petition is anchored on two grounds, to wit:

A. The Honorable Court of Appeals committed a serious error of law

when it ignored [S]ection 10 of Republic Act [R.A.] No. 8042 otherwise
 known as the Migrant Workers Act of 1995 as well as Section 29 of the
Standard Terms and Conditions Governing the Employment of Filipino
Seafarers On-Board Ocean-Going Vessels (which is deemed incorporated
under the petitioners POEA approved Employment Contract) that the claims
or disputes of the Overseas Filipino Worker by virtue of a contract fall within
the jurisdiction of the Labor Arbiter of the NLRC.

B. The Honorable Court of Appeals committed a serious error when

it disregarded the required quantum of proof in labor cases, which is
substantial evidence, thus a total departure from established jurisprudence on
the matter.[17]
RULING
Petitioner maintains that respondent violated the Migrant Workers Act and
the POEA Rules when it failed to deploy him within thirty (30) calendar days
without a valid reason. In doing so, it had unilaterally and arbitrarily prevented the
consummation of the POEA- approved contract. Since it prevented his
deployment without valid basis, said deployment being a condition to the
consummation of the POEA contract, the contract is deemed consummated, and
therefore he should be awarded actual damages, consisting of the stipulated salary
and fixed overtime pay.[18] Petitioner adds that since the contract is deemed
consummated, he should be considered an employee for all intents and purposes,
and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of
his claims.[19]

On the other hand, respondent argues that the Labor Arbiter has no
jurisdiction to award petitioners monetary claims. His employment with respondent
did not commence because his deployment was withheld for a valid
reason. Consequently, the labor arbiter and/or the NLRC cannot entertain
adjudication of petitioners case much less award damages to him. The controversy
involves a breach of contractual obligations and as such is cognizable by civil
courts.[24] On another matter, respondent claims that the second issue posed by
petitioner involves a recalibration of facts which is outside the jurisdiction of this
Court.[25]

There is some merit in the petition.

 There is no question that the parties entered into an employment contract
on 3 February 1998, whereby petitioner was contracted by respondent to
render services on board MSV Seaspread for the consideration of US$515.00
per month for nine (9) months, plus overtime pay. However, respondent failed to
deploy petitioner from the port of Manila to Canada. Considering that petitioner was
not able to depart from the airport or seaport in the point of hire, the employment
contract did not commence, and no employer-employee relationship was created
between the parties.[26]

However, a distinction must be made between the perfection of the

employment contract and the commencement of the employer-
employee relationship. The perfection of the contract, which in this:

case coincided with the date of execution thereof, occurred when petitioner and
respondent agreed on the object and the cause, as well as the rest of the terms and
conditions therein. The commencement of the employer-employee relationship, as
earlier discussed, would have taken place had petitioner been actually deployed from
the point of hire. Thus, even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the birth
of certain rights and obligations, the breach of which may give rise to a cause
of action against the erring party. Thus, if the reverse had happened, that is the
seafarer failed or refused to be deployed as agreed upon, he would be liable for
damages.

Moreover, while the POEA Standard Contract must be recognized and

respected, neither the manning agent nor the employer can simply prevent a seafarer
from being deployed without a valid reason.

Respondents act of preventing petitioner from departing

the port of Manila and boarding MSV Seaspread constitutes a breach of contract,
giving rise to petitioners cause of action. Respondent unilaterally and unreasonably
reneged on its obligation to deploy petitioner and must therefore answer for the
actual damages he suffered.
 Despite the absence of an employer-employee relationship between petitioner
and respondent, the Court rules that the NLRC has jurisdiction over petitioners
complaint. The jurisdiction of labor arbiters is not limited to claims arising from
employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant Workers
Act), provides that:

Sec. 10. Money Claims. Notwithstanding any provision of law to the

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

Since the present petition involves the employment contract entered into by
petitioner for overseas employment, his claims are cognizable by the labor arbiters
of the NLRC.

Article 2199 of the Civil Code provides that one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved.
Respondent is thus liable to pay petitioner actual damages in the form of the loss
of nine (9) months worth of salary as provided in the contract. He is not, however,
entitled to overtime pay. While the contract indicated a fixed overtime pay, it is not
a guarantee that he would receive said amount regardless of whether or not he
rendered overtime work. Even though petitioner was prevented without valid reason
from rendering regular much less overtime service,[28] the fact remains that there is
no certainty that petitioner will perform overtime work had he been allowed to board
the vessel. The amount of US$286.00 stipulated in the contract will be paid only if
and when the employee rendered overtime work.This has been the tenor of our
rulings in the case of Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor
Relations Commission[29] where we discussed the matter in this light:

The contract provision means that the fixed overtime pay of 30% would
be the basis for computing the overtime pay if and when overtime work
 would be rendered. Simply stated, the rendition of overtime work and the
submission of sufficient proof that said work 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.Realistically
speaking, a seaman, by the very nature of his job, stays on board a ship or
vessel beyond the regular eight-hour work schedule. For the employer to
give him overtime pay for the extra hours when he might be sleeping or
attending to his personal chores or even just lulling away his time would
be extremely unfair and unreasonable.[30]

The Court also holds that petitioner is entitled to attorneys fees in the concept
of damages and expenses of litigation. Attorney's fees are recoverable when the
defendant's act or omission has compelled the plaintiff to incur expenses to protect
his interest.[31] We note that respondents basis for not deploying petitioner is the
belief that he will jump ship just like his brother, a mere suspicion that is based on
alleged phone calls of several persons whose identities were not even
confirmed. Time and again, this Court has upheld management prerogatives so long
as they are exercised in good faith for the advancement of the employers interest
and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements.[32] Respondents failure to deploy
petitioner is unfounded and unreasonable, forcing petitioner to institute the suit
below. The award of attorneys fees is thus warranted.

However, moral damages cannot be awarded in this case. While respondents

failure to deploy petitioner seems baseless and unreasonable, we cannot qualify such
action as being tainted with bad faith, or done deliberately to defeat petitioners
rights, as to justify the award of moral damages. At most, respondent was being
overzealous in protecting its interest when it became too hasty in making its
conclusion that petitioner will jump ship like his brother.

We likewise do not see respondents failure to deploy petitioner as an act

designed to prevent the latter from attaining the status of a regular employee.
 ---------------------------------------------
G.R. No. 167614 March 24, 2009

ANTONIO M. SERRANO, Petitioner,

vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.

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.

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 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which
applied the subject clause, entreating this Court to declare the subject clause
unconstitutional.

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

Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded
employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon
the assurance and representation of respondents that he would be made Chief Officer by the end of
April 1998.6

Respondents did not deliver on their promise to make petitioner Chief Officer.7 Hence, petitioner
refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.8

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March
19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and
seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23)
days.

Petitioner filed with the Labor Arbiter (LA) a Complaint9 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:

TOTAL CLAIM US$ 26,442.7311

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

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner
illegal and awarding him monetary benefits, to wit:

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on

the salary period of three months only -- rather than the entire unexpired portion of nine
months and 23 days of petitioner's employment contract - applying the subject clause.
However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic
salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month,
vacation leave pay = US$2,590.00/compensation per month."14

Respondents appealed15 to the National Labor Relations Commission (NLRC) to question

the finding of the LA that petitioner was illegally dismissed.

Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the
ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations
Commission17 that in case of illegal dismissal, OFWs are entitled to their salaries
for the unexpired portion of their contracts.18

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby
ordered to pay complainant, jointly and severally, in Philippine currency, at the prevailing rate
of exchange at the time of payment the following:

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

I
The Court of Appeals and the labor tribunals have decided the case in a way not in accord with
applicable decision of the Supreme Court involving similar issue of granting unto the migrant worker
back wages equal to the unexpired portion of his contract of employment instead of limiting it to
three (3) months

II

In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their
interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals
gravely erred in law when it failed to discharge its judicial duty to decide questions of substance not
theretofore determined by the Honorable Supreme Court, particularly, the constitutional
issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back
wages of overseas workers to three (3) months.
III

Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the
Court of Appeals gravely erred in law in excluding from petitioner’s award the overtime pay and
vacation pay provided in his contract since under the contract they form part of his salary.28

On 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
equivalent to his salaries for the entire nine
US$25,382.23,
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;33and 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.

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

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 Commission43 and
Millares v. National Labor Relations Commission,44 OFWs are contractual employees who can
never acquire regular employment status, unlike local workers who are or can become
regular employees. Hence, the OSG posits that there are rights and privileges exclusive to local
workers, but not available to OFWs; that these peculiarities make for a reasonable and valid basis
for the differentiated treatment under the subject clause of the money claims of OFWs who are
illegally dismissed. Thus, the provision does not violate the equal protection clause nor Section 18,
Article II of the Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted
to mitigate the solidary liability of placement agencies for this "redounds to the benefit of the migrant
workers whose welfare the government seeks to promote. The survival of legitimate placement
agencies helps [assure] the government that migrant workers are properly deployed and are
employed under decent and humane conditions."46

The Court's Ruling

The Court sustains petitioner on the first and second issues.

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.54Nonetheless, the issue is deemed seasonably raised because it is not the NLRC but the CA
which has the competence to resolve the constitutional issu. The NLRC is a labor tribunal that
merely performs a quasi-judicial function – its function in the present case is limited to determining
questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving
such questions in accordance with the standards laid down by the law itself;55 thus, its foremost
function is to administer and enforce R.A. No. 8042, and not to inquire into the validity of its
provisions.

Thus, the stage is all set for the determination of the constitutionality of the subject clause.

Does the subject clause violate Section 10,

Article III of the Constitution on non-impairment
of contracts?

The answer is in the negative.

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

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective
operation,58and cannot affect acts or contracts already perfected;59 however, as to laws already in
existence, their provisions are read into contracts and deemed a part thereof.60 Thus, the non-
impairment clause under Section 10, Article II is limited in application to laws about to be enacted
that would in any way derogate from existing acts or contracts by enlarging, abridging or in any
manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of
the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued
that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties.
Rather, when the parties executed their 1998 employment contract, they were deemed to have
incorporated into it all the provisions of R.A. No. 8042.

But even if the Court were to disregard the timeline, the subject clause may not be declared
unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in
the exercise of the police power of the State to regulate a business, profession or calling, particularly
the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the
dignity and well-being of OFWs wherever they may be employed.61Police power legislations adopted
by the State to promote the health, morals, peace, education, good order, safety, and general
welfare of the people are generally applicable not only to future contracts but even to those already
in existence, for all private contracts must yield to the superior and legitimate measures taken by the
State to promote public welfare.62

Does the subject clause violate Section 1,

Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

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

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

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

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

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification
embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification
needs only be shown to be rationally related to serving a legitimate state interest;67 b) the middle-tier
or intermediate scrutiny in which the government must show that the challenged classification serves
an important state interest and that the classification is at least substantially related to serving that
interest;68 and c) strict judicial scrutiny69 in which a legislative classification which impermissibly
interferes with the exercise of a fundamental right70 or operates to the peculiar disadvantage of a
suspect class71 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 classifications73 based
on race74 or gender75 but not when the classification is drawn along income categories.76

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

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

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

xxxx

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

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

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

xxxx

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

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

xxxx

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

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

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

First, OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more;

Second, among OFWs with employment contracts of more than one year; and

Third, OFWs vis-à-vis local workers with fixed-period employment;

OFWs with employment contracts of less than one year vis-à-vis OFWs with employment
contracts of one year or more

As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations
Commission79(Second Division, 1999) that the Court laid down the following rules on the application
of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an
illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired
portion of his employment contract or three (3) months’ salary for every year of the unexpired
term, whichever is less, comes into play only when the employment contract concerned has a
term of at least one (1) year or more. This is evident from the words "for every year of the
unexpired term" which follows the words "salaries x x x for three months." To follow
petitioners’ thinking that private respondent is entitled to three (3) months salary only
simply because it is the lesser amount is to completely disregard and overlook some
words used in the statute while giving effect to some. This is contrary to the well-established
rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word
thereof be given effect since the law-making body is presumed to know the meaning of the words
employed in the statue and to have used them advisedly. Ut res magis valeat quam
pereat.80 (Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but
was awarded his salaries for the remaining 8 months and 6 days of his contract.

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on
Section 10(5). One was Asian Center for Career and Employment System and Services v. National
Labor Relations Commission (Second Division, October 1998),81 which involved an OFW who was
awarded a two-year employment contract, but was dismissed after working for one year and two
months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary
covering eight months, the unexpired portion of his contract. On appeal, the Court reduced the
award to SR3,600.00 equivalent to his three months’ salary, this being the lesser value, to wit:

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just,
valid or authorized cause is entitled to his salary for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondent’s employment contract is eight (8)
months. Private respondent should therefore be paid his basic salary corresponding to three (3)
months or a total of SR3,600.82

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third
Division, December 1998),83 which involved an OFW (therein respondent Erlinda Osdana) who was
originally granted a 12-month contract, which was deemed renewed for another 12 months. After
serving for one year and seven-and-a-half months, respondent Osdana was illegally dismissed, and
the Court awarded her salaries for the entire unexpired portion of four and one-half months of her
contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:
 Case Title Contract Period of Unexpired Period Applied in
Period Service Period the Computation
of the Monetary
Award
Skippers v. 6 months 2 months 4 months 4 months
Maguad84
Bahia Shipping 9 months 8 months 4 months 4 months
v. Reynaldo
Chua 85
Centennial 9 months 4 months 5 months 5 months
Transmarine v.
dela Cruz l86
Talidano v. 12 months 3 months 9 months 3 months
Falcon87
Univan v. CA 88 12 months 3 months 9 months 3 months

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

CA 89 months
PCL v. NLRC90 12 months more than 2 more or less 9 3 months
months months
Olarte v. 12 months 21 days 11 months and 9 3 months
Nayona91 days

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

24 days
Pentagon v. 12 months 9 months and 2 months and 23 2 months and 23
Adelantar93 7 days days days
Phil. Employ v. 12 months 10 months 2 months Unexpired portion
Paramio, et
al.94

Flourish 2 years 26 days 23 months and 4 6 months or 3

Maritime v. days months for each
Almanzor 95 year of contract

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

Manpower v. months and and 28 days months for each
Villanos 96 28 days year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The
first category includes OFWs with fixed-period employment contracts of less than one year; in case
of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their contract.
The second category consists of OFWs with fixed-period employment contracts of one year or more;
in case of illegal dismissal, they are entitled to monetary award equivalent to only 3 months of the
unexpired portion of their contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent
OFW worked for only 2 months out of his 6-month contract, but was awarded his salaries for the
remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for
about 2 months out of their 12-month contracts were awarded their salaries for only 3 months of the
unexpired portion of their contracts. Even the OFWs involved in Talidano and Univan who
had worked for a longer period of 3 months out of their 12-month contracts before being illegally
dismissed were awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an
employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical
OFW-B with an employment contract of 15 months with the same monthly salary rate of
US$1,000.00. Both commenced work on the same day and under the same employer, and were
illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to
US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B
will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion
of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his contract, as
the US$3,000.00 is the lesser amount.

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

Case Title Contract Period of Unexpired Period Applied in the

Period Service Period Computation of the
Monetary Award

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

al.98
Phil. Integrated 2 years 7 days 23 months 23 months and 23
v. NLRC99 and 23 days days
JGB v. NLC100 2 years 9 months 15 months 15 months

Agoy v. 2 years 2 months 22 months 22 months

NLRC101
EDI v. NLRC, 2 years 5 months 19 months 19 months
et al.102
Barros v. 12 months 4 months 8 months 8 months
NLRC, et al.103

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

Transmarine v. and 22 days 18 days
Carilla104

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the computation of their monetary benefits in case of
illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries
multiplied by the entire unexpired portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation
of the money claims of illegally dismissed OFWs based on their employment periods, in the
process singling out one category whose contracts have an unexpired portion of one year or more
and subjecting them to the peculiar disadvantage of having their monetary awards limited to their
salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while sparing
the other category from such prejudice, simply because the latter's unexpired contracts fall short of
one year.

Among OFWs With Employment Contracts of More Than One Year

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

The Court notes that the subject clause "or

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

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

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

OFWs vis-à-vis Local Workers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

More significantly, the same principles were applied to cases involving overseas Filipino workers
whose fixed-term employment contracts were illegally terminated, such as in First Asian Trans &
Shipping Agency, Inc. v. Ople,119involving seafarers who were illegally discharged. In Teknika Skills
and Trade Services, Inc. v. National Labor Relations Commission,120 an OFW who was illegally
dismissed prior to the expiration of her fixed-period employment contract as a baby sitter, was
awarded salaries corresponding to the unexpired portion of her contract. The Court arrived at the
same ruling in Anderson v. National Labor Relations Commission,121 which involved a foreman hired
in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally dismissed after only nine
months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired
portion of his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission,122 a
Filipino working as a security officer in 1989 in Angola was awarded his salaries for the remaining
period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co.,
Inc. v. National Labor Relations Commission,123 an OFW whose 12-month contract was illegally cut
short in the second month was declared entitled to his salaries for the remaining 10 months of his
contract.

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were
illegally discharged were treated alike in terms of the computation of their money claims: they were
uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the
enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed
OFWs with an unexpired portion of one year or more in their employment contract have since been
differently treated in that their money claims are subject to a 3-month cap, whereas no such
limitation is imposed on local workers with fixed-term employment.

The Court concludes that the subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more
in their contracts, but none on the claims of other OFWs or local workers with fixed-term
employment. The subject clause singles out one classification of OFWs and burdens it with a
peculiar disadvantage.

There being a suspect classification involving a vulnerable sector protected by the Constitution, the
Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a
compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers arrayed in
the Constitution and calibrated by history.124 It is akin to the paramount interest of the state125 for
which some individual liberties must give way, such as the public interest in safeguarding health or
maintaining medical standards,126 or in maintaining access to information on matters of public
concern.127

In the present case, the Court dug deep into the records but found no compelling state interest that
the subject clause may possibly serve.

The OSG defends the subject clause as a police power measure "designed to protect the
employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic], Filipino
seafarers have better chance of getting hired by foreign employers." The limitation also protects the
interest of local placement agencies, which otherwise may be made to shoulder millions of pesos in
"termination pay."128

The OSG explained further:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the
event that jurisdiction over the foreign employer is not acquired by the court or if the foreign
employer reneges on its obligation. Hence, placement agencies that are in good faith and which
fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect
them and to promote their continued helpful contribution in deploying Filipino migrant workers,
liability for money are reduced under Section 10 of RA 8042.

This measure redounds to the benefit of the migrant workers whose welfare the government seeks
to promote. The survival of legitimate placement agencies helps [assure] the government that
migrant workers are properly deployed and are employed under decent and humane
conditions.129 (Emphasis supplied)

However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception
of the state interest sought to be served by the subject clause.

The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;130 but the speech
makes no reference to the underlying reason for the adoption of the subject clause. That is only
natural for none of the 29 provisions in HB 14314 resembles the subject clause.

On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:

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

The liability of the principal and the recruitment/placement agency or any and all claims under this
Section shall be joint and several.

Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of

damages under this Section shall not be less than fifty percent (50%) of such money
claims: Provided, That any installment payments, if applicable, to satisfy any such compromise or
voluntary settlement shall not be more than two (2) months. Any compromise/voluntary agreement in
violation of this paragraph shall be null and void.

Non-compliance with the mandatory period for resolutions of cases provided under this Section shall
subject the responsible officials to any or all of the following penalties:

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

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

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

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

But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money
claims.

A rule on the computation of money claims containing the subject clause was inserted and
eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined the
rationale of the subject clause in the transcripts of the "Bicameral Conference Committee
(Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of Senate
Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state interest, let
alone a compelling one, that is sought to be protected or advanced by the adoption of the subject
clause.

In fine, the Government has failed to discharge its burden of proving the existence of a compelling
state interest that would justify the perpetuation of the discrimination against OFWs under the
subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous and
cavalier rationale will have to be rejected. There can never be a justification for any form of
government action that alleviates the burden of one sector, but imposes the same burden on another
sector, especially when the favored sector is composed of private businesses such as placement
agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the
Constitution commands. The idea that private business interest can be elevated to the level of a
compelling state interest is odious.

Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement
agencies vis-a-vistheir foreign principals, there are mechanisms already in place that can be
employed to achieve that purpose without infringing on the constitutional rights of OFWs.

The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring
foreign employers who default on their contractual obligations to migrant workers and/or their
Philippine agents. These disciplinary measures range from temporary disqualification to preventive
suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of
Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring
foreign employers.

Resort to these administrative measures is undoubtedly the less restrictive means of aiding local
placement agencies in enforcing the solidary liability of their foreign principals.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right
of petitioner and other OFWs to equal protection. 1avvphi1

Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause directly violates
state policy on labor under Section 3,131Article 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 DECLAREDUNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005
Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his
salaries for the entire unexpired portion of his employment contract consisting of nine months and 23
days computed at the rate of US$1,400.00 per month.

G.R. No. 170139 August 5, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,

vs.
JOY C. CABILES, Respondent.

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement

agency.5 Responding to an ad it published, respondent, Joy C. Cabiles, submitted her application for
a quality control job in Taiwan.6

Joy’s application was accepted.7 Joy was later asked to sign a oneyear 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 ₱70,000.00 when she signed the employment contract.9

Joy was deployed to work for S. 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

Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain Mr. Huwang from
Wacoal informedJoy, 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

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

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

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

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

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 proofto show that respondent was inefficient in her work and that she failed to comply with
company requirements.41 Furthermore, procedural dueprocess was not observed in terminating
respondent.42

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

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

Petitioner reiterates that there was just cause for termination because there was a finding of Wacoal
that respondent was inefficient in her work.55

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

Sameer Overseas Placement Agency failed to show that there was just cause for causing Joy’s
dismissal. The employer, Wacoal, also failed to accord her due process of law.

Indeed, employers have the prerogative to impose productivity and quality standards at work.58 They
may also impose reasonable rules to ensure that the employees comply with these
standards.59 Failure to comply may be a just cause for their dismissal.60 Certainly, employers cannot
be compelled to retain the services of anemployee who is guilty of acts that are inimical to the
interest of the employer.61 While the law acknowledges the plight and vulnerability of workers, it does
not "authorize the oppression or self-destruction of the employer."62 Management prerogative is
recognized in law and in our jurisprudence.

This prerogative, however, should not be abused. It is "tempered with the employee’s right to
security of tenure."63Workers are entitled to substantive and procedural due process before
termination. They may not be removed from employment without a validor just cause as determined
by law and without going through the proper procedure.

Security of tenure for labor is guaranteed by our Constitution.64

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:

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 tomake it appear that the labor laws of Saudi Arabia do not require any
certification by a competent public health authority in the dismissal of employees due to illness.

Again, petitioner’s argument is without merit.

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

The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to selforganization, 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. Theyshall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.

....

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 pretermination 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:
Petitioners admit that they did notinform 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 ofnotice 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:

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

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

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

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

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

(e) Other causes analogous to the foregoing.

Petitioner’s allegation that respondentwas inefficient in her work and negligent in her duties69 may,
therefore, constitute a just cause for termination under Article 282(b), but only if petitioner was able
to prove it.

The burden of proving that there is just cause for termination is on the employer. "The employer
must affirmatively show rationally adequate evidence that the dismissal was for a justifiable
cause."70 Failure to show that there was valid or just cause for termination would necessarily mean
that the dismissal was illegal.71

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 tothe employee; and
3) the communication was made at a reasonable time prior to the employee’s performance
assessment.
This is similar to the law and jurisprudence on probationary employees, which allow termination
ofthe 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

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

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

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

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

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

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

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

Petitioner failed to comply with

the due process requirements

Respondent’s dismissal less than one year from hiring and her repatriation on the same day show
not onlyfailure on the partof petitioner to comply with the requirement of the existence of just cause
for termination. They patently show that the employersdid not comply with the due process
requirement.

A valid dismissal requires both a valid cause and adherence to the valid procedure of
dismissal.75 The employer is required to give the charged employee at least two written notices
before termination.76 One of the written notices must inform the employee of the particular acts that
may cause his or her dismissal.77 The other notice must "[inform] the employee of the employer’s
decision."78 Aside from the notice requirement, the employee must also be given "an opportunity to
be heard."79

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 ofthe employment contract that was violated together with attorney’s fees and reimbursement
of amounts withheld from her salary.

Section 10 of Republic Act No. 8042,otherwise known as the Migrant Workers and Overseas
Filipinos Act of1995, states thatoverseas 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/placementagency, 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 orpartnership 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)

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

....

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

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

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

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

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

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:

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

SEC. 10. Money Claims.– Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damage. Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with
the developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to
de [sic] filed by the recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the recruitment/placement agency
is a juridical being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims
and damages.

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

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of

damages under this section shall be paid within thirty (30) days from approval of the settlement by
the appropriate authority.

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

In case of a final and executory judgement against a foreign employer/principal, it shall be

automatically disqualified, without further proceedings, from participating in the Philippine Overseas
Employment Program and from recruiting and hiring Filipino workers until and unless it fully satisfies
the judgement award.

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

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

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

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

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

Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of
the clause in Republic Act No. 8042 was not yet in effect at the time of respondent’s termination from
work in 1997.86 Republic Act No. 8042 before it was amended byRepublic 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 mootand 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 sochanged as to warrant a reverse conclusion.

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

Likewise, there are special reasons of judicial efficiency and economy that attend to these cases.
The new law puts our overseas workers in the same vulnerable position as they were prior to
Serrano. Failure to reiterate the very ratio decidendi of that case will result in the same untold
economic hardships that our reading of the Constitution intended to avoid. Obviously, we cannot
countenance added expenses for further litigation thatwill reduce their hardearned 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

The Office of the Solicitor General also argued that the clause was valid and
constitutional.93 However, since the parties never raised the issue of the constitutionality of the clause
asreinstated in Republic Act No. 10022, its contention is that it is beyond judicial review.94
On the other hand, respondentargued that the clause was unconstitutional because it infringed on
workers’ right to contract.95

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 changein 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 anillegally 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

In creating laws, the legislature has the power "to make distinctions and classifications."99

In exercising such power, it has a wide discretion.100

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 prescribesa reasonable classification.104

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

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 fixedperiod 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

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

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

We also noted in Serranothat before the passage of Republic Act No. 8042, the money claims of
illegally terminated overseas and local workers with fixed-term employment werecomputed in the
same manner.112 Their money claims were computed based onthe "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

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

Observing the terminologies used inthe 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

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 norless than the rights violated when a fixed-period overseas worker is illegally terminated. It is
state policy to protect the rights of workers withoutqualification as to the place of employment.119 In
both cases, the workers are deprived of their expected salary, which they could have earned had
they not been illegally dismissed. For both workers, this deprivation translates to economic insecurity
and disparity.120 The same is true for the distinctions between overseas workers with an employment
contract of less than one year and overseas workers with at least one year of employment contract,
and between overseas workers with at least a year left in their contracts and overseas workers with
less than a year left in their contracts when they were illegally dismissed.

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

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 classificationsare 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
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 incentivizedby 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:

Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a
hidden twist affecting the principal/employer’s liability. While intended as an incentive accruing to
recruitment/manning agencies, the law, as worded, simply limits the OFWs’ recovery in
wrongfuldismissal 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 ofliability under Section 10 cannot be an "appropriate" incentive, to borrow the term that
R.A. No. 8042 itself uses to describe the incentive it envisions under its purpose clause.

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

The so-called incentive is rendered particularly odious by its effect on the OFWs — the benefits
accruing to the recruitment/manning agencies and their principals are takenfrom 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 bea 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 suchas placement agencies, while the disadvantaged
sector is composed ofOFWs whose protection no less than the Constitution commands. The idea
thatprivate business interest can be elevated to the level of a compelling state interest is odious."127

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

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: 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:

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 rateof 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

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:

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

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

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 cannotrepeal 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
overseasworker that in case the overseas worker is adjudged as entitled to reimbursement of his or
her placement fees, the amount shall be subject to a 12% interest per annum. This implied
stipulation has the effect of removing awards for reimbursement of placement fees from Circular No.
799’s coverage.

The same cannot be said for awardsof 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 ofWacoal as principal and petitioner as the employment agency that
facilitated respondent’s overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign
employer and the local employment agency are jointly and severally liable for money claims
including claims arising out of an employer-employee relationship and/or damages. This section also
provides that the performance bond filed by the local agency shall be answerable for such money
claims or damages if they were awarded to the employee.

G.R. No. 93666 April 22, 1991

GENERAL MILLING CORPORATION and EARL TIMOTHY CONE, petitioners,

vs.
HON. RUBEN D. TORRES, in his capacity as Secretary of Labor and Employment, HON.
BIENVENIDO E. LAGUESMA, in his capacity as Acting Secretary of Labor and
Employment, and BASKETBALL COACHES ASSOCIATION OF THE
PHILIPPINES, respondents.

Sobrevinas, Diaz, Hayudini & Bodegon Law Office for petitioners.

Rodrigo, Cuevas & De Borja for respondent BCAP.

RESOLUTION

FELICIANO, J.:

On 1 May 1989, the National Capital Region of the Department of Labor and Employment issued
Alien Employment Permit No. M-0689-3-535 in favor of petitioner Earl Timothy Cone, a United
States citizen, as sports consultant and assistant coach for petitioner General Milling Corporation
("GMC").

On 27 December 1989, petitioners GMC and Cone entered into a contract of employment whereby
the latter undertook to coach GMC's basketball team.

On 15 January 1990, the Board of Special Inquiry of the Commission on Immigration and
Deportation approved petitioner Cone's application for a change of admission status from
temporary visitor to pre-arranged employee.

On 9 February 1990, petitioner GMC requested renewal of petitioner Cone's alien employment
permit. GMC also requested that it be allowed to employ Cone as full-fledged coach. The DOLE
Regional Director, Luna Piezas, granted the request on 15 February 1990.

On 18 February 1990, Alien Employment Permit No. M-02903-881, valid until 25 December 1990,
was issued.

Private respondent Basketball Coaches Association of the Philippines ("BCAP") appealed the
issuance of said alien employment permit to the respondent Secretary of Labor who, on 23 April
1990, issued a decision ordering cancellation of petitioner Cone's employment permit on the ground
that there was no showing that there is no person in the Philippines who is competent, able and
willing to perform the services required nor that the hiring of petitioner Cone would redound to the
national interest.

Petitioner GMC filed a Motion for Reconsideration and two (2) Supplemental Motions for
Reconsideration but said Motions were denied by Acting Secretary of Labor Bienvenido E.
Laguesma in an Order dated 8 June 1990.

Petitioners are now before the Court on a Petition for Certiorari, dated 14 June 1990, alleging that:

1. respondent Secretary of Labor gravely abused his discretion when he revoked petitioner
Cone's alien employment permit; and

2. Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is null
and void as it is in violation of the enabling law as the Labor Code does not empower
respondent Secretary to determine if the employment of an alien would redound to national
interest.

Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to
show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of
respondent Secretary of Labor in rendering his decision, dated 23 April 1990, revoking petitioner
Cone's Alien Employment Permit.

The alleged failure to notify petitioners of the appeal filed by private respondent BCAP was cured
when petitioners were allowed to file their Motion for Reconsideration before respondent Secretary
of Labor.1

Petitioner GMC's claim that hiring of a foreign coach is an employer's prerogative has no legal basis
at all. Under Article 40 of the Labor Code, an employer seeking employment of an alien
must first obtain an employment permit from the Department of Labor. Petitioner GMC's
right to choose whom to employ is, of course, limited by the statutory requirement of an alien
employment permit.

Petitioners will not find solace in the equal protection clause of the Constitution. As pointed out by
the Solicitor-General, no comparison can be made between petitioner Cone and Mr. Norman Black
as the latter is "a long time resident of the country," and thus, not subject to the provisions of Article
40 of the Labor Code which apply only to "non-resident aliens." In any case, the term "non-
resident alien" and its obverse "resident alien," here must be given their technical
connotation under our law on immigration.

Neither can petitioners validly claim that implementation of respondent Secretary's decision would
amount to an impairment of the obligations of contracts. The provisions of the Labor Code and its
Implementing Rules and Regulations requiring alien employment permits were in existence long
before petitioners entered into their contract of employment. It is firmly settled that provisions of
applicable laws, especially provisions relating to matters affected with public policy, are deemed
written into contracts.2 Private parties cannot constitutionally contract away the otherwise applicable
provisions of law.

Petitioners' contention that respondent Secretary of Labor should have deferred to the findings of
Commission on Immigration and Deportation as to the necessity of employing petitioner Cone, is,
again, bereft of legal basis. The Labor Code itself specifically empowers respondent
Secretary to make a determination as to the availability of the services of a "person in
the Philippines who is competent, able and willing at the time of application to perform
the services for which an alien is desired."3

In short, the Department of Labor is the agency vested with jurisdiction to determine the
question of availability of local workers. The constitutional validity of legal provisions granting
such jurisdiction and authority and requiring proof of non-availability of local nationals able to carry
out the duties of the position involved, cannot be seriously questioned.

Petitioners apparently also question the validity of the Implementing Rules and Regulations,
specifically Section 6 (c), Rule XIV, Book I of the Implementing Rules, as imposing a condition not
found in the Labor Code itself. Section 6 (c), Rule XIV, Book I of the Implementing Rules, provides
as follows:

Section 6. Issuance of Employment Permit –– the Secretary of Labor may issue an

employment permit to the applicant based on:

a) Compliance by the applicant and his employer with the requirements of Section 2 hereof;

b) Report of the Bureau Director as to the availability or non-availability of any person in the
Philippines who is competent and willing to do the job for which the services of the applicant
are desired.

(c) His assessment as to whether or not the employment of the applicant will redound to the
national interest;

(d) Admissibility of the alien as certified by the Commission on Immigration and Deportation;

(e) The recommendation of the Board of Investments or other appropriate government

agencies if the applicant will be employed in preferred areas of investments or in accordance
with the imperative of economic development;

xxx xxx xxx

(Emphasis supplied)

Article 40 of the Labor Code reads as follows:

Art. 40. Employment per unit of non-resident aliens. –– Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign employer who desires to
engage an alien for employment in the Philippines shall obtain an employment permit from
the Department of Labor.

The employment permit may be issued to a non-resident alien or to the applicant employer
after a determination of the non-availability of a person in the Philippines who is competent,
able and willing at the time of application to perform the services for which the alien is
desired.

For an enterprise registered in preferred areas of investments, said employment permit may
be issued upon recommendation of the government agency charged with the supervision of
said registered enterprise. (Emphasis supplied)
Petitioners apparently suggest that the Secretary of Labor is not authorized to take into account
the question of whether or not employment of an alien applicant would "redound to the national
interest" because Article 40 does not explicitly refer to such assessment. This argument (which
seems impliedly to concede that the relationship of basketball coaching and the national interest is
tenuous and unreal) is not persuasive. In the first place, the second paragraph of Article 40 says:
"[t]he employment permit may be issued to a non-resident alien or to
the applicant employer after a determination of the non-availability of a
person in the Philippines who is competent, able and willing at the time
of application to perform the services for which the alien is desired."
The permissive language employed in the Labor Code indicates that the authority granted involves
the exercise of discretion on the part of the issuing authority. In the second place, Article 12 of the
Labor Code sets forth a statement of objectives that the Secretary of Labor should, and indeed must,
take into account in exercising his authority and jurisdiction granted by the Labor Code,

Art. 12. Statement of Objectives. –– It is the policy of the State:

a) To promote and maintain a state of full employment through improved manpower training,
allocation and utilization;

xxx xxx xxx

c) To facilitate a free choice of available employment by persons seeking work in conformity

with the national interest;

d) To facilitate and regulate the movement of workers in conformity with the national interest;

e) To regulate the employment of aliens, including the establishment of a registration and/or

work permit system;

xxx xxx xxx

Thus, we find petitioners' arguments on the above points of constitutional law too insubstantial to
require further consideration.
1avv phi1

Petitioners have very recently manifested to this Court that public respondent Secretary of Labor has
reversed his earlier decision and has issued an Employment Permit to petitioner Cone. Petitioners
seek to withdraw their Petition for Certiorari on the ground that it has become moot and academic.

While ordinarily this Court would dismiss a petition that clearly appears to have become moot and
academic, the circumstances of this case and the nature of the questions raised by petitioners are
such that we do not feel justified in leaving those questions unanswered.4

Moreover, assuming that an alien employment permit has in fact been issued to petitioner Cone, the
basis of the reversal by the Secretary of Labor of his earlier decision does not appear in the record.
If such reversal is based on some view of constitutional law or labor law different from those here set
out, then such employment permit, if one has been issued, would appear open to serious legal
objections.

ACCORDINGLY, the Court Resolved to DISMISS the Petition for certiorari for lack of merit. Costs
against petitioners
G.R. No. L-21348 June 30, 1966

RED V COCONUT PRODUCTS, LTD., petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS, TANGLAW NG PAGGAWA, ALBERTO DELA CRUZ, ET
AL.,respondents.

Romeo A. Real for petitioner.

A. V. Villacorta for respondents.

BENGZON, J.P., J.:

Red V Coconut Products, Ltd. is a corporation with principal office and place of business at Lucena
City. It has in that city a desiccated coconut factory. In said factory, it has several hundred workers.
About 800 of said workers are members of Tanglaw ng Paggawa labor union.

Tanglaw ng Paggawa and Red V Coconut Products, Ltd. entered into a collective bargaining
agreement on July 15, 1958. Subsequently, however, on October 5, 1961, the aforementioned
company and union entered into another collective bargaining agreement, to expire on October 31,
1965.

The 1958 collective bargaining agreement provided among other things for payment of differentials
to night shift workers in the desiccated coconut factory. 1äw phï1.ñët

The 1961 collective bargaining agreement retained the same arrangement. It stated:

The present shift differential will remain in effect, namely, 35¢ for the second shift and 55¢
for the third Shift.

In the factory, there are two groups of workers, the three-shift group — let us call it Group A — and
the two — shift group — which we shall call Group B. As observed by the parties thereto,
differentials were paid to workers, under the 1958 and 1961 contracts, thus:

Hours of Work Differentials

Group A — 1st shift 4 A.M. — 12 Noon (8 Hrs.) None
2nd shift 12 Noon — 8 P.M. (8 Hrs.) .35
3rd shift 8 P.M. — 4 A.M. (8 Hrs.) .55

Group B — 1st shift 4 A.M. — 4 P.M. (12 Hrs.) None

2nd shift 4 P.M. — 4 A.M. (12 Hrs.) .55

On January 17, 1962, Tanglaw ng Paggawa and some 300 workers in the above-stated factory,
members of the said union, who belong to Group B, filed a petition in the Court of Industrial
Relations. Petitioners therein alleged that the petitioners-workers are shellers, parers, counters and
haulers in the two shifts (Group B) consisting of 12 hours each shift, the first shift from 4: 00 A.M. to
4: 00 P.M. and the second shift from 4 P.M. to 4 A.M.; that said workers change shift assignments
every week; that, accordingly, all of them work from 4 A.M. to 4 P.M. (first shift) for two alternate
weeks per month and from 4 P.M. to 4 A.M. (second shift) likewise for two alternate weeks in a
month; that although said workers perform work from 4 P.M. to 4 A.M., they receive only P.55
differential pay for the corresponding hours of night work; that their nightwork is equivalent to the
nightwork of the 2nd and 3rd shifts of Group A combined, so that they should receive what the 2nd
and 3rd shifts of Group A, combined, receive as differential pay, namely, P.90 (P.75 plus P.35); that,
therefore, they are entitled to payment of P.35 more as differential pay, since up to the time of the
petition, they received only P.55 per night as differential pay.

Said additional P.35 was asked by the petitioners-workers of Group B f or work done by them from 4
P.M. to 4 A.M. Their claim referred to the time from July 15, 1958 to the date of the petition, allegedly
at P186.90 per sheller, parer, counter and hauler, or a total sum of P65,228.10 more or less.

Respondent company therein filed on January 28, 1962 a motion to dismiss, stating that the Court of
Industrial Relations has no jurisdiction over the case for the reason that the claim asserted in the
petition is a simple money claim and that an interpretation of a contract (the collective bargaining
agreement is involved, which pertains to the regular courts.

The Court of Industrial Relations denied said motion by resolution of February 17, 1962 ruling that
the claim is for unpaid overtime pay of laborers still employed by the company. Said court likewise
denied a motion for reconsideration of the resolution. Red V Coconut Products, Ltd. filed its answer
on May 2, 1962.

In the meanwhile, on April 25, 1962, Tanglaw ng Paggawa filed with the Court of Industrial
Relations a new and independent petition alleging unfair labor practice against Red V Coconut
Products, Ltd. (CIR Case No. 3150 ULP). It was asserted therein that the company refused to grant
15 days leave with pay to the members of the union in violation of the 1961 collective bargaining
agreement.

The Court of Industrial Relations, on January 19, 1963 after trial, rendered its decision on the petition
for differential pay (CIR Case No. 1642-V). It found therein that the petitioners-workers are engaged
on pakiao or piece-work basis, and, therefore, are not entitled to overtime pay under the Eight-Hour
Labor Law (Sec. 2, CA 444); that their petition for night shift differentials based on the collective
bargaining agreements is meritorious because the company having paid night differentials
indiscriminately to the night shift workers of Group A and Group B alike, the payments should be
uniform and equal for the night shifts of both groups, that is, P.90. It therefore ordered payment of
the deficiency in said differentials to the workers of Group B.

Red V Coconut Products, Ltd. moved for reconsideration of said decision on January 29, 1963. The
Court of Industrial Relations en banc denied said motion by resolution of February 25, 1963. And,
hence, Red V Coconut Products, Ltd. filed this petition for review herein.

Petitioner herein contends that the present case involves a mere money claim over which the Court
of Industrial Relations has no jurisdiction.1

It is exiomatic that to determine the issue of jurisdiction resort is to be made to the allegations in the
petition or complaint.2 The petition for shift differential in the present case, it is true, did not expressly
mention the Eight-Hour Labor Law. Nonetheless, it clearly asserted that (1) petitioners-laborers "are
working in the Red V Coconut Products, Ltd." and (2) they "work in two (2) shifts (Blue and Red
shifts) consisting of approximately 12 hours each shift." Accordingly, from the said allegations, it is
proper to regard the petition, as the Court of Industrial Relations did, as one for overtime pay by
workers still employed by the company. As such it falls within the jurisdiction of the Court of
Industrial Relations. For the same is in effect an assertion not of a simple money claim but, as
respondent court rightly held, of a claim for overtime pay by workers who are employees of the
company.3

During the trial, as stated, evidence was adduced to the effect that the aforesaid petitioners-workers
were engaged on a piece-work basis. The same, however, does not appear from the petition or
complaint filed with the respondent court. It therefore cannot affect its jurisdiction over the case,
which was already acquired. For jurisdiction, once acquired, continues until final adjudication of the
litigation.4

Furthermore, although the Eight-Hour Labor Law provides that it does not cover those workers who
prefer to be paid on piece-work basis (Sec. 2, CA 444), nothing in said law precludes an agreement
for the payment of overtime compensation to piece-workers. And in agreeing to the provision for
payment of shift differentials to the petitioners-workers aforementioned, in the bargaining agreement,
as well as in actually paying to them said differentials, though not in full, the company in effect freely
adhered to an application and implementation of the Eight-Hour Labor Law, or its objectives, to said
workers. It should be observed that while the provision in the bargaining agreements speaks of shift
differentials for the "second shift" and the "third shift" and Group B has no third shift, said Group B
has a second shift, which performs work equivalent to that of the corresponding shifts of Group A. It
follows that respondent court did not err in ordering the company to pay the full and equivalent
amount of said differentials (P.90) corresponding, under the bargaining agreements, to the workers
who performed 12 hours of work, from 4 P.M. to 4 A.M.

And, finally, the laborers in question are not strictly under the full concept of piece-workers as
contemplated by law for the reason that their hours of work — that is, 12 hours per shift — are fixed
by the employer. As ruled by this Court in Lara v. Del Rosario, 94 Phil. 780, 781-782, the philosophy
underlying the exclusion of piece workers from the Eight-Hour Labor Law is that said workers are
paid depending upon the work they do "irrespective of the amount of time employed" in doing said
work. Such freedom as to hours of work does not obtain in the case of the laborers herein involved,
since they are assigned by the employer to work in two shifts for 12 hours each shift. Thus it cannot
be said that for all purposes these workers fall outside the law requiring payment of compensation
for work done in excess of eight hours. At least for the purpose of recovering the full differential pay
stipulated in the bargaining agreement as due to laborers who perform 12 hours of work under the
night shift, said laborers should be deemedpro tanto or to that extent within the scope of the afore-
stated law.

Wherefore, the decision and resolution of the Court of Industrial Relations under review are affirmed.
So ordered.

=--------------

STOLT-NIELSEN MARINE SERVICES (PHILS.) INC., petitioner,

vs. NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE
OVERSEAS EMPLOYMENT ADMINISTRATION and MEYNARDO J.
HERNANDEZ, respondent.

DECISION
ROMERO, J.:
 Private respondent Meynardo J. Hernandez was hired by petitioner Stolt-
Nielsen Marine Services (Phils.) Inc. (STOLT-NIELSEN, for short) as radio
officer on board M/T Stolt Condor for a period of ten months. He boarded the
vessel on January 20, 1990.
On April 26, 1990, the ship captain ordered private respondent to carry the
baggage of crew member Lito Loveria who was being repatriated. He refused
to obey the order out of fear in view of the utterance of said crew member
"makakasaksak ako" and also because he did not perceive such task as one of
his duties as radio officer. As a result of such refusal, private respondent was
ordered to disembark on April 30, 1990 and was himself repatriated on May 15,
1990. He was paid his salaries and wages only up to May 16, 1990.
On June 21, 1990, private respondent filed before public respondent POEA
a complaint for illegal dismissal and breach of contract praying for, among other
things, payment of salaries, wages, overtime and other benefits due him for the
unexpired portion of the contract which was six (6) months and three (3) days.
Petitioner STOLT-NIELSEN in its answer alleged that on April 26, 1990,
private respondent refused to follow the "request" of the master of the vessel to
explain to Lolito Loveria the reason for the latter's repatriation and to assist him
in carrying his baggage, all in violation of Article XXIV, Section 1 of the
Collective Bargaining Agreement (CBA) and the POEA Standard
Contract. Hence, private respondent, after being afforded the opportunity to
explain his side, was dismissed for gross insubordination and serious
misconduct.
In reply, he denied that the master of the vessel requested him to explain to
Loveria the reason for the latter's repatriation.
Thereafter, POEA Administrator Jose N. Sarmiento rendered an award in
favor of private respondent, as follows:

"The issue to be resolved is whether or not complainant was illegally dismissed.

We rule in the affirmative.

Record shows that on April 26, 1990, complainant was directed by the master of the
vessel to carry the luggage of an outgoing seaman offshore. Complainant, however,
refused to obey the said order, hence, his dismissal from his employment.

Evaluating the reason for complainant's dismissal, we find the penalty

imposed too severe considering the violation committed. To our mind, a
warning would have been sufficient since this was the first offense
committed. Moreover, as a radio officer, it is not one of his official duties to carry
the luggage of outgoing seaman.
In the light of the foregoing, we hold that complainant's dismissal due to the
aforesaid incident arbitrary, whimsical and contrary to human nature and
experience, hence, not justified.Accordingly, he is entitled to his salaries for the
unexpired portion of his contract computed as follows:
1. Remaining portion of his contract - 6 months & 3 days
2. Basic salary - US$1,024.00
3. Fixed Overtime - 420.00[1]
Total US$1,434.00
4. Salary/day = ($1,434/30 days) = US$47.8/day
5. Salary for 3 days - ($47.8 x 3) = US$143.4
6. Salary for 6 months - ($1,434 x 6) = US$8,604.00
7. Salary for the unexpired portion of his contract
(basic salary + fixed O.T.)
for 6 months and 3 days
(US$8,604 + 143.4) = US$8,747.40

Complainant's claim for day's leave with pay for the unexpired portion of the contract
is hereby denied since the same is only given during actual service.

The claim for damages is hereby denied for want of jurisdiction.

Complainant is however entitled to five (5%) percent of the total award as and by way
of attorney's fees.

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered ordering

respondent to pay complainant the following or its peso equivalent at the time of
payment:

1. EIGHT THOUSAND SEVEN HUNDRED FORTY SEVEN & 40/100 US

DOLLARS (US$8,747.40) or its peso equivalent at the time of payment, as salaries
for the unexpired portion of his contract.

2. Five percent (5%) of the total award as and by way of attorney's fees.

All other claims are hereby DENIED for lack of merit.

SO ORDERED."[2]
 Aggrieved, petitioner Stolt-Nielsen appealed to the National Labor Relations
Commission (NLRC).
The NLRC, in a resolution[3] dated November 27, 1992, concurred with the
POEA Administrator in ruling that private respondent, having been illegally
dismissed, was, therefore, entitled to the monetary award. It further stated that
private respondent's duty as a radio officer or radio operator does not include
the carrying of the luggage of any seaman or explaining to said seaman the
reason for his repatriation. Thus, concluded the NLRC, his termination on this
ground was not proper and, therefore, he had every right to the monetary
award. The NLRC likewise granted private respondent's claim for fixed overtime
pay and attorney's fees.
Petitioner, having moved for reconsideration without success, is before this
Court on certiorari.
The issues posed for resolution in this case are: (a) whether private
respondent was legally dismissed on the ground of gross insubordination and
serious misconduct; and (b) whether private respondent was entitled to the
award of overtime pay.
With respect to the first issue, petitioner Stolt-Nielsen emphasizes how
"(e)mployment on board ocean-going vessels is totally different from land-
based ones in that in the former strict and faithful compliance of all lawful
commands and orders of the master or captain of the vessel is of paramount
and crucial importance." Petitioner then cites Part I, Section A (2) of the POEA
Standard Employment Contract which provides:

"2. The seaman binds himself to the following:

'a. To faithfully comply with and observe the terms and conditions of this contract,
violation of which shall be subject to disciplinary action pursuant to appendix 2 of this
crew contract.

xxx xxx xxx

d. To be obedient to the lawful commands of the master or any person who shall
succeed him.'"

It likewise adverts to Article XXIV, Section 1 of the CBA, viz:

"Authority of the Master

Section 1. It is understood and agreed that nothing contained in this is intended or
shall be construed so as to restrict in any way the superiority of the Master or prevent
the obedience of any member of the crew to any lawful order of any superior officer."
(Underscoring ours)

Petitioner contends that since the captain's order to assist the crew member
who was being repatriated in carrying his baggage is lawful, private
respondent's refusal to obey the command is willful, thus warranting his
dismissal.
Article 282 of the Labor Code provides in part:

"Art. 282. Termination by Employer. An employer may terminate an employment for

any of the following causes: a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in connection with his
work;

xxx xxx xxx

Willful disobedience of the employer's lawful orders, as a just cause for the
dismissal of an employee, envisages the concurrence of at least two (2)
requisites: the employee's assailed conduct must have been willful or
intentional, the willfulness being characterized by a "wrongful and perverse
attitude"; and the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had been
engaged to discharge.[4]
The Court agrees that by virtue of the aforementioned CBA and POEA
Standard Contract provisions cited by petitioner, private respondent is indeed
bound to obey the lawful commands of the captain of the ship, but only as long
as these pertain to his duties. The order to carry the luggage of a crew member,
while being lawful, is not part of the duties of a radio
officer. Assuming arguendo that lawful commands of a ship captain are
supposed to be obeyed by the complement of a ship, private respondent's so-
called "act of disobedience" does not warrant the supreme penalty of dismissal.
In Gold City Integrated Port Services, Inc. v. NLRC,[5] the Court ruled:

"x x x We believe that not every case of insubordination or willful disobedience by an

employee of a lawful work-connected order of the employer or its representative is
reasonably penalized with dismissal.For one thing, Article 282 (a) refers to "serious
misconduct or willful disobedience - - -". There must be reasonable
proportionality between, on the one hand, the willful disobedience by the employee
and, on the other hand, the penalty imposed therefor. x x x"

In instant case, the POEA found that private respondent's actuation which
led to his dismissal was the first and only act of disobedience during his service
with the petitioner.Furthermore, examination of the circumstances surrounding
private respondent's disobedience shows that the repatriated seaman's
utterance of "makakasaksak ako" so instilled fear in private respondent that he
was deterred from carrying out the order of the captain. Hence, his act could
not be rightfully characterized as one motivated by a "wrongful and perverse
attitude." Besides, said incident posed no serious or substantial danger to the
well-being of his other co-employees or of the general public doing business
with petitioner employer. Neither did such behavior threaten substantial
prejudice to the business of his employer.
In light of the foregoing, we agree with the NLRC that termination of the
private respondent's services was a disproportionately heavy penalty.
Coming to the second issue involving the award of overtime pay, the NLRC
in its assailed resolution states:

"Anent the overtime pay, complainant alleged that he is entitled thereto as the same is
a fixed overtime pay. The respondents failed to controvert said allegations. In short,
the complainant's claim for overtime pay was undisputed and for this reason, the grant
of this claim must be upheld."[6]

Petitioner, on the other hand, cites this Court's pronouncement

in Cagampan v. NLRC,[7] thus:

"As regards the question of overtime pay, the NLRC cannot be faulted for disallowing
the payment of said pay because it merely straightened out the distorted interpretation
asserted by petitioners and defined the correct interpretation of the provision on
overtime pay embodied in the contract conformably with settled doctrines on the
matter. Notably, the NLRC ruling on the disallowance of overtime pay is ably
supported by the fact that petitioners never produced any proof of actual performance
of overtime work.

Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime
pay of 30% of the basic salary per month" embodied in their employment contract
should be awarded to them as part of a "package benefit." They have theorized that
even without sufficient evidence of actual rendition of overtime work, they would
automatically be entitled to overtime pay. Their theory is erroneous for being illogical
and unrealistic. Their thinking even runs counter to the intention behind the
provision. The contract provision means that the fixed overtime pay of 30% would be
the basis for computing the overtime pay if and when overtime work would be
rendered. Simply stated, the rendition of overtime work and the submission of
sufficient proof that said work 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. Realistically speaking, a seaman, by the very nature of his job, stays on
board a ship or vessel beyond the regular eight-hour work schedule. For the employer
to give him overtime pay for the extra hours when he might be sleeping or attending
to his personal chores or even just lulling away his time would be extremely unfair
and unreasonable."

Petitioner's argument is well taken. A close scrutiny of the computation of

the monetary award[8] shows that the award for overtime was for the remaining
six (6) months and three (3) days of private respondent's contract at which time
he was no longer rendering services as he had already been repatriated. In light
of our aforequoted ruling in Cagampan v. NLRC, said award for overtime should
be, as it is hereby, disallowed for being unjustified.
WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the
modification that the award for overtime pay should be DELETED.
SO ORDERED.
\PULP AND PAPER, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION AND EPIFANIA
ANTONIO, respondents.

DECISION
PANGANIBAN, J.:

In the absence of wage rates specially prescribed for piece-rate workers, how
should the separation pay and salary differential of such workers be computed?

Statement of the Case

This is the main question raised in the instant petition for certiorari, filed
under Rule 65 of the Rules of Court, to set aside and annul National Labor
Relations Commissions Decision promulgated on September 24, 1993 and
[1] [2]

Resolution dated December 16, 1993 in NLRC NCR CA No. 004041-

[3]
92. Public respondents assailed Decision affirmed in toto Labor Arbiter
[4]

Eduardo J. Carpios decision dated October 6, 1992, which disposed thus:

[5] [6]

IN VIEW OF ALL THE FOREGOING, judgement [sic] is hereby rendered:

1. dismissing the complaint for illegal dismissal for lack of merit;

2. ordering respondent Pulp and Papers Distributors Inc. to pay complainant Efipania
(sic) Antonio the sum of P49.088.00 representing her separation pay; and
3. ordering respondent to pay the complainant the sum of P31,149.56 representing the
underpayment of wages.
4. dismissing all other issues for lack of merit.

The assailed Resolution denied petitioners motion for reconsideration for

lack of merit.

The Facts

The facts as found by the labor arbiter are as follows: [7]

A case of illegal dismissal and underpayment of wages [was] filed by MS. EPIFANIA
ANTONIO [private respondent herein] against PULP AND PAPER DISTRIBUTORS
INC., [petitioner herein] x x x.

In filing the present complaint, complainant in her position paper alleges that she was
a regular employee of the x x x corporation having served thereat as Wrapper
sometime in September 1975. On November 29, 1991, for unknown reasons, she was
advised verbally of her termination and was given a prepared form of Quitclaim and
Release which she refused to sign. Instead she brought the present complaint for
illegal dismissal.

In charging the [herein petitioner] of underpayment of wages, complainant in the

same position paper alleges that, rarely during her employment with the respondent
she received her salary, a salary which was in accordance with the minimum wage
law. She was not paid overtime pay, holiday pay and five-day service incentive leave
pay, hence she is claiming for payments thereof by instituting the present case.

Respondent on the otherhand [sic] denied having terminated the services of the
complainant and alleges inter alia that starting 1989 the orders from customers
became fewer and dwindled to the point that it is no longer practical to maintain the
present number of packer/wrappers. Maintaining the same number of
packers/wrappers would mean less pay because the work allocation is no longer the
same as it was.Such being the case, the respondent has to reduce temporarily the
number of packers/wrappers. Complainant was among those who were temporarily
laid-off from work. Complainant last worked with the company on June 29, 1991.

As regards complainants allegation that on November 29, 1991, she was forced to
sign a quitclaim and release by the respondent, the latter clarified that considering that
five months from the time the complainant last worked with the company, the
management decided to release the complainant and give her a chance to look for
another job in the meantime that no job is available for her with the company.In other
words, complainant was given the option and considering that she did not sign the
documents referred to as the Quitclaim and Release, the respondent did not insist, and
did not terminate the services of the complainant. It was just surprise [sic] to receive
the present complaint. In fact, respondent added that the reason why the complainant
was called on November 29, 1991 was not to work but to receive her 13th month pay
of P636.70 as shown by the voucher she signed (Annex-A, Respondent).

As regards the claim of the complainant for underpayment, respondent did not
actually denied (sic) the same but give [sic] the reservation that should the same be
determined by this Office it is willing to settle the same considering the fact that
complainant herein being paid by results, it is not in a proper position to determine
whether the complainant was underpaid or not.

The Issues

Petitioner couched the main issue in this wise: [8]

Did the Public Respondent NLRC act correctly in affirming in toto the decision
rendered by the labor arbitration branch a quo in NLRC NCR Case no. 00-01-00494-
92?

While it expressly admits that private respondent is entitled to separation

pay, petitioner raises nonetheless the following queries: (a) Are the factors in
determining the amount of separation pay for a piece-rate worker the same as
that of a time-worker? (b) Is a worker, who was terminated for lack of work,
entitled to separation pay at the rate of one-months pay for every year of
service? The petition is based on the following grounds:
[9]

I
 Public Respondent NLRC committed grave abuse of discretion and serious
reversible error when it affirmed in toto the award of separation pay in favor of
private respondent, without bases in fact and in law.

II

Public Respondent NLRC committed grave abuse of discretion and serious

reversible error when it affirmed in toto the award of underpayment in favor of
private respondent, without bases in fact and in law.

The Public Respondents Ruling

In dismissing the appeal of petitioner, public respondent reasoned: [10]

It is true that all the above circumstances cited by the [herein petitioner] are not
present in the case at bar, hence, separation pay based on those circumstances is not
owing to the [herein private respondent].However, it is quite obvious that [petitioner]
missed the legal and factual basis why separation pay was awarded by the Labor
Arbiter. In the first place, the [petitioner] admits that the complainant-appellee was
temporarily laid off on June 29, 1991. This means that there was a temporary
suspension of employer-employee relationship between the appellant and the
appellee. Lay-off is a temporary termination initiated by the employer, but without
prejudice to the reinstatement or recall of the workers who have been temporarily
separated. The reasons for laying off employees are varied: lack of work, shutdown
for repairs, business reverses, and the like. Always, however, there is the expectation
that the employees who have been laid off will be recalled or rehired. This situation is
governed by Rule I, Section 12, of Book VI of the Implementing Rules and
Regulations of the Labor Code, which provides:

Sec. 12. Suspension of Relationship. -- The employer-employee relationship shall be

deemed suspended in case of suspension of operation of the business or undertaking
of the employer for a period not exceeding six (6) months x x x.

From June 29, 1991 up to the time the complainant-appellee filed her complaint on
January 21, 1992, there was more than six (6) months that already elapse (sic) and yet,
the appellant failed to recall the appellee to let her resume working. If the appellant
was not yet in a possession to recall or reinstate the appellee after six (6) months, up
to when shall appellant let her keep in waiting. Of course, she cannot be allowed to
wait interminably. That is the reason why the law imposes a period of six (6) months
within which the resumption of employer-employee relationship must be resumed in
temporary lay-offs.Otherwise, any employer can, in the guise of a temporary lay-off,
close its doors to an employee for more than six months and their claim that the lay-
off has ripened into termination and try to get away from any liability. The award of
separation pay is hereby declared in order.

On the second issue raised by the (petitioner) on appeal, We are also for the Labor
Arbiters ruling upholding the appellees right to salary differential in the amount
computed.

The argument interposed by the [petitioner] based on Art. 101 of the Labor Code, in
relation to Rule VII, Section (8), Book III of the Omnibus Implementing Rule and
Regulations, will not lie in the case at bar. In the first place, pursuant to the provision
of law cited by the [petitioner], all time and motion studies, or any other schemes or
devices to determine whether the employees paid by results are being compensated in
accordance with the minimum wage requirements, shall only be approved on petition
of the interested employer. Thus, it is the fault of the [petitioner] on whose initiative, a
time and motion study or any other similar scheme is not yet available in its
establishment.

The Courts Ruling

The appeal is not meritorious.

First Issue: Computation of Minimum Wage

Petitioner argues that private respondent was a piece-rate worker and not
a time-worker. Since private respondents employment as (p)acker/(w)rapper in
1975 until her separation on June 29, 1991, (h)er salary depended upon the
number of reams of bond paper she packed per day. Petitioner contends that
private respondents work depended upon the number and availability of
purchase orders from customers. Petitioner adds that, oftentimes,
packers/wrappers only work three to four hours a day. Thus, her separation pay
must be based on her latest actual compensation per piece or on the minimum
wage per piece as determined by Article 101 of the Labor Code, whichever is
higher, and not on the daily minimum wage applicable to time-workers. [11]

Compensation of Pieceworkers
 In the absence of wage rates based on time and motion studies determined
by the labor secretary or submitted by the employer to the labor secretary for
his approval, wage rates of piece-rate workers must be based on the applicable
daily minimum wage determined by the Regional Tripartite Wages and
Productivity Commission. To ensure the payment of fair and reasonable wage
rates, Article 101 of the Labor Code provides that the Secretary of Labor shall
[12]

regulate the payment of wages by results, including pakyao, piecework and

other nontime work. The same statutory provision also states that the wage
rates should be based, preferably, on time and motion studies, or those arrived
at in consultation with representatives of workers and employers
organizations. In the absence of such prescribed wage rates for piece-rate
workers, the ordinary minimum wage rates prescribed by the Regional Tripartite
Wages and Productivity Boards should apply. This is in compliance with Section
8 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A -- the
prevailing wage order at the time of dismissal of private respondent, viz.: [13]

SEC. 8. Workers Paid by Results. -- a) All workers paid by results including those
who are paid on piece work, takay, pakyaw, or task basis, shall receive not less than
the applicable minimum wage rates prescribed under the Order for the normal
working hours which shall not exceed eight (8) hours work a day, or a proportion
thereof for work of less than the normal working hours.

The adjusted minimum wage rates for workers paid by results shall be computed in
accordance with the following steps:

1) Amount of increase in AMW x 100 = % increase

Previous AMW

2) Existing rate/piece x % increase = increase in rate/piece;

3) Existing rate/piece + increase in rate/piece = adjusted rate/piece.

b) The wage rates of workers who are paid by results shall continue to be established
in accordance with Art. 101 of the Labor Code, as amended and its implementing
regulations. (Underscoring supplied.)

On November 29, 1991, private respondent was orally informed of the

termination of her employment. Wage Order No. NCR-02, in effect at the time,
set the minimum daily wage for non-agricultural workers like private respondent
at P118.00. This was the rate used by the labor arbiter in computing the
[14]

separation pay of private respondent. We cannot find any abuse of discretion,

let alone grave abuse, in the order of the labor arbiter which was later affirmed
by the NLRC.
Moreover, since petitioner employed piece-rate workers, it should have
inquired from the secretary of labor about their prescribed specific wage
rates. In any event, there being no such prescribed rates, petitioner, after
consultation with its workers, should have submitted for the labor secretarys
approval time and motion studies as basis for the wage rates of its
employees. This responsibility of the employer is clear under Section 8, Rule
VII, Book III of the Omnibus Rules Implementing the Labor Code:

Section 8. Payment by result. (a) On petition of any interested party, or upon its
initiative, the Department of Labor shall use all available devices, including the use of
time and motion studies and consultations with representatives of employers and
workers organizations, to determine whether the employees in any industry or
enterprise are being compensated in accordance with the minimum wage requirements
of this Rule.

(b) The basis for the establishment of rates for piece, output or contract work shall be
the performance of an ordinary worker of minimum skill or ability.

(c) An ordinary worker of minimum skill or ability is the average worker of the lowest
producing group representing 50% of the total number of employees engaged in
similar employment in a particular establishment, excluding learners, apprentices and
handicapped workers employed therein.

(d) Where the output rates established by the employer do not conform with the
standards prescribed herein, or with the rates prescribed by the Department of Labor
in an appropriate order, the employees shall be entitled to the difference between the
amount to which they are entitled to receive under such prescribed standards or rates
and that actually paid them by employer.

In the present case, petitioner as the employer unquestionably failed to

discharge the foregoing responsibility. Petitioner did not submit to the secretary
of labor a proposed wage rate -- based on time and motion studies and reached
after consultation with the representatives from both workers and employers
organization -- which would have applied to its piece-rate workers. Without
those submissions, the labor arbiter had the duty to use the daily minimum
wage rate for non-agricultural workers prevailing at the time of private
respondents dismissal, as prescribed by the Regional Tripartite Wages and
Productivity Boards. Put differently, petitioner did not take the initiative of
proposing an appropriate wage rate for its piece-rate workers.In the absence of
such wage rate, the labor arbiter cannot be faulted for applying the prescribed
minimum wage rate in the computation of private respondents separation
pay. In fact, it acted and ruled correctly and legally in the premises.
It is clear, therefore, that the applicable minimum wage for an eight-hour
working day is the basis for the computation of the separation pay of piece-rate
workers like private respondent.The computed daily wage should not be
reduced on the basis of unsubstantiated claims that her daily working hours
were less than eight. Aside from its bare assertion, petitioner presented no clear
proof that private respondents regular working day was less than eight
hours. Thus, the labor arbiter correctly used the full amount of P118.00 per day
in computing private respondents separation pay. We agree with the following
computation: [15]

Considering therefore that complainant had been laid-off for more than six (6) months
now, we strongly feel that it is already reasonable for the respondent to pay the
complainant her separation pay of one month for every year of service, a fraction of
six (6) months to be considered as one whole year. Separation pay should be
computed based on her minimum salary as will be determined hereunder.

Separation pay 1 month = 16 years

P118.00 x 26 x 16 years = P49,088.00

The amount P118.00 represents the applicable daily minimum wage per
Wage Order Nos. NCR-02 and NCR-02-A; 26, the number of working days in a
month after excluding the four Sundays which are deemed rest days; 16, the
total number of years spent by private respondent in the employ of petitioner.

Second Issue: Computation of Separation Pay

Petitioner questions not only the basis for computing private respondents
monthly wage; it also contends that private respondents separation pay should
not have been computed at one months pay for every year of service. Because
private respondent should be considered retrenched, the separation pay should
be one months pay or at least one/half (1/2) month pay for every year of service,
whichever is higher, and not one (1) months pay for every year of service as
public respondent had ruled. [16]

Petitioner misapprehended the ground relied upon by public respondent for

awarding separation pay. In this case, public respondent held that private
respondent was constructively dismissed, pursuant to Article 286 of the Labor
Code which reads:

ART. 286. When employment not deemed terminated. -- The bonafide suspension of
the operation of a business or undertaking for a period not exceeding six (6) months,
or the fulfillment by the employee of a military or civic duty shall not terminate
employment. In all such cases, the employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates his desire to resume his work
not later that one (1) month from his resumption of operations of his employer or from
his relief from the military or civic duty.

Petitioner failed to discern that public respondent, in finding that the services
of private respondent were terminated, merely adopted by analogy the rule on
constructive dismissal. Since private respondent was not reemployed within six
(6) months from the suspension of her employment, she is deemed to have
been constructively dismissed. Otherwise, private respondent will remain in a
[17]

perpetual floating status. Because petitioner had not shown by competent

evidence any just cause for the dismissal of private respondent, she is entitled
to reinstatement or, if this is not feasible, to separation pay equivalent to one
[18]

(1) month salary for every year of service. Private respondent, however, neither
asked for reinstatement nor appealed from the labor arbiters finding that she
[19]

was not illegally dismissed; she merely prayed for the grant of her monetary
claims. Thus, we sustain the award of separation pay made by public
respondent, for employees constructively dismissed are entitled to separation
[20]

pay. Because she did not ask for more, we cannot give her more. We repeat:
she appealed neither the decision of the labor arbiter nor that of the
NLRC. Hence, she is not entitled to any affirmative relief.
Furthermore, we cannot sustain petitioners claim that private respondent
was retrenched. For retrenchment to be considered a ground for termination,
the employer must serve a written notice on the workers and the Department of
Labor and Employment at least one month before the intended date
thereof. Petitioner did not comply with this requirement.
[21]

Third Issue: Determination of Salary Differential

In light of the foregoing discussion, we must also dismiss petitioners

challenge to the computation of salary differential. As earlier observed, private
respondent is entitled to the minimum wage prevailing at the time of the
termination of her employment. The same rate of minimum wage, P118.00,
should be used in computing her salary differential resulting from petitioners
underpayment of her wages. Thus, the labor arbiter correctly deducted private
respondents actually received wage of P60 a day from the prescribed daily
minimum wage of P118.00, and multiplied the difference by 26 working days,
and subsequently by 16 years, equivalent to her length of service with
petitioner. Thus, the amount of P31,149.56 as salary differential. [22]

Petitioner argues that the work of the private respondent is seasonal, being
dependent upon the availability of job-orders and not twenty-six (26) days a
month. Further, petitioner contends that private respondent herself admitted
[23]

she was a piece worker whose work [was] seasonal. [24]

Contrary to the assertion of petitioner, neither the assailed Decision nor the
pleadings of private respondent show that private respondents work was
seasonal. More important, petitioner utterly failed to substantiate its allegation
that private respondents work was seasonal. We observe that the labor arbiter
based the computation of the salary differential on a 26-day month on the
presumption that private respondents work was continuous. In view of the
failure of petitioner to support its claim, we must sustain the correctness of this
computation.
WHEREFORE, premises considered, the petition is DISMISSED and the
assailed Decision is AFFIRMED. Costs against petitioner.
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER ROMULUS
PROTACIO and DR. HERMINIO A. FABROS, respondents.

DECISION
PUNO, J.:

Petitioner Philippine Airlines, Inc. assails the decision of the National Labor Relations
Commission dismissing its appeal from the decision of Labor Arbiter Romulus S. Protacio which
declared the suspension of private respondent Dr. Herminio A. Fabros illegal and ordered
petitioner to pay private respondent the amount equivalent to all the benefits he should have
received during his period of suspension plus P500,000.00 moral damages.
The facts are as follow:
Private respondent was employed as flight surgeon at petitioner company. He was assigned at
the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00
midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have
his dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic
received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel
Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called private
respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in the
evening and Mr. Eusebio immediately rushed him to the hospital. When private respondent
reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr.
Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered
the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required
private respondent to explain why no disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal
break; that he immediately left his residence upon being informed by Mr. Eusebio about the
emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought
the patient to the hospital without waiting for him.
Finding private respondents explanation unacceptable, the management charged private
respondent with abandonment of post while on duty. He was given ten days to submit a written
answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He
further denied that he abandoned his post on February 17, 1994. He said that he only left the clinic
to have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon being
informed of the emergency.
After evaluating the charge as well as the answer of private respondent, petitioner company
decided to suspend private respondent for three months effective December 16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision[1] declaring the
suspension of private respondent illegal. It also ordered petitioner to pay private respondent the
amount equivalent to all the benefits he should have received during his period of suspension
plus P500,000.00 moral damages. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered declaring the
suspension of complainant as illegal, and ordering the respondents the restitution to the
complainant of all employment benefits equivalent to his period of suspension, and the payment
to the complainant of P500,000.00 by way of moral damages.[2]

Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after finding that
the decision of the Labor Arbiter is supported by the facts on record and the law on the
matter.[3] The NLRC likewise denied petitioners motion for reconsideration.[4]
Hence, this petition raising the following arguments:

1. The public respondents acted without or in excess of their jurisdiction and with
grave abuse of discretion in nullifying the 3-month suspension of private
respondent despite the fact that the private respondent has committed an
offense that warranted the imposition of disciplinary action.
 2. The public respondents acted without or in excess of their jurisdiction and with
grave abuse of discretion in holding the petitioner liable for moral damages:

(a) Despite the fact that no formal hearing whatsoever was conducted for
complainant to substantiate his claim;

(b) Despite the absence of proof that the petitioner acted in bad faith in
imposing the 3-month suspension; and

(c) Despite the fact that the Labor Arbiter's award of moral damages is highly
irregular, considering that it was more than what the private respondent
prayed for.[5]

We find that public respondents did not err in nullifying the three-month suspension of private
respondent. They, however, erred in awarding moral damages to private respondent.
First, as regards the legality of private respondents suspension. The facts do not support
petitioners allegation that private respondent abandoned his post on the evening of February 17,
1994. Private respondent left the clinic that night only to have his dinner at his house, which was
only a few minutes drive away from the clinic. His whereabouts were known to the nurse on duty
so that he could be easily reached in case of emergency. Upon being informed of Mr. Acostas
condition, private respondent immediately left his home and returned to the clinic. These facts
belie petitioners claim of abandonment.
Petitioner argues that being a full-time employee, private respondent is obliged to stay in the
company premises for not less than eight (8) hours. Hence, he may not leave the company premises
during such time, even to take his meals.
We are not impressed.
Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.The normal hours of work of any employee shall not
exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred
(100) shall hold regular office hours for eight (8) hours a day, for five (5) days a
week, exclusive of time for meals, except where the exigencies of the service require
that such personnel work for six (6) days or forty-eight (48) hours, in which case they
shall be entitled to an additional compensation of at least thirty per cent (30%) of their
regular wage for work on the sixth day. For purposes of this Article, health personnel
shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.(emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer to give his employees not less than
sixty (60) minutes time-off for their regular meals.

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:

Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of
sex, not less than one (1) hour time-off for regular meals, except in the following
cases when a meal period of not less than twenty (20) minutes may be given by the
employer provided that such shorter meal period is credited as compensable hours
worked of the employee;

(a) Where the work is non-manual work in nature or does not involve strenuous
physical exertion;

(b) Where the establishment regularly operates not less than sixteen hours a day;

(c) In cases of actual or impending emergencies or there is urgent work to be

performed on machineries, equipment or installations to avoid serious loss which the
employer would otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be
considered as compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it
be inferred that employees must take their meals within the company premises. Employees are not
prohibited from going out of the premises as long as they return to their posts on time. Private
respondents act, therefore, of going home to take his dinner does not constitute abandonment.
We now go to the award of moral damages to private respondent.
Not every employee who is illegally dismissed or suspended is entitled to damages. As a rule,
moral damages are recoverable only where the dismissal or suspension of the employee was
attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy.[6] Bad faith does not simply mean negligence
or bad judgment. It involves a state of mind dominated by ill will or motive. It implies a conscious
and intentional design to do a wrongful act for a dishonest purpose or some moral obliquity.[7] The
person claiming moral damages must prove the existence of bad faith by clear and convincing
evidence for the law always presumes good faith.[8]
In the case at bar, there is no showing that the management of petitioner company was moved
by some evil motive in suspending private respondent. It suspended private respondent on an
honest, albeiterroneous, belief that private respondents act of leaving the company premises to
take his meal at home constituted abandonment of post which warrants the penalty of
suspension. Also, it is evident from the facts that petitioner gave private respondent all the
opportunity to refute the charge against him and to defend himself. These negate the existence of
bad faith on the part of petitioner. Under the circumstances, we hold that private respondent is not
entitled to moral damages.
IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The portion of the assailed
decision awarding moral damages to private respondent is DELETED. All other aspects of the
decision are AFFIRMED.
SO ORDERED.

AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. NATIONAL

LABOR RELATIONS COMMISSION and J.C. TAILOR SHOP and/or
JOHNNY CO, respondents.

DECISION
MENDOZA, J.:

This is a petition for certiorari to set aside the decision[1] of the National Labor Relations
Commission (NLRC) which reversed the awards made by the Labor Arbiter in favor of petitioners,
except one for P4,992.00 to each, representing 13th month pay.
The facts are as follows.
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985,
respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As
in the case of the other 100 employees of private respondents, petitioners were paid on a piece-
work basis, according to the style of suits they made. Regardless of the number of pieces they
finished in a day, they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day,
service incentive leave pay, separation pay, 13th month pay, and attorneys fees.
After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal
dismissal and accordingly ordered them to pay petitioners claims. The dispositive portion of the
Labor Arbiters decision reads:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring

the complainants to have been illegally dismissed and ordering the respondents to pay
the complainants the following monetary awards:

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20 = P191,102.40

Add: 10% Attorneys Fees 19,110.24

GRAND TOTAL P210,212.64

======

or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO

HUNDRED TWELVE AND 64/100 (P210,212.64).

All other claims are dismissed for lack of merit.

SO ORDERED.[2]

On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It
found that petitioners had not been dismissed from employment but merely threatened with a
closure of the business if they insisted on their demand for a straight payment of their minimum
wage, after petitioners, on January 17, 1989, walked out of a meeting with private respondents and
other employees.According to the NLRC, during that meeting, the employees voted to maintain
the company policy of paying them according to the volume of work finished at the rate of P18.00
per dozen of tailored clothing materials. Only petitioners allegedly insisted that they be paid the
minimum wage and other benefits. The NLRC held petitioners guilty of abandonment of work and
accordingly dismissed their claims except that for 13th month pay. The dispositive portion of its
decision reads:

WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and
a new one entered ordering respondents to pay each of the complainants their 13th
month pay in the amount of P4,992.00. All other monetary awards are hereby deleted.

SO ORDERED.[3]

Petitioners allege that they were dismissed by private respondents as they were about to file a
petition with the Department of Labor and Employment (DOLE) for the payment of benefits such
as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they
abandoned their work.
The petition is meritorious.
 First. There is no dispute that petitioners were employees of private respondents although
they were paid not on the basis of time spent on the job but according to the quantity and the
quality of work produced by them. There are two categories of employees paid by results: (1) those
whose time and performance are supervised by the employer. (Here, there is an element of control
and supervision over the manner as to how the work is to be performed. A piece-rate worker
belongs to this category especially if he performs his work in the company premises.); and (2)
those whose time and performance are unsupervised. (Here, the employers control is over the
result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of
workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment
factories where work is done in the company premises, while payment on pakyao and takay basis
is commonly observed in the agricultural industry, such as in sugar plantations where the work is
performed in bulk or in volumes difficult to quantify.[4] Petitioners belong to the first
category, i.e., supervised employees.
In determining the existence of an employer-employee relationship, the following elements
must be considered: (1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the power to control the employees conduct. [5] Of these
elements, the most important criterion is whether the employer controls or has reserved the right
to control the employee not only as to the result of the work but also as to the means and methods
by which the result is to be accomplished.[6]
In this case, private respondents exercised control over the work of petitioners. As tailors,
petitioners worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays
and holidays.The mere fact that they were paid on a piece-rate basis does not negate their status as
regular employees of private respondents. The term wage is broadly defined in Art. 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations.[7] Nor does the fact that petitioners
are not covered by the SSS affect the employer-employee relationship.
Indeed, the following factors show that petitioners, although piece-rate workers, were regular
employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code,
their work as tailors was necessary or desirable in the usual business of private respondents, which
is engaged in the tailoring business; (2) petitioners worked for private respondents throughout the
year, their employment not being dependent on a specific project or season; and, (3) petitioners
worked for private respondents for more than one year.[8]
Second. Private respondents contend, however, that petitioners refused to report for work
after learning that the J.C. Tailoring and Dress Shop Employees Union had demanded their
(petitioners) dismissal for conduct unbecoming of employees. In support of their claim, private
respondents presented the affidavits[9] of Emmanuel Y. Caballero, president of the union, and
Amado Cabaero, member, that petitioners had not been dismissed by private respondents but that
practically all employees of the company, including the members of the union had asked
management to terminate the services of petitioners.The employees allegedly said they were
against petitioners request for change of the mode of payment of their wages, and that when a
meeting was called to discuss this issue, a petition for the dismissal of petitioners was presented,
prompting the latter to walk out of their jobs and instead file a complaint for illegal dismissal
against private respondents on January 17, 1989, even before all employees could sign the petition
and management could act upon the same.
To justify a finding of abandonment of work, there must be proof of a deliberate and
unjustified refusal on the part of an employee to resume his employment. The burden of proof is
on the employer to show an unequivocal intent on the part of the employee to discontinue
employment.[10] Mere absence is not sufficient. It must be accompanied by manifest acts unerringly
pointing to the fact that the employee simply does not want to work anymore.[11]
Private respondents failed to discharge this burden. Other than the self-serving declarations in
the affidavits of their two employees, private respondents did not adduce proof of overt acts of
petitioners showing their intention to abandon their work. On the contrary, the evidence shows that
petitioners lost no time in filing the case for illegal dismissal against private respondent. This fact
negates any intention on their part to sever their employment relationship.[12] Abandonment is a
matter of intention; it cannot be inferred or presumed from equivocal acts.[13]
Third. Private respondents invoke the compromise agreement,[14] dated March 2, 1993,
between them and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00,
petitioner absolved private respondents from liability for money claims or any other obligations.
To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where
there is clear proof that the waiver was wangled from an unsuspecting or gullible person or (2)
where the terms of settlement are unconscionable on their face are invalid. In these cases, the law
will step in to annul the questionable transaction.[15] However, considering that the Labor Arbiter
had given petitioner Lambo a total award of P94,719.20, the amount of P10,000.00 to cover any
and all monetary claims is clearly unconscionable. As we have held in another case,[16] the
subordinate position of the individual employee vis-a-vis management renders him especially
vulnerable to its blandishments, importunings, and even intimidations, and results in his
improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or
releases are looked upon with disfavor for being contrary to public policy and are ineffective to
bar claims for the full measure of the workers legal rights.[17] An employee who is merely
constrained to accept the wages paid to him is not precluded from recovering the difference
between the amount he actually received and that amount which he should have received.
Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay,
separation pay and attorneys fees, corresponding to 10% of the total monetary awards, in favor of
petitioners.
As petitioners were illegally dismissed, they are entitled to reinstatement with
backwages. Considering that petitioners were dismissed from the service on January 17,
1989, i.e., prior to March 21, 1989,[18] the Labor Arbiter correctly applied the rule in the Mercury
Drug case,[19] according to which the recovery of backwages should be limited to three years
without qualifications or deductions. Any award in excess of three years is null and void as to the
excess.[20]
The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable
time has lapsed since petitioners dismissal, so that reinstatement would now be impractical and
hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded
to petitioners at the rate of one month salary for every year of service, with a fraction of at least
six (6) months of service being considered as one (1) year.[21]
 The awards for overtime pay, holiday pay and 13th month pay are in accordance with our
finding that petitioners are regular employees, although paid on a piece-rate basis.[22] These awards
are based on the following computation of the Labor Arbiter:

AVELINO LAMBO

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

P 64.00/day x 26 days =

1,664.00/mo. x 36 mos. = P 59,904.00

13th Mo. Pay:

P 1,664.00/yr. x 3 yrs. = 4, 992.00 P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 15 mos. & 12 days =

(15 mos. x 26 days + 12 days) = 402 days

*2 hours = 25%

402 days x 2 hrs./day = 804 hrs.

P 32.00/day 8 hrs. =

4.00/hr. x 25% =

1.00/hr. + P4.00/hr. =

5.00/hr. x 804 hrs. = P 4,020.00

May 1/87-Sept. 30/87 = 4 mos. & 26 days =

(4 mos. x 26 days + 26 days) = 130 days

130 days x 2 hrs./day = 260 hrs.

P 41.00/day 8 hrs. =

5.12/hr. x 25% =
1.28/hr. + P5.12/hr. =

6.40/hr. x 260 hrs. = P 1,664.00

Oct. 1/87-Dec. 13/87 = 2 mos. & 11 days =

(2 mos. x 26 days + 11 days) = 63 days

63 days x 2 hrs./day = 126 hrs.

P 49.00/day 8 hrs. =

6.12/hr. x 25% =

1.53/hr. + P6.12/hr. =

7.65/hr. x 126 hrs. = P963.90

Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days =

(13 mos. x 26 days + 2 days) = 340 days

340 days x 2 hrs./day = 680 hrs.

P 64.00/day 8 hrs. =

8.00/hr. x 25% =

2.00/hr. + P8.00/hr. =

10.00/hr. x 680 hrs. = P6,800.00 P13,447.90

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs

P 32.00/day x 200% =

64.00/day x 12 days = P768.00

32.00/day x 12 days = (384.00) P384.00

32.00/day x 30% =
9.60/day x 8 days = 76.80 460.80

May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs

P 41.00/day x 200% =

82.00/day x 3 days = P246.00

41.00/day x 3 days = (123.00) P123.00

41.00/day x 30% =

12.30/day x 3 days = 36.90 159.90

Oct. 1/87 - Dec. 13/87 = 1 RH

P 49.00/day x 200% =

98.00/day x 1 day = P98.00

49.00/day x 1 day = (49.00) 49.00

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs

P 64.00/day x 200% =

128.00/day x 9 days = P1,152.00

64.00/day x 9 days = (576.00) P 576.00

64.00/day x 30% =

19.20/day x 8 days = 153.60 729.60 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.

P 64.00/day x 26 days =

1,664.00/yr. x 3 yrs. = 4,992.00

V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs.

1,664.00/mo. x 6 yrs. = 9,984.00

TOTAL AWARD OF AVELINO LAMBO P94,719.20

======

VICENTE BELOCURA

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

Same computation as A. Lambo P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 13,447.90

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 4,992.00

V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs.

P1,664.00/mo. x 7 yrs. = 11,648.00

TOTAL AWARD OF VICENTE BELOCURA P96,383.20

=====

SUMMARY

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MO. PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20

= P191,102.40

ADD: 10% Attorneys Fees 19,110.24

GRAND TOTAL P 210,212.64

=======

Except for the award of attorneys fees in the amount of P19,110.24, the above computation is
affirmed. The award of attorneys fees should be disallowed, it appearing that petitioners were
represented by the Public Attorneys Office. With regard to petitioner Avelino Lambo, the amount
of P10,000.00 paid to him under the compromise agreement should be deducted from the total
award of P94,719.20.Consequently, the award to each petitioner should be as follows:

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P 64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

P 94,719.20

Less 10,000.00

TOTAL P84,719.20 P96,383.20

GRAND TOTAL P181,102.40

======
vvvvvvvvvv

WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE
and another one is RENDERED ordering private respondents to pay petitioners the total amount
of One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as
computed above.
 SO ORDERED.

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO

GONZALES and MA. THERESA
MONTEJO, petitioners, vs. INTERPHIL LABORATORIES, INC., AND
HONORABLE LEONARDO A. QUISUMBING, SECRETARY OF
LABOR AND EMPLOYMENT, respondents.

DECISION
KAPUNAN, J.:

Assailed in this petition for review on certiorari are the decision, promulgated on 29
December 1999, and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-
G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of
the rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the business of
manufacturing and packaging pharmaceutical products. They had a Collective Bargaining
Agreement (CBA) effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993, Allesandro G.
Salazar,[1] Vice-President-Human Resources Department of respondent company, was approached
by Nestor Ocampo, the union president, and Hernando Clemente, a union director. The two union
officers inquired about the stand of the company regarding the duration of the CBA which was set
to expire in a few months. Salazar told the union officers that the matter could be best discussed
during the formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more
about the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested
for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting
was held on 15 April 1993 where the union officers asked whether Salazar would be amenable to
make the new CBA effective for two (2) years, starting 01 August 1993. Salazar, however,
declared that it would still be premature to discuss the matter and that the company could not make
a decision at the moment. The very next day, or on 16 April 1993, all the rank-and-file employees
of the company refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00
p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees
stopped working and left their workplace without sealing the containers and securing the raw
materials they were working on. When Salazar inquired about the reason for their refusal to
follow their normal work schedule, the employees told him to "ask the union officers." To
minimize the damage the overtime boycott was causing the company, Salazar immediately asked
for a meeting with the union officers. In the meeting, Enrico Gonzales, a union director, told
Salazar that the employees would only return to their normal work schedule if the company would
agree to their demands as to the effectivity and duration of the new CBA. Salazar again told the
union officers that the matter could be better discussed during the formal renegotiations of the
CBA.Since the union was apparently unsatisfied with the answer of the company, the overtime
boycott continued. In addition, the employees started to engage in a work slowdown campaign
during the time they were working, thus substantially delaying the production of the company.[2]
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and
the latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations
Commission (NLRC) a petition to declare illegal petitioner unions overtime boycott and work
slowdown which, according to respondent company, amounted to illegal strike. The case, docketed
NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation
Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA
negotiations.[3] The parties, however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with Office of the Secretary of Labor and Employment a petition for
assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair
labor practice allegedly committed by respondent company. On 12 February 1994, the union
staged a strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order[4] over
the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent
company to immediately accept all striking workers, including the fifty-three (53) terminated
union officers, shop stewards and union members back to work under the same terms and
conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its
employees in 1993.[5] On the other hand, petitioner union was directed to strictly
and immediately comply with the return to work orders issued by (the) Office x x x.[6] The same
order pronounced that (a)ll pending cases which are direct offshoots of the instant labor dispute
are hereby subsumed herewith.[7]
In the interim, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner
union filed an Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend
Proceedings seeking the consolidation of the case with the labor dispute pending before the
Secretary of Labor. Despite objection by respondent company, Labor Arbiter Caday held in
abeyance the proceedings before him. However, on 06 June 1994, Acting Labor Secretary Jose S.
Brillantes, after finding that the issues raised would require a formal hearing and the presentation
of evidentiary matters, directed the Labor Arbiters Caday and M. Sol del Rosario to proceed with
the hearing of the cases before them and to thereafter submit their report and recommendation to
his office.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then
Secretary of Labor Leonardo A. Quisumbing.[8] Then Secretary Quisumbing approved and adopted
the report in his Order, dated 13 August 1997, hence:

WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be

supported by substantial evidence, this Office hereby RESOLVES to APPROVE and
ADOPT the same as the decision in this case, and judgment is hereby rendered:
(1) Declaring the overtime boycott and work slowdown as illegal strike;

(2) Declaring the respondent union officers namely:

Nestor Ocampo - President

Carmelo Santos - Vice-President

Marites Montejo - Treasurer/Board Member

Rico Gonzales - Auditor

Rod Abuan - Director

Segundino Flores - Director

Hernando Clemente - Director

who spearheaded and led the overtime boycott and work slowdown, to have lost
their employment status; and

(3) Finding the respondents guilty of unfair labor practice for violating the
then existing CBA which prohibits the union or any employee during the
existence of the CBA from staging a strike or engaging in slowdown or
interruption of work and ordering them to cease and desist from further
committing the aforesaid illegal acts.

Petitioner union moved for the reconsideration of the order but its motion was denied. The
union went to the Court of Appeals via a petition for certiorari. In the now questioned decision
promulgated on 29 December 1999, the appellate court dismissed the petition. The unions motion
for reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE

HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW,
COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION WHEN IT COMPLETELY
DISREGARDED PAROL EVIDENCE RULE IN THE EVALUATION AND
APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS

COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT DECLARE
PRIVATE RESPONDENTS ACT OF EXTENDING SUBSTANTIAL
SEPARATION PACKAGE TO ALMOST ALL INVOLVED OFFICERS OF
PETITIONER UNION, DURING THE PENDENCY OF THE CASE, AS
TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS ANY
MISDEED COMMITTED.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS

COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT THE
SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICTION OVER A
CASE (A PETITION TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG
BEEN FILED AND PENDING BEFORE THE LABOR ARBITER.[9]

We sustain the questioned decision.

On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to
rule on the illegal strike committed by petitioner union, it is undisputed that the petition to declare
the strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and
Employment issued the assumption order on 14 February 1994. However, it cannot be denied that
the issues of overtime boycott and work slowdown amounting to illegal strike before Labor Arbiter
Caday are intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March
1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings before him and
consolidate the same with the case before the Secretary of Labor. When Acting Labor Secretary
Brillantes ordered Labor Arbiter Caday to continue with the hearing of the illegal strike case, the
parties acceded and participated in the proceedings, knowing fully well that there was also a
directive for Labor Arbiter Caday to thereafter submit his report and recommendation to the
Secretary. As the appellate court pointed out, the subsequent participation of petitioner union in
the continuation of the hearing was in effect an affirmation of the jurisdiction of the Secretary of
Labor.
The appellate court also correctly held that the question of the Secretary of Labor and
Employments jurisdiction over labor-related disputes was already settled in International
Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU)[10] where the
Court declared:

In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor
Code the authority to assume jurisdiction over a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest, and
decide the same accordingly. Necessarily, this authority to assume jurisdiction over
the said labor dispute must include and extend to all questions and controversies
arising therefrom, including cases over which the labor arbiter has exclusive
jurisdiction.

Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions
thereto. This is evident from the opening proviso therein reading (e)xcept as otherwise
provided under this Code x x x.Plainly, Article 263(g) of the Labor Code was meant
to make both the Secretary (or the various regional directors) and the labor arbiters
share jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be
able to effectively and efficiently dispose of the primary dispute. To hold the contrary
may even lead to the absurd and undesirable result wherein the Secretary and the labor
arbiter concerned may have diametrically opposed rulings. As we have said, (i)t is
fundamental that a statute is to be read in a manner that would breathe life into it,
rather than defeat it.

In fine, the issuance of the assailed orders is within the province of the Secretary as
authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same
Code, taken conjointly and rationally construed to subserve the objective of the
jurisdiction vested in the Secretary.[11]

Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that
the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record,
must be accorded due respect by the Supreme Court.[12] Here, the report and recommendation of
Labor Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but it was
likewise affirmed by the Court of Appeals. We see no reason to depart from their findings.
Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the
parol evidence rule[13] when they upheld the allegation of respondent company that the work
schedule of its employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00
a.m. According to petitioner union, the provisions of their CBA on working hours clearly stated
that the normal working hours were from 7:30 a.m. to 4:30 p.m.[14] Petitioner union underscored
that the regular work hours for the company was only eight (8) hours. It further contended that the
Labor Arbiter as well as the Court of Appeal should not have admitted any other evidence contrary
to what was stated in the CBA.
The reliance on the parol evidence rule is misplaced. In labor cases pending before the
Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are
not controlling.[15]Rules of procedure and evidence are not applied in a very rigid and technical
sense in labor cases.[16] Hence, the Labor Arbiter is not precluded from accepting and evaluating
evidence other than, and even contrary to, what is stated in, the CBA.
In any event, the parties stipulated:

Section 1. Regular Working Hours - A normal workday shall consist of not more than
eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M.
to 4:30 P.M. The schedule of shift work shall be maintained; however the company
may change the prevailing work time at its discretion, should such change be
necessary in the operations of the Company. All employees shall observe such rules as
have been laid down by the company for the purpose of effecting control over
working hours.[17]
 It is evident from the foregoing provision that the working hours may be changed, at the
discretion of the company, should such change be necessary for its operations, and that the
employees shall observe such rules as have been laid down by the company. In the case before us,
Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily
schedule by reason of the nature of its business and the demands of its clients. It was established
that the employees adhered to the said work schedule since 1988. The employees are deemed to
have waived the eight-hour schedule since they followed, without any question or complaint, the
two-shift schedule while their CBA was still in force and even prior thereto. The two-shift schedule
effectively changed the working hours stipulated in the CBA. As the employees assented by
practice to this arrangement, they cannot now be heard to claim that the overtime boycott is
justified because they were not obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:

Respondents' attempt to deny the existence of such regular overtime schedule is belied by their
own awareness of the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and
6:00 P.M. to 6:00 A.M. of the following day that has been going on since 1988. Proof of this is
the case undisputedly filed by the union for and in behalf of its members, wherein it is claimed
that the company has not been computing correctly the night premium and overtime pay for
work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-
10, testimony of Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union
Vice-President Carmelo C. Santos, demanded that the company make a recomputation of
the overtime records of the employees from 1987 (Exh. "P"). Even their own witness, union
Director Enrico C. Gonzales, testified that when in 1992 he was still a Quality Control Inspector
at the Sucat Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M.,
sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to
6:00 A.M., and when on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9,
hearing of January 10, 1994). Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to
12, 1993, which were passed around daily for the employees to sign, his name appeared but
without his signatures, he however had rendered overtime during those dates and was paid
because unlike in other departments, it has become a habit to them to sign the overtime schedule
weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The awareness of the respondent union,
its officers and members about the existence of the regular overtime schedule of 6:00 A.M. to
6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be further shown in the
discussion of the second issue.[18]

As to the second issue of whether or not the respondents have engaged in "overtime
boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both
amounting to illegal strike, the evidence presented is equally crystal clear that the
"overtime boycott" and "work slowdown" committed by the respondents amounted to
illegal strike.

As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-

President-Human Resources Department, sometime in February, 1993, he was
approached by the union President NestorOcampo and Union Director Hernando
Clemente who asked him as to what was the stand of the company regarding the
duration of the CBA between the company and which was set to expire on July 31,
1993. He answered that the matter could be best discussed during the formal
renegotiations which anyway was to start soon. This query was followed up sometime
in March, 1993, and his answer was the same. In early April, 1993, the union
president requested for a meeting to discuss the duration and effectivity of the
CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein the
union officers asked him if he would agree to make the new CBA effective on August
1, 1993 and the term thereof to be valid for only two (2) years. When he answered that
it was still premature to discuss the matter, the very next day, April 16, 1993, all the
rank and file employees of the company refused to follow their regular two-shift work
schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-
hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M., respectively,
leaving their place of work without sealing the containers and securing the raw
materials they were working on.When he saw the workers leaving before the end of
their shift, he asked them why and their reply was "asked (sic) the union
officers." Alarmed by the overtime boycott and the damage it was causing the
company, he requested for a meeting with the union officers. In the meeting, he asked
them why the regular work schedule was not being followed by the employees, and
union Director Enrico Gonzales, with the support of the other union officers, told him
that if management would agree to a two-year duration for the new CBA and an
effectivity date of August 1, 1993, all employees will return to the normal work
schedule of two 12-hour shifts. When answered that the management could not decide
on the matter at the moment and to have it discussed and agreed upon during the
formal renegotiations, the overtime boycott continued and the employees at the same
time employed a work slowdown campaign during working hours, causing
considerable delay in the production and complaints from the clients/customers (Exh.
"O", Affidavit of Alessandro G. Salazar which formed part of his direct
testimony). This testimonial narrations of Salazar was, as earlier said, undisputed
because the respondents' counsel waived his cross examination (t.s.n. p. 15, hearing
on August 9, 1994).

Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other
Department Managers pointing to the union officers as the instigators of the overtime
boycott and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a
union member at the time the concerted activities of the respondents took place, is
quoted hereunder:

2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo ang

lahat ng taga-maintenance ng bawat departamento upang dumalo sa isang miting. Sa
miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na mayroon
ilalabas na memo ang Unyon na nag-uutos sa mga empleyado ng Kompanya na mag-
imbento ng sari-saring dahilan para lang hindi sila makapagtrabaho
ng"overtime". Sinabihan rin ako ni Tessie Montejo na siya namang Treasurer ng
Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes para hindi ka masabihan
ng magtrabaho ng Sabado at Linggo' na siya namang araw ng "overtime" ko. x x x

3. Nakalipas ang dalawaang buwan at noong unang bahagi ng Abril 1993, miniting
kami ng Shop Stewards namin na sina Ariel Abenoja, Dany Tansiongco at Vicky
Baron. Sinabihan kami na huwag ng mag-ovetime pag nagbigay ng senyas ang Unyon
ng "showtime."

4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng

"showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay silang
umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18, 1993 na Sabado at
Linggo.

5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa
opisina ng Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng Unyon na sina:

Nestor Ocampo ----- Presidente

Carmelo Santos ----- Bise-Presidente

Nanding Clemente -- Director

Tess Montejo------- Chief Steward

Segundo Flores ------ Director

Enrico Gonzales ----- Auditor

Boy Alcantara ------- Shop Steward

Rod Abuan ----------- Director

at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga
opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-ovetime"
gayong "Binigyan ka na namin ng instruction na huwag pumasok, pinilit mo pa ring
pumasok." "Management ka ba o Unyonista." Sinagot ko na ako ay
Unyonista. Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala akong
maibigay na dahilan para lang hindi pumasok at "mag-overtime." Pagkatapos nito,
ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang umalis.

x x x"
Likewise, the respondents' denial of having a hand in the work slowdown since there
was no change in the performance and work efficiency for the year 1993 as compared
to the previous year was even rebuffed by their witness M. Theresa Montejo, a
Quality Control Analyst. For on cross-examination, she (Montejo) admitted that she
could not answer how she was able to prepare the productivity reports from May 1993
to February 1994 because from April 1993 up to April 1994, she was on union
leave. As such, the productivity reports she had earlier shown was not prepared by her
since she had no personal knowledge of the reports (t.s.n. pp. 32-35, hearing of
February 27, 1995). Aside from this admission, the comparison made by the
respondents was of no moment, because the higher production for the years previous
to 1993 was reached when the employees regularly rendered overtime work. But
undeniably, overtime boycott and work slowdown from April 16, 1993 up to March 7,
1994 had resulted not only in financial losses to the company but also damaged its
business reputation.

Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the
24-hour work schedule thru their concerted activities of "overtime boycott" and "work
slowdown" from April 16, 1993 up to March 7, 1994, to force the petitioner company
to accede to their unreasonable demands, can be classified as a strike on an
installment basis, as correctly called by petitioner company. xxx[19]

It is thus undisputed that members of the union by their own volition decided not to render
overtime services in April 1993.[20] Petitioner union even admitted this in its Memorandum, dated
12 April 1999, filed with the Court of Appeals, as well as in the petition before this Court, which
both stated that "(s)sometime in April 1993, members of herein petitioner, on their own volition
and in keeping with the regular working hours in the Company x x x decided not to render
overtime".[21] Such admission confirmed the allegation of respondent company that petitioner
engaged in overtime boycott and work slowdown which, to use the words of Labor Arbiter Caday,
was taken as a means to coerce respondent company to yield to its unreasonable demands.
More importantly, the overtime boycott or work slowdown by the employees constituted a
violation of their CBA, which prohibits the union or employee, during the existence of the CBA,
to stage a strike or engage in slowdown or interruption of work.[22] In Ilaw at Buklod ng
Manggagawa vs. NLRC,[23] this Court ruled:

x x x (T)he concerted activity in question would still be illicit because contrary to the
workers explicit contractual commitment that there shall be no strikes, walkouts,
stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes,
or any other interference with any of the operations of the COMPANY during the
term of xxx (their collective bargaining) agreement.

What has just been said makes unnecessary resolution of SMCs argument that the workers
concerted refusal to adhere to the work schedule in force for the last several years, is
a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike
clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement
with the petitioners concept of a slowdown as a strike on the installment plan; as a willful
reduction in the rate of work by concerted action of workers for the purpose of restricting the
output of the employer, in relation to a labor dispute; as an activity by which workers, without a
complete stoppage of work, retard production or their performance of duties and functions to
compel management to grant their demands. The Court also agrees that such a slowdown is
generally condemned as inherently illicit and unjustifiable, because while the employees
continue to work and remain at their positions and accept the wages paid to them, they at the
same time select what part of their allotted tasks they care to perform of their own volition or
refuse openly or secretly, to the employers damage, to do other work; in other words, they work
on their own terms. x x x.[24]

Finally, the Court cannot agree with the proposition that respondent company, in extending
substantial separation package to some officers of petitioner union during the pendency of this
case, in effect, condoned the illegal acts they committed.
Respondent company correctly postured that at the time these union officers obtained their
separation benefits, they were still considered employees of the company. Hence, the company
was merely complying with its legal obligations.[25] Respondent company could have withheld
these benefits pending the final resolution of this case. Yet, considering perhaps the financial
hardships experienced by its employees and the economic situation prevailing, respondent
company chose to let its employees avail of their separation benefits. The Court views the gesture
of respondent company as an act of generosity for which it should not be punished.
WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision
of the Court of Appeals is AFFIRMED.
SO ORDERED.

CL SHIPPING PHILIPPINES, G.R. No. 153031

INC. and U-MING MARINE
TRANSPORT CORPORATION, Present:
Petitioners,

PANGANIBAN, C.J.
YNARES-SANTIAGO,
(Working Chairperson)
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR. and
CHICO-NAZARIO, JJ.
NATIONAL LABOR
RELATIONS COMMISSION Promulgated:
and STEVE RUSEL,
Respondents. December 14, 2006
x------------------------------------------------x
 DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the Decision[1] of the Court of Appeals (CA) dated December 18,
2001 in CA-G.R. SP No. 59976, which affirmed the Decision of the National Labor
Relations Commission (NLRC) dated March 22, 2000 in NLRC NCR CA No.
018120-99; and the Resolution of the CA dated April 10, 2002, denying petitioners
motion for reconsideration.[2]

The facts of the case, as found by the CA, are as follows:

In April 1996, Rusel was employed as GP/AB seaman by manning
agency, PCL Shipping Philippines, Inc. (PCL Shipping) for and in behalf
of its foreign principal, U-Ming Marine Transport Corporation (U-Ming
Marine). Rusel thereby joined the vessel MV Cemtex General (MV
Cemtex) for the contract period of twelve (12) months with a basic
monthly salary of US$400.00, living allowance of US$140.00, fixed
overtime rate of US$120.00 per month, vacation leave with pay of
US$40.00 per month and special allowance of US$175.00.

On July 16, 1996, while Rusel was cleaning the vessels kitchen, he
slipped, and as a consequence thereof, he suffered a broken and/or
sprained ankle on his left foot. A request for medical examination was
flatly denied by the captain of the vessel. On August 13, 1996, feeling an
unbearable pain in his ankle, Rusel jumped off the vessel using a life
jacket and swam to shore. He was brought to a hospital where he was
confined for eight (8) days.

On August 22, 1996, a vessels agent fetched Rusel from the

hospital and was required to board a plane bound for the Philippines.

On September 26, 1996, Rusel filed a complaint for illegal

dismissal, non-payment of wages, overtime pay, claim for medical
 benefits, sick leave pay and damages against PCL Shipping and U-Ming
Marine before the arbitration branch of the NLRC. In their answer, the
latter alleged that Rusel deserted his employment by jumping off the
vessel.

On July 21, 1998, the labor arbiter rendered his decision, the
dispositive portion of which reads as follows:

Wherefore, above premises duly considered we find the

respondent liable for unjust repatriation of the complainant.

Accordingly, the following award is hereby adjudged against the

respondent:

1. The amount of $2,625.00 or its peso equivalent at the time of

payment representing three (3) months salary of the complainant due to
his illegal dismissal.
2. The amount of $1,600.00 or its peso equivalent, representing
sick wage benefits.

3. The amount of $550.00 or its peso equivalent, representing

living allowance, overtime pay and special allowance for two (2) months.

4. The amount of $641.66 or its peso equivalent, representing

unpaid wages from August 11 to 22, 1996.

5. Attorneys fees equivalent to 10% of the total monetary award.

The rest of the claims are dismissed for lack of merit.

SO ORDERED.[3]

Aggrieved by the Decision of the Labor Arbiter, herein petitioners appealed

to the NLRC. In its Decision dated March 22, 2000, the NLRC affirmed the findings
of the Labor Arbiter but modified the appealed Decision, disposing as follows:

WHEREFORE, premises considered, the assailed decision is as it

is hereby ordered MODIFIED in that the amount representing three
months salary of the complainant due to his illegal dismissal is reduced to
US$1,620.00. Further the award of sick wage benefit is deleted.

All other dispositions are AFFIRMED.

SO ORDERED.[4]
 Petitioners filed a Motion for Reconsideration but the NLRC denied the same
in its Decision of May 3, 2000.[5]

Petitioners filed a petition for certiorari with the CA.[6] In its Decision
dated December 18, 2001, the CA dismissed the petition and affirmed the NLRC
Decision.[7]

Petitioners filed a Motion for Reconsideration but it was denied by the CA in its
Resolution dated April 10, 2002.[8]

Hence, the instant petition with the following assignment of errors:

I. The Court of Appeals erred in ruling that private respondent was

illegally dismissed from employment.

xxxx

II. Likewise, the Court of Appeals erred in not upholding

petitioners right to pre-terminate private respondents employment.
xxxx

III. The private respondent is not entitled to other money claims,

particularly as to the award of attorneys fees.[9]

As to their first assigned error, petitioners contend that the CA erred in

affirming the findings of the NLRC that Rusels act of jumping ship does not establish
any intent on his part to abandon his job and never return. Petitioners argue that
Rusels very act of jumping from the vessel and swimming to shore is evidence of
highest degree that he has no intention of returning to his job. Petitioners further
contend that if Rusel was indeed suffering from unbearable and unmitigated pain, it
is unlikely that he is able to swim two (2) nautical miles, which is the distance
between their ship and the shore, considering that he needed to use his limbs in
swimming. Petitioners further assert that it is error on the part of the CA to disregard
the entries contained in the logbook and in the Marine Note Protest evidencing
Rusels offense of desertion because while these pieces of evidence were belatedly
presented, the settled rule is that additional evidence may be admitted on appeal in
labor cases. Petitioners also contend that Rusels act of desertion is a grave and
serious offense and considering the nature and situs of employment as well as the
nationality of the employer, the twin requirements of notice and hearing before an
employee can be validly terminated may be dispensed with.

As to their second assigned error, petitioners contend that assuming, for the
sake of argument, that Rusel is not guilty of desertion, they invoked the alternative
defense that the termination of his employment was validly made pursuant to
petitioners right to exercise their prerogative to pre-terminate such employment in
accordance with Section 19(C) of the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers On-Board Ocean-Going Vessels, which provision
was incorporated in Rusels Contract of Employment with petitioners. Petitioners
assert that despite the fact that this issue was raised before the CA, the appellate
court failed to resolve the same.

Anent the last assigned error, petitioners argue that it is error on the part of
the CA to affirm the award of living allowance, overtime pay, vacation pay and
special allowance for two months because Rusel failed to submit substantial
evidence to prove that he is entitled to these awards. Petitioners further argue that
these money claims, particularly the claim for living allowance, should not be
granted because they partake of the nature of earned benefits for services rendered
by a seafarer. Petitioners also contend that the balance of Rusels wages from August
11-22, 1996 should be applied for the payment of the costs of his repatriation,
considering that under Section 19(E) of the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels,
when a seafarer is discharged for any just cause, the employer shall have the right to
recover the costs of his replacement and repatriation from the seafarers wages and
other earnings. Lastly, petitioners argue that the award of attorneys fees should be
deleted because there is nothing in the decision of the Labor Arbiter or the NLRC
which states the reason why attorneys fees are being awarded.

In his Comment, private respondent contends that petitioners are raising issues
of fact which have already been resolved by the Labor Arbiter, NLRC and the CA.
Private respondent argues that, aside from the fact that the issues raised were already
decided by three tribunals against petitioners favor, it is a settled rule that only
questions of law may be raised in a petition for review on certiorari under Rule 45
of the Rules of Court. While there are exceptions to this rule, private respondent
contends that the instant case does not fall under any of these exceptions. Private
respondent asserts that petitioners failed to substantiate their claim that the former is
guilty of desertion. Private respondent further contends that the right to due process
is available to local and overseas workers alike, pursuant to the provisions of the
Constitution on labor and equal protection as well as the declared policy contained
in the Labor Code. Private respondent argues that petitioners act of invoking the
provisions of Section 19(C) of the POEA Contract as an alternative defense is
misplaced and is inconsistent with their primary defense that private respondent was
dismissed on the ground of desertion. As to the award of attorneys fees, private
respondent contends that since petitioners act compelled the former to incur
expenses to protect his interest and enforce his lawful claims, and because petitioners
acted in gross and evident bad faith in refusing to satisfy private respondents lawful
claims, it is only proper that attorneys fees be awarded in favor of the latter. Anent
the other monetary awards, private respondent argues that these awards are all
premised on the findings of the Labor Arbiter, NLRC and the CA that private
respondents dismissal was improper and illegal.

The Court finds the petition without merit.

Anent the first assigned error, it is a settled rule that under Rule 45 of the
Rules of Court, only questions of law may be raised in this Court.[10] Judicial review
by this Court does not extend to a re-evaluation of the sufficiency of the evidence
upon which the proper labor tribunal has based its determination.[11] Firm is the
doctrine that this Court is not a trier of facts, and this applies with greater force in
labor cases.[12] Factual issues may be considered and resolved only when the findings
of facts and conclusions of law of the Labor Arbiter are inconsistent with those of
the NLRC and the CA.[13] The reason for this is that the quasi-judicial agencies, like
the Arbitration Board and the NLRC, have acquired a unique expertise because their
jurisdiction are confined to specific matters.[14] In the present case, the question of
whether private respondent is guilty of desertion is factual. The Labor Arbiter,
NLRC and the CA are unanimous in their findings that private respondent is not
guilty of desertion and that he has been illegally terminated from his
employment. After a review of the records of the instant case, this Court finds no
cogent reason to depart from the findings of these tribunals.
 Petitioners assert that the entries in the logbook of MV Cemtex General[15] and
in the Marine Note Protest[16] which they submitted to the NLRC confirm the fact
that private respondent abandoned the vessel in which he was assigned. However,
the genuineness of the Marine Note Protest as well as the entries in the logbook are
put in doubt because aside from the fact that they were presented only during
petitioners Motion for Reconsideration filed with the NLRC, both the Marine Note
Protest and the entry in the logbook which were prepared by the officers of the vessel
were neither notarized nor authenticated by the proper authorities. Moreover, a
reading of these entries simply shows that private respondent was presumed to have
deserted his post on the sole basis that he was found missing while
the MV Cemtex General was anchored at the port of Takehara, Japan. Hence,
without any corroborative evidence, these documents cannot be used as bases for
concluding that private respondent was guilty of desertion.

Petitioners also question the findings and conclusion of the Labor Arbiter and
the NLRC that what caused private respondent in jumping overboard was the
unmitigated pain he was suffering which was compounded by the inattention of the
vessels captain to provide him with the necessary treatment inspite of the fact that
the ship was moored for about two weeks at the anchorage of Takehara, Japan; and,
that private respondents act was a desperate move to protect himself and to seek
relief for his physical suffering. Petitioners contend that the findings and conclusions
of the Labor Arbiter and the NLRC which were affirmed by the CA are based on
conjecture because there is no evidence to prove that, at the time he jumped ship,
private respondent was really suffering from an ankle injury.

It is true that no substantial evidence was presented to prove that the cause of
private respondents confinement in a hospital in Takehara, Japan was his ankle
injury. The Court may not rely on the letter marked as Annex B and attached to
private respondents Position Paper because it was unsigned and it was not
established who executed the same.[17] However, the result of the x-ray examination
conducted by the LLN Medical Services, Inc. on August 26, 1996, right after private
respondent was repatriated to the Philippines, clearly showed that there is a soft-
tissue swelling around his ankle joint.[18] This evidence is consistent with private
respondents claim that he was then suffering from an ankle injury which caused him
to jump off the ship.
 As to petitioners contention that private respondent could not have traversed
the distance between the ship and the shore if he was indeed suffering from
unbearable pain by reason of his ankle injury, suffice it to say that private respondent
is an able-bodied seaman and that with the full use of both his arms and the help of
a life jacket, was able to reach the shore.

As correctly defined by petitioners, desertion, in maritime law is:

The act by which a seaman deserts and abandons a ship or vessel,

in which he had engaged to perform a voyage, before the expiration of his
time, and without leave. By desertion, in maritime law, is meant, not a
mere unauthorized absence from the ship, without leave, but an
unauthorized absence from the ship with an intention not to return to
her service; or as it is often expressed, animo non revertendi, that is, with
an intention to desert.[19] (emphasis supplied)

Hence, for a seaman to be considered as guilty of desertion, it is essential that there

be evidence to prove that if he leaves the ship or vessel in which he had engaged to
perform a voyage, he has the clear intention of abandoning his duty and of not
returning to the ship or vessel. In the present case, however, petitioners failed to
present clear and convincing proof to show that when private respondent jumped
ship, he no longer had the intention of returning. The fact alone that he jumped off
the ship where he was stationed, swam to shore and sought medical assistance for
the injury he sustained is not a sufficient basis for petitioners to conclude that he had
the intention of deserting his post. Settled is the rule that in termination cases, the
burden of proof rests upon the employer to show that the dismissal is for a just and
valid cause.[20] The case of the employer must stand or fall on its own merits and not
on the weakness of the employees defense.[21] In the present case, since petitioners
failed to discharge their burden of proving that private respondent is guilty of
desertion, the Court finds no reason to depart from the conclusion of the Labor
Arbiter, NLRC and the CA that private respondents dismissal is illegal.

In their second assigned error, petitioners cite Section 19(C) of POEA

Memorandum Circular No. 055-96[22] known as the Revised Standard Employment
Terms and Conditions Governing the Employment of Filipino Seafarers On Board
Ocean-Going Vessels as their alternative basis in terminating the employment of
private respondent. Said Section provides as follows:
 Section 19. REPATRIATION
xxxx

C. If the vessel arrives at a convenient port within a period of three

months before the expiration of his contract, the master/
employer may repatriate the seafarer from such port provided
that the seafarer shall be paid all his earned wages. In addition,
the seafarer shall also be paid his leave pay for the entire
contract period plus a termination pay equivalent to one (1)
month of his basic pay, provided, however, that this mode of
termination may only be exercised by the master/employer if the
original contract period of the seafarer is at least ten (10)
months; provided, further, that the conditions for this mode of
termination shall not apply to dismissal for cause.

The Court is not persuaded. POEA Memorandum Circular No. 055-96 took
effect on January 1, 1997 while the contract of employment entered into by and
between private respondent and petitioners was executed on April 10, 1996. Hence,
it is wrong for petitioners to cite this particular Memorandum because at the time of
petitioners and private respondents execution of their contract of employment
Memorandum Circular No. 055-96 was not yet effective.

What was in effect at the time private respondents Contract of Employment

was executed was POEA Memorandum Circular No. 41, Series of 1989. It is clearly
provided under the second paragraph of private respondents Contract of
Employment that the terms and conditions provided under Memorandum Circular
No. 41, Series of 1989 shall be strictly and faithfully observed. Hence, it is
Memorandum Circular No. 41, Series of 1989 which governs private respondents
contract of employment.

Section H (6), Part I of Memorandum Circular No. 41, which has almost
identical provisions with Section 19 (C) of Memorandum Circular No. 055-96,
provides as follows:
SECTION H. TERMINATION OF EMPLOYMENT

xxxx
 6. If the vessel arrives at a convenient port within a period of three
(3) months before the expiration of the Contract, the master/employer may
repatriate the seaman from such port provided that the seaman shall be
paid all his earned wages. In addition, the seaman shall also be paid his
leave pay for the entire contract period plus a termination pay equivalent
to one (1) month of his basic pay, provided, however, that this mode of
termination may only be exercised by the master/employer if the original
contact period of the seaman is at least ten (10) months; provided, further,
that the conditions for this mode of termination shall not apply to dismissal
for cause.

The Court agrees with private respondents contention that petitioners

arguments are misplaced. Petitioners may not use the above-quoted provision as
basis for terminating private respondents employment because it is incongruent with
their primary defense that the latters dismissal from employment was for
cause. Petitioners may not claim that they ended private respondents services
because he is guilty of desertion and at the same time argue that they exercised their
option to prematurely terminate his employment, even without cause, simply
because they have the right to do so under their contract. These grounds for
termination are inconsistent with each other such that the use of one necessarily
negates resort to the other. Besides, it appears from the records that petitioners
alternative defense was pleaded merely as an afterthought because it was only in
their appeal with the NLRC that they raised this defense. The only defense raised by
petitioners in their Answer with Counterclaim filed with the office of the Labor
Arbiter is that private respondent was dismissed from employment by reason of
desertion.[23] Under the Rules of Court,[24] which is applicable in a suppletory
character in labor cases before the Labor Arbiter or the NLRC pursuant to Section
3, Rule I of the New Rules of Procedure of the NLRC[25], defenses which are not
raised either in a motion to dismiss or in the answer are deemed waived.[26]

Granting, for the sake of argument, that petitioners may use Section H (6),
Part I of Memorandum Circular No. 41 or Section 19(C) of Memorandum Circular
No. 055-96 as basis for terminating private respondents employment, it is clear that
one of the conditions before any of these provisions becomes applicable is when the
vessel arrives at a convenient port within a period of three (3) months before the
expiration of the contract of employment. In the present case, private respondents
contract was executed on April 10, 1996 for a duration of twelve months. He was
deployed aboard MV Cemtex General on June 25, 1996 and repatriated to
the Philippines on August 22, 1996. Hence, it is clear that petitioners did not meet
this condition because private respondents termination was not within a period of
three months before the expiration of his contract of employment.

Moreover, the Court finds nothing in the records to show that petitioners
complied with the other conditions enumerated therein, such as the payment of all
of private respondents earned wages together with his leave pay for the entire
contract period as well as termination pay equivalent to his one month salary.

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.[27] 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.[28] Accordingly, as to the requirement of notice and hearing in the case of a
seafarer, the Court has already ruled in a number of cases that before a seaman can
be dismissed and discharged from the vessel, it is required that he be given a written
notice regarding the charges against him and that he be afforded a formal
investigation where he could defend himself personally or through a
representative.[29] Hence, the employer should strictly comply with the twin
requirements of notice and hearing without regard to the nature and situs of
employment or the nationality of the employer. Petitioners failed to comply with
these twin requirements.
 Petitioners also contend that the wages of private respondent from August 11-
22, 1996 were applied to the costs of his repatriation. Petitioners argue that the off-
setting of the costs of his repatriation against his wages for the aforementioned
period is allowed under the provisions of Section 19(E) of Memorandum Circular
No. 055-96 which provides that when the seafarer is discharged for any just cause,
the employer shall have the right to recover the costs of his replacement and
repatriation from the seafarers wages and other earnings.

The Court does not agree. Section 19(E) of Memorandum Circular No. 055-
96 has its counterpart provision under Section H (2), Part II of Memorandum
Circular No. 41, to wit:

SECTION H. REPATRIATION

xxxx

2. When the seaman is discharged for disciplinary reasons, the

employer shall have the right to recover the costs of maintenance and
repatriation from the seamans balance of wages and other earnings.

xxxx

It is clear under the above-quoted provision that the employer shall have the right to
recover the cost of repatriation from the seamans wages and other earnings only if
the concerned seaman is validly discharged for disciplinary measures. In the present
case, since petitioners failed to prove that private respondent was validly terminated
from employment on the ground of desertion, it only follows that they do not have
the right to deduct the costs of private respondents repatriation from his wages and
other earnings.

Lastly, the Court is not persuaded by petitioners contention that the private
respondent is not entitled to his money claims representing his living allowance,
overtime pay, vacation pay and special allowance as well as attorneys fees because
he failed to present any proof to show that he is entitled to these awards.
 However, the Court finds that the monetary award representing private
respondents three months salary as well as the award representing his living
allowance, overtime pay, vacation pay and special allowance should be modified.

The Court finds no basis in the NLRCs act of including private respondents
living allowance as part of the three months salary to which he is entitled under
Section 10 of Republic Act (RA) No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995. The pertinent provisions of the said
Act provides:

Sec. 10. Money Claims

xxxx

In case of termination of overseas employment without just, valid

or authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest at
twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.

xxxx

It is clear from the above-quoted provision that what is included in the computation
of the amount due to the overseas worker are only his salaries. Allowances are
excluded. In the present case, since private respondent received a basic monthly
salary of US$400.00, he is, therefore, entitled to receive a sum of US$1200.00,
representing three months of said salary.

As to the awards of living allowance, overtime pay, vacation pay and special
allowance, it is clearly provided under private respondents Contract of Employment
that he is entitled to these benefits as follows: living allowance of US$140.00/month;
vacation leave with pay equivalent to US$40.00/month; overtime rate of
US$120.00/month; and, special allowance of US$175.00/month.[30]

With respect, however, to the award of overtime pay, the correct criterion in
determining whether or not sailors are entitled to overtime pay is not whether they
were on board and can not leave ship beyond the regular eight working hours a day,
but whether they actually rendered service in excess of said number of hours. [31] In
the present case, the Court finds that private respondent is not entitled to overtime
pay because he failed to present any evidence to prove that he rendered service in
excess of the regular eight working hours a day.

On the basis of the foregoing, the remaining benefits to which the private
respondent is entitled is the living allowance of US$140.00/month, which was
removed in the computation of private respondents salary, special allowance of
US$175.00/month and vacation leave with pay amounting to US$40.00/month.
Since private respondent rendered service for two months these benefits should be
doubled, giving a total of US$710.00.

As to the award of attorneys fees, this Court ruled in Reyes v. Court of

Appeals,[32] as follows:

x x x [T]here are two commonly accepted concepts of attorney's

fees, the so-called ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer by his client
for the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement with the
client. In its extraordinary concept, attorneys fees are deemed indemnity
for damages ordered by the court to be paid by the losing party in a
litigation. The instances where these may be awarded are those
enumerated in Article 2208 of the Civil Code, specifically par. 7 thereof
which pertains to actions for recovery of wages, and is payable not to the
lawyer but to the client, unless they have agreed that the award shall
pertain to the lawyer as additional compensation or as part thereof. The
extraordinary concept of attorneys fees is the one contemplated in Article
111 of the Labor Code, which provides:

Art. 111. Attorneys fees. (a) In cases of unlawful

withholding of wages, the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of
wages recovered x x x

The afore-quoted Article 111 is an exception to the declared

policy of strict construction in the awarding of attorneys
fees. Although an express finding of facts and law is still necessary to
 prove the merit of the award, there need not be any showing that the
employer acted maliciously or in bad faith when it withheld the wages.
There need only be a showing that the lawful wages were not paid
accordingly, as in this case.
In carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the employees welfare should be the primordial
and paramount consideration. This kind of interpretation gives meaning
and substance to the liberal and compassionate spirit of the law as
provided in Article 4 of the Labor Code which states that [a]ll doubts in
the implementation and interpretation of the provisions of [the Labor]
Code including its implementing rules and regulations, shall be resolved
in favor of labor, and Article 1702 of the Civil Code which provides that
[i]n case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the
laborer.[33] (Emphasis supplied)
In the present case, it is true that the Labor Arbiter and the NLRC failed to state the
reasons why attorneys fees are being awarded. However, it is clear that private
respondent was illegally terminated from his employment and that his wages and
other benefits were withheld from him without any valid and legal basis. As a
consequence, he is compelled to file an action for the recovery of his lawful wages
and other benefits and, in the process, incurred expenses. On these bases, the Court
finds that he is entitled to attorneys fees.

WHEREFORE, the petition is PARTLY GRANTED. The Court of

Appeals Decision dated December 18, 2001 and Resolution dated April 10,
2002 are AFFIRMEDwith MODIFICATION to the effect that the award of
US$1620.00 representing private respondents three months salary is reduced to
US$1200.00. The award of US$550.00 representing private respondents living
allowance, overtime pay, vacation pay and special allowance for two months is
deleted and in lieu thereof, an award of US$710.00 is granted representing private
respondents living allowance, special allowance and vacation leave with pay for the
same period.

OWEL Z. ZUBISTA, and ORLANDO P.

TABOY, Petitioners, v. COURT OF APPEALS (Special Twelfth
Division), STA. CLARA INTERNATIONAL TRANSPORT AND
 EQUIPMENT CORPORATION, and NICANDRO
LINAO, Respondents.

DECISION

QUISUMBING, J.:

Assailed in this Petition for Review are the Decision1 dated June 21,
2005 and the Resolution2 dated August 22, 2005 of the Court of
Appeals in CA-G.R. SP No. 76096, which affirmed the
Resolution3 dated May 20, 2002 of the National Labor Relations
Commission (NLRC). The NLRC had affirmed the decision4 of the
Labor Arbiter in NLRC Case No. NCR-00-09-09578-99, dismissing
petitioners' complaint for constructive dismissal but ordering the
payment of their holiday pay, accrued sick and vacation leaves and
wage differential.

The antecedent facts culled from the submissions below are as

follows:

Petitioners Lazaro V. Dacut, Cesario G. Cajote, Romerlo F. Tungala,

Lowel Z. Zubista, and Orlando P. Taboy were crew members of the
LCT "BASILISA", an inter-island cargo vessel owned by private
respondent Sta. Clara International Transport and Equipment
Corporation.

On November 29, 1998, Dacut discovered a hole in the vessel's

engine room. The company had the hole patched up with a piece of
iron and cement. Despite the repair, Dacut and Tungala resigned in
July 1999 due to the vessel's alleged unseaworthiness.5

On the other hand, Cajote went on leave from April 12-28, 1999 to
undergo eye treatment. Since then, he has incurred several
unauthorized absences. Fearing that he will be charged as Absent
Without Leave (AWOL), Cajote resigned in June 1999.6

On September 22, 1999, petitioners filed a complaint7 for

constructive dismissal amounting to illegal dismissal (except for
Zubista and Taboy); underpayment of wages, special and regular
holidays; non-payment of rest days, sick and vacation leaves, night
shift differentials, subsistence allowance, and fixed overtime pay;
actual, moral and exemplary damages; and litigation costs and
attorney's fees.

Dacut and Tungala claimed that they resigned after Reynalyn G.

Orlina, the secretary of the Personnel Manager, told them that they
will be paid their separation pay if they voluntarily resigned. They
also resigned because the vessel has become unseaworthy after the
company refused to have it repaired properly.8 Meanwhile, Cajote
alleged that he resigned because the company hired a replacement
while he was still on leave. When he returned, the Operations
Manager told him that he will be paid his separation pay if he
voluntarily resigned; otherwise, he would be charged for being
AWOL. On the other hand, Zubista claimed that his wage was below
the minimum set by the Regional Tripartite Wages and Productivity
Board. Finally, petitioners alleged that they were not paid their rest
days, sick and vacation leaves, night shift differentials, subsistence
allowance, and fixed overtime pay.

After the Labor Arbiter declared the case submitted for decision, the
company filed its reply to petitioners' position paper. It countered
that Dacut and Tungala voluntarily resigned due to the vessel's
alleged unseaworthiness while Cajote resigned to avoid being
charged as AWOL. It also claimed that petitioners' monetary claims
had no basis.

On August 2, 2000, the Labor Arbiter dismissed petitioners'

complaint. The Labor Arbiter ruled that there was sufficient evidence
to prove that the vessel was seaworthy. Thus, the fear of Dacut and
Tungala was unfounded, and they must bear the consequence of
their resignation. The Labor Arbiter also observed that Cajote has
incurred excessive unauthorized absences which would warrant his
dismissal under the Labor Code. Thus, the Labor Arbiter upheld the
company's position that Cajote resigned to avoid being charged as
AWOL. Finally, the Labor Arbiter noted that except for the holiday
pay, accrued sick and vacation leaves, and wage differential,
petitioners failed to substantiate their monetary claims. The Labor
Arbiter thus held:
WHEREFORE, the foregoing premises considered, judgment is
hereby rendered dismissing complainants' charge for constructive
dismissal and the concomitant prayer that goes therewith for lack of
merit. However, respondent is ordered to pay the following:

1. [Complainants'] holiday pay and the cash equivalent of their

accrued sick leave/vacation leave credits to:

Holiday Pay Accrued

Regular Special S/L - V/L Credits

Dacut P1,000.00 P1,099.98 P8,365.35
Tungala P 933.32 P 756.66 P7,850.00
Cajote P1,292.30 P 682.95 P2,100.00
Zubista P 923.04 P 714.98 P2,600.00
Taboy P1,307.68 P1,076.91 P5,000.00
[Total] P5,456.34 P4,331.48 P25,915.35

2. Zubista's wage differential amounting to THIRTY-FOUR

THOUSAND SIX HUNDRED EIGHTY-SEVEN PESOS and 70/100
(P34,687.70)[.]

SO ORDERED.9

Petitioners appealed to the NLRC alleging that the Labor Arbiter

erred: (1) in entertaining the company's reply after the case had
been submitted for decision; (2) in not finding that Dacut, Cajote
and Tungala were constructively dismissed; (3) in not finding that
petitioners were entitled to their monetary claims; and (4) in not
finding that petitioners were entitled to actual, moral and exemplary
damages as well as litigation costs and attorney's fees. At this point,
Dacut and Tungala further contended that they resigned because
they were being harassed by the company due to a complaint for
violation of labor standards they had filed earlier against it.

On May 20, 2002, the NLRC affirmed the Labor Arbiter's

decision.10 The NLRC clarified that although the Labor Arbiter has
declared the case submitted for decision, the Labor Arbiter may still
entertain the company's reply in order to ascertain the facts of the
case. The NLRC also declared that Dacut, Cajote and Tungala
voluntarily executed their resignation letters. chanrobles v irt ual law l ibra ry

Petitioners elevated the case to the Court of Appeals which likewise

affirmed the findings of the NLRC. Petitioners now come before us
alleging that the appellate court committed serious errors of law:

I.

'in holding that there was nothing irregular in admitting

respondents' belatedly submitted reply and making the same the
primary basis of the decision despite the fact that petitioners had
not been given the chance to refute its contents.

II.

'IN HOLDING THAT PETITIONERS LAZARO DACUT, [ET] AL.

VOLUNTARILY RESIGNED FROM THEIR EMPLOYMENT AND WERE
NOT CONSTRUCTIVELY DISMISSED.

III.

'IN RULING THAT PETITIONERS [WERE] NOT ENTITLED TO THEIR

OTHER MONETARY CLAIMS.11

Essentially, we are asked to resolve: (1) whether the Labor Arbiter

erred in admitting the company's reply after the case had been
submitted for decision; (2) whether Dacut, Tungala and Cajote
voluntarily resigned from their employment; and (3) whether
petitioners were entitled to their monetary claims. chanroble s virtual law lib rary

The first issue deals with technical rules and procedural matters.
Well-settled is the rule that technical rules of procedure are not
binding in labor cases.12 In fact, it is the spirit and intention of the
Labor Code that labor officials shall use all reasonable means to
ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure.13
In our view, the fact that the Labor Arbiter admitted the company's
reply after the case had been submitted for decision did not make
the proceedings before him irregular. Petitioners were given
adequate opportunity in the NLRC and the Court of Appeals to rebut
the company's evidence against them.

The second and third issues require a review of factual matters.

Under Rule 45 of the Rules of Court, a Petition for Review
on Certiorari shall only raise questions of law considering that the
findings of fact of the Court of Appeals are, as a general rule,
conclusive upon and binding on this Court. This doctrine applies with
greater force in labor cases where the factual findings of the labor
tribunals are affirmed by the Court of Appeals. The reason is that
labor officials are deemed to have acquired expertise in matters
within their jurisdiction and therefore, their factual findings are
generally accorded not only respect but also finality.14

Here, the Labor Arbiter, the NLRC, and the Court of Appeals were
unanimous in finding that the primary reason why Dacut and
Tungala resigned was the vessel's alleged unseaworthiness as borne
by their pleadings before the Labor Arbiter. Dacut and Tungala
never mentioned that they resigned because they were being
harassed by the company due to a complaint for violation of labor
standards they had filed against it. This ground was alleged only
before the NLRC and not a single act or incident was cited to prove
this point. Even the alleged assurance by Orlina, that they would be
given separation pay, served merely as a secondary reason why
they resigned. In fact, we doubt that such assurance was even
made considering that as secretary of the Personnel Manager, it was
not shown under what authority Orlina acted when she told Dacut
and Tungala to resign.

Likewise deserving scant consideration is Cajote's claim that the

Operations Manager told him that he will be paid separation pay if
he resigned voluntarily; otherwise, he would be charged as AWOL.
Although the company already hired a replacement, Cajote admitted
that he was still employed at the time he resigned. In fact, the
company tried to give him another assignment but he refused it.
Thus, the only reason why Cajote resigned was his long
unauthorized absences which would have warranted his dismissal in
any case.

We find no reason to disturb all these factual findings because they

are amply supported by substantial evidence.

Apropos the monetary claims, there is insufficient evidence to prove

petitioners' entitlement thereto. As crew members, petitioners were
required to stay on board the vessel by the very nature of their
duties, and it is for this reason that, in addition to their regular
compensation, they are given free living quarters and subsistence
allowances when required to be on board. It could not have been
the purpose of our law to require their employers to give them
overtime pay or night shift differential, even when they are not
actually working. Thus, the correct criterion in determining whether
they are entitled to overtime pay or night shift differential is not
whether they were on board and cannot leave ship beyond the
regular eight working hours a day, but whether they actually
rendered service in excess of said number of hours.15 In this case,
petitioners failed to submit sufficient proof that overtime and night
shift work were actually performed to entitle them to the
corresponding pay.

WHEREFORE, the instant petition is DENIED. The Decision dated

June 21, 2005 and the Resolution dated August 22, 2005 of the
Court of Appeals in CA-G.R. SP No. 76096 are AFFIRMED.

SO ORDERED.

BAHIA SHIPPING SERVICES, G.R. No. 162195

INC.,
Petitioner, Present:

AUSTRIA-MARTINEZ, J.,
Acting Chairperson,
- versus - TINGA,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
 REYNALDO CHUA, Promulgated:
Respondent. April 8, 2008
x-------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
wherein Bahia Shipping Services, Inc. (petitioner) assails the August 28, 2003 Decision[1] of
the Court of Appeals (CA), affirming the December 23, 1998 Decision and February 15,
1999 Resolution of the National Labor Relations Commission (NLRC); and the February
19, 2004 CA Resolution,[2] denying its Motion for Reconsideration.

Petitioner adopted the following findings of fact of the CA:

Private respondent Reynaldo Chua was hired by the petitioner shipping
company, Bahia Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship
liner M/S Black Watch pursuant to a Philippine Overseas Employment Administration
(POEA) approved employment contract dated October 9, 1996 for a period of nine (9)
months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private
respondent left Manila for Heathrow, England to board the said sea vessel where he will be
assigned to work.

On February 15, 1997, the private respondent reported for his working station one and one-
half (1) hours late. On February 17, 1997, the master of the vessel served to the private
respondent an official warning-termination form pertaining to the said incident. On March 8,
1997, the vessel's master, ship captain Thor Fleten conducted an inquisitorial hearing to
investigate the said incident. Thereafter, on March 9, 1997, private respondent was dismissed
from the service on the strength of an unsigned and undated notice of dismissal. An alleged
record or minutes of the said investigation was attached to the said dismissal notice.

On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other
monetary claims, which case was assigned to Labor Arbiter Manuel M. Manansala.

The private respondent alleged that he was paid only US$300.00 per month as monthly
salary for five (5) months instead of US$410.00 as stipulated in his employment contract.
Thus, he claimed that he was underpaid in the amount of US$110.00 per month for that same
period of five (5) months. He further asserted that his salaries were also deducted US$20.00
per month by the petitioner for alleged union dues. Private respondent argued that it was his
first offense committed on board the vessel. He adverted further that the petitioner has no
 proof of being a member of the AMOSUP or the ITF to justify its claim to deduct the said
union dues [from] his monthly salary.

The petitioner disputed the said allegations of the private respondent by arguing that it
received a copy of an addendum to the collective bargaining agreement (CBA) from the
petitioner's principal, BlackfriarsShipping Company, Ltd. Consequently, the petitioner
requested permission from the POEA through a letter dated March 17, 1997 to amend the
salary scale of the private respondent to US$300.00 per month. The petitioner justified its
monthly deduction made for union dues against the private respondent's salary in view of an
alleged existing CBA between the Norwegian Seaman's Union (NSU, for brevity) and the
petitioner's principal, Blackfriars Shipping Co., Ltd. The petitioner further asseverated that
the private respondent has violated the terms and conditions of his contract as manifested in
the said official warning-termination form by always coming late when reporting for duty
even prior to the February 15, 1997 incident.[3]

The Labor Arbiter rendered a Decision dated March 5, 1998, holding petitioner liable to
respondent for illegal dismissal and unauthorized deductions, viz:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring [petitioner] Bahia Shipping Services, Inc. (BSSI) and its foreign
principal Blackfriars Shipping Co., Ltd. (BSCL) guilty of illegal dismissal. Accordingly,
the aforenamed [petitioner] BSSI and its foreign principal BSCL are hereby directed to pay
jointly and severally, [private respondent] Reynaldo Chua the sum of US$1,230.00 as earlier
computed, representing his salary for the unexpired portion of the contract of employment
limited to three (3) months under Republic Act 8042, and convertible to Philippine currency
upon actual payment.
2. Directing the aforenamed [petitioner] BSSI and its foreign principal BSCL to pay,
jointly and severally, [private respondent] Reynaldo Chua the following money claims as
earlier computed:
Reimbursement/Refund of Plane Fare ---- US$ 638.99
Illegal Deductions (Union Dues) ---- 100.00
Differential Pay (Underpayment of Wages) ---- 550.00
==========
US$1,288.99

convertible to Philippine currency upon actual payment.

3. Directing the aforenamed [petitioner] BSSI and its foreign principal BSCL to pay,
jointly and severally, the [private respondent] Reynaldo Chua ten (10%) percent attorney's
fees based on the total monetary award.

4. Dismissing the other money claims and/or charges of [private respondent]

Reynaldo Chua for lack of factual and legal basis.

SO ORDERED.[4]
Petitioner appealed to the NLRC which issued on December 23, 1998 a Decision,
the dispositive portion of which reads:

WHEREFORE, premises considered, the appealed Decision is hereby MODIFIED in that

the award on the unexpired portion of the contract is deducted the amount equivalent to a
day's work of complainant. The other findings stand AFFIRMED.

SO ORDERED.[5]

Petitioner filed a Motion for Reconsideration but the NLRC denied the same in a Resolution
dated February 15, 1999. [6]

Respondent did not question the foregoing NLRC decision and resolution.
Upon a petition for certiorari filed by petitioner, the CA rendered the August 28,
2003 Decision assailed herein, modifying the NLRC decision, thus:

WHEREFORE, premises considered, the assailed decision dated December 23, 1998, and
the resolution dated February 15, 1999, of the public respondent NLRC are hereby
AFFIRMED, with the MODIFICATION that the monetary award representing the salary of
the petitioner for the unexpired portion of the contract which is limited to three (3) months
under Republic Act No. 8042 is DELETED.

SO ORDERED.[7]

The CA denied petitioner's Motion for Reconsideration.

And so, the present petition raising the following issues:

a) Whether or not the Court of Appeals could grant additional affirmative relief by
increasing the award despite the fact that respondent did not appeal the decision of both the
Labor Arbiter and the NLRC.

b) Whether or not reporting for work one and one-half (1) hours late and abandoning
his work are valid grounds for dismissal.

c) Whether or not respondent is entitled to overtime pay which was incorporated in

his award for the unexpired portion of the contract despite the fact that he did not render
overtime work, and whether or not, it is proper for the NLRC to award money claims despite
the fact that the NLRC decision, and affirmed by the Court of Appeals, did not state clearly
the facts and the evidence upon which such conclusions are based.[8]
It is noted that petitioner does not question the monetary awards under Item Nos. 2 and 3 of
the dispositive portion of the LA Decision, which were affirmed in toto by the NLRC and
CA.

The issues will be resolved jointly.

The LA declared the dismissal of respondent illegal for the reason that the infraction he
committed of being tardy by 1 hour should not have been penalized by petitioner with the
ultimate punishment of termination; rather, the commensurate penalty for such single
tardiness would have been suspension for one or two weeks. The LA further noted that
petitioner meted out on respondent the penalty of dismissal hastily and summarily in that it
merely went through the motions of notifying respondent and hearing his side when, all
along, it had already decided to dismiss him.[9]
The NLRC sustained the foregoing findings of the LA, noting that the claim of petitioner
that respondent's tardiness was not infrequent but habitual is not supported by
evidence.[10] However, the NLRC held that, although the penalty of dismissal on respondent
was properly lifted, a penalty of deduction of one day's salary, the same to be subtracted from
his monetary award, should be imposed on the latter for the tardiness he incurred.[11]

The CA held that the NLRC and LA did not commit any grave abuse of discretion in arriving
at the factual assessments which are all supported by substantial evidence.[12]

Petitioner assails the ruling of the CA for being based on the faulty premise that respondent
incurred tardiness only once when in fact he had done so habitually.[13] Whether respondent
had been habitually tardy prior to February 15, 1997 when he reported for work 1 hours late
is purely factual in nature. As such, the Court defers to the concurrent assessments of the LA
and NLRC, as affirmed by the CA, for the evaluation of evidence and the appreciation of the
credibility of witnesses fall within their expertise.[14]

As the Court held in Acebedo Optical v . National Labor Relations

Commission,[15]

Judicial Review of labor cases does not go beyond the evaluation of the sufficiency
of the evidence upon which its labor officials findings rest. As such, the findings of facts and
conclusion of the NLRC are generally accorded not only great weight and respect but even
clothed with finality and deemed binding on this Court as long as they are supported by
substantial evidence.[16]

In the present case, petitioner has failed to establish a compelling reason for the Court
to depart from this rule. In fact, as pointed out by the CA, petitioner's claim that respondent's
tardiness was habitual lacks evidentiary support as no other documents on record were
attached to substantiate that the private respondent was forewarned for the first and second
time for any infraction or offense, work-related or not, vis--vis the performance of his regular
duties and functions.[17]

Such empty claim of petitioner, therefore, cannot persuade the Court to simply
disregard three layers of thorough and in-depth assessments on the matter by the CA, NLRC
and LA.

It being settled that the dismissal of respondent was illegal, it follows that the latter is entitled
to payment of his salary for the unexpired portion of his contract, as provided under Republic
Act (R.A.) No. 8042, considering that his employment was pre-terminated on March 9, 1997
or four months prior to the expiration of his employment contract on July 17, 1997.

However, the LA limited the award to an amount equivalent to respondent's salary for three
months. The NLRC affirmed said award but deducted therefrom his salary for one day as
penalty for the tardiness incurred. The CA affirmed the one-day salary deduction imposed
by the NLRC but removed the three months - salary cap imposed by the LA. In effect, as
this particular monetary award now stands, it is to be computed based on the salary of
respondent covering the period March 9, 1997 to July 17, 1997, less his salary for one day.

Petitioner questions the CA for lifting the three-month salary cap, pointing out that the LA
and NLRC decisions which imposed the cap can no longer be altered as said decisions where
not questioned by respondent.[18]

Indeed, a party who has failed to appeal from a judgment is deemed to have
acquiesced to it and can no longer obtain from the appellate court any affirmative relief other
that what was already granted under said judgment.[19] However, when strict adherence to
such technical rule will impair a substantive right, such as that of an illegally dismissed
employee to monetary compensation as provided by law, then equity dictates that the Court
set aside the rule to pave the way for a full and just adjudication of the case. As the Court
held in St. Michael's Institute v. Santos:[20]

On the matter of the award of backwages, petitioners advance the view that by
awarding backwages, the appellate court "unwittingly reversed a time-honored doctrine that
a party who has not appealed cannot obtain from the appellate court any affirmative relief
other than the ones granted in the appealed decision." We do not agree.

The fact that the NLRC did not award backwages to the respondents or that the respondents
themselves did not appeal the NLRC decision does not bar the Court of Appeals from
 awarding backwages. While as a general rule, a party who has not appealed is not entitled to
affirmative relief other than the ones granted in the decision of the court below, the Court of
Appeals is imbued with sufficient authority and discretion to review matters, not
otherwise assigned as errors on appeal, if it finds that their consideration is necessary
in arriving at a complete and just resolution of the case or to serve the interests of justice
or to avoid dispensing piecemeal justice.

Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee
is entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is
no longer viable, and (b) backwages. Both are distinct reliefs given to alleviate the economic
damage suffered by an illegally dismissed employee and, thus, the award of one does not bar
the other. Both reliefs are rights granted by substantive law which cannot be defeated by
mere procedural lapses. Substantive rights like the award of backwages resulting from
illegal dismissal must not be prejudiced by a rigid and technical application of the rules.
The order of the Court of Appeals to award backwages being a mere legal consequence
of the finding that respondents were illegally dismissed by petitioners, there was no
error in awarding the same.[21] (Emphasis supplied)

The Court has consistently applied the foregoing exception to the general rule. It does so yet
again in the present case.

Section 10 of R.A. No. 8042,[22] entitles an overseas worker who has been illegally dismissed
to his salaries for the unexpired portion of the employment contract or for three (3) months
for every year of the unexpired term, whichever is less.[23]

The CA correctly applied the interpretation of the Court in Marsaman Manning

Agency, Inc. v. National Labor Relations Commission[24] that the second option which
imposes a three months salary cap applies only when the term of the overseas contract is
fixed at one year or longer; otherwise, the first option applies in that the overseas worker
shall be entitled payment of all his salaries for the entire unexpired period of his contract.

In Skippers Pacific, Inc. v. Mira,[25] wherein the overseas contract involved was only
for six months, the Court held that it is the first option provided under Section 10 of R.A. No.
8042 which is applicable in that the overseas worker who was illegally dismissed is entitled
to payment of all his salaries covering the entire unexpired period of his contract. The CA
committed no error in adhering to the prevailing interpretation of Section 10 of R.A. No.
8042.

Finally, the Court comes to the last issue on whether in the computation of
the foregoing award, respondent's guaranteed overtime pay amounting to US$197.00 per
month should be included as part of his salary. Petitioner contends that there is no factual or
legal basis for the inclusion of said amount because, after respondent's repatriation, he could
not have rendered any overtime work.[26]
This time, petitioner's contention is well-taken.

The Court had occasion to rule on a similar issue in Stolt-Nielsen Marine Services (Phils.),
Inc. v. National Labor Relations Commission,[27] where the NLRC was questioned for
awarding to an illegally dismissed overseas worker fixed overtime pay equivalent to the
unexpired portion of the latter's contract. In resolving the question, the Court,
citing Cagampan v. National Labor Relations Commission,[28] held that although an
overseas employment contract may guarantee the right to overtime pay, entitlement to such
benefit must first be established, otherwise the same cannot be allowed.

Hence, it being improbable that respondent rendered overtime work during the unexpired
term of his contract, the inclusion of his guaranteed overtime pay into his monthly salary as
basis in the computation of his salaries for the entire unexpired period of his contract has no
factual or legal basis and the same should have been disallowed.

Based on respondents Position Paper filed with the Labor Arbiter,[29] his basic monthly salary
is $213.00.

WHEREFORE, the petition is PARTLY GRANTED. The assailed August 28, 2003
Decision and February 19, 2004 Resolution of the Court of Appeals
are AFFIRMED withMODIFICATION that in the computation of the payment to
respondent Reynaldo Chua of his salaries for the entire unexpired portion of his contract, his
basic monthly salary of US$213.00 shall be used as the sole basis.
BISIG MANGGAGAWA SA TRYCO G.R. No. 151309
and/or FRANCISCO SIQUIG, as Union
President, JOSELITO LARIO, Present:
VIVENCIO B. BARTE, SATURNINO
EGERA and SIMPLICIO AYA-AY, PUNO, C.J.,*
Petitioners, YNARES-SANTIAGO, J.,
Chairperson,
- versus - CHICO-NAZARIO,
NACHURA, and
NATIONAL LABOR RELATIONS REYES, JJ.
COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C. Promulgated:
RIVERA,
Respondents. October 15, 2008
x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

This petition seeks a review of the Decision[1] of the Court of Appeals (CA)
dated July 24, 2001 and Resolution dated December 20, 2001, which affirmed the
finding of the National Labor Relations Commission (NLRC) that the petitioners
transfer to another workplace did not amount to a constructive dismissal and an
unfair labor practice.

The pertinent factual antecedents are as follows:

Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines

and its principal office is located in Caloocan City. Petitioners Joselito Lario,
Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees,
occupying the positions of helper, shipment helper and factory workers,
respectively, assigned to the Production Department. They are members of Bisig
Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-
and-file employees.

Tryco and the petitioners signed separate Memorand[a] of

Agreement[2] (MOA), providing for a compressed workweek schedule to be
implemented in the company effective May 20, 1996. The MOA was entered into
pursuant to Department of Labor and Employment Department Order (D.O.) No. 21,
Series of 1990, Guidelines on the Implementation of Compressed Workweek. As
provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours. The MOA
specifically stated that the employee waives the right to claim overtime pay for work
rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the
compressed workweek schedule is adopted in lieu of the regular workweek schedule
which also consists of 46 hours. However, should an employee be permitted or
required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay.

Tryco informed the Bureau of Working Conditions of the Department of

Labor and Employment of the implementation of a compressed workweek in the
company.[3]

In January 1997, BMT and Tryco negotiated for the renewal of their collective
bargaining agreement (CBA) but failed to arrive at a new agreement.

Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau
of Animal Industry of the Department of Agriculture reminding it that its production
should be conducted in San Rafael, Bulacan, not in Caloocan City:

MR. WILFREDO C. RIVERA

President, Tryco Pharma Corporation
San Rafael, Bulacan

Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan

Dear Mr. Rivera:

This is to remind you that your License to Operate as Veterinary Drug and
Product Manufacturer is addressed at San Rafael, Bulacan, and so,
therefore, your production should be done at the above mentioned address
only. Further, production of a drug includes propagation, processing,
compounding, finishing, filling, repacking, labeling, advertising, storage,
distribution or sale of the veterinary drug product. In no instance,
therefore, should any of the above be done at your business office at 117
M. Ponce St., EDSA, Caloocan City.

Please be guided accordingly.

Thank you.

Very truly yours,

(sgd.)
 EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division[4]

Accordingly, Tryco issued a Memorandum[5] dated April 7, 1997 which

directed petitioner Aya-ay to report to the companys plant site in Bulacan. When
petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18,
1997.[6] Subsequently, through a Memorandum[7] dated May 9, 1997, Tryco also
directed petitioners Egera, Lario and Barte to report to the companys plant site in
Bulacan.

BMT opposed the transfer of its members to San Rafael, Bulacan, contending
that it constitutes unfair labor practice. In protest, BMT declared a strike on May 26,
1997.

In August 1997, petitioners filed their separate complaints[8] for illegal

dismissal, underpayment of wages, nonpayment of overtime pay and service
incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C.
Rivera. In their Position Paper,[9] petitioners alleged that the company acted in bad
faith during the CBA negotiations because it sent representatives without authority
to bind the company, and this was the reason why the negotiations failed. They added
that the management transferred petitioners Lario, Barte, Egera and Aya-ay
from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the
company to pay them their salaries from May 26 to 31, 1997, service incentive leave,
and overtime pay, and to implement Wage Order No. 4.

In their defense, respondents averred that the petitioners were not dismissed
but they refused to comply with the managements directive for them to report to the
companys plant in San Rafael, Bulacan. They denied the allegation that they
negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President
and Legal Counsel as the companys representatives to the CBA negotiations. They
claim that the failure to arrive at an agreement was due to the stubbornness of the
union panel.

Respondents further averred that, long before the start of the negotiations, the
company had already been planning to decongest the Caloocan office to comply
with the government policy to shift the concentration of manufacturing activities
from the metropolis to the countryside. The decision to transfer the companys
production activities to San Rafael, Bulacan was precipitated by the letter-reminder
of the Bureau of Animal Industry.

On February 27, 1998, the Labor Arbiter dismissed the case for lack of
[10]
merit. The Labor Arbiter held that the transfer of the petitioners would not
paralyze or render the union ineffective for the following reasons: (1) complainants
are not members of the negotiating panel; and (2) the transfer was made pursuant to
the directive of the Department of Agriculture.

The Labor Arbiter also denied the money claims, ratiocinating that the
nonpayment of wages was justified because the petitioners did not render work from
May 26 to 31, 1997; overtime pay is not due because of the compressed workweek
agreement between the union and management; and service incentive leave pay
cannot be claimed by the complainants because they are already enjoying vacation
leave with pay for at least five days. As for the claim of noncompliance with Wage
Order No. 4, the Labor Arbiter held that the issue should be left to the grievance
machinery or voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the Labor Arbiters Decision,
dismissing the case, thus:

PREMISES CONSIDERED, the Decision of February 27, 1998 is

hereby AFFIRMED and complainants appeal therefrom DISMISSED for
lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino
Egera and Simplicio Aya-ay are directed to report to work at respondents
San Rafael Plant, Bulacan but without backwages. Respondents are
directed to accept the complainants back to work.

SO ORDERED.[11]

On December 22, 1999, the NLRC denied the petitioners motion for
reconsideration for lack of merit.[12]

Left with no recourse, petitioners filed a petition for certiorari with the CA.
 On July 24, 2001, the CA dismissed the petition for certiorari and ruled that
the transfer order was a management prerogative not amounting to a constructive
dismissal or an unfair labor practice. The CA further sustained the enforceability of
the MOA, particularly the waiver of overtime pay in light of this Courts rulings
upholding a waiver of benefits in exchange of other valuable privileges. The
dispositive portion of the said CA decision reads:

WHEREFORE, the instant petition is DISMISSED. The Decision

of the Labor Arbiter dated February 27, 1998 and the Decision and
Resolution of the NLRC promulgated on October 29, 1999 and December
22, 1999, respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-
97 and 08-05920-97, are AFFIRMED.

SO ORDERED.[13]

The CA denied the petitioners motion for reconsideration on December 20, 2001.[14]

Dissatisfied, petitioners filed this petition for review raising the following issues:

-A-

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING

THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER
AND THE COMMISSION THAT THERE WAS NO DISMISSAL,
MUCH LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL
PETITIONERS.

-B-

THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING

AND CONCLUDING THAT PRIVATE RESPONDENTS
COMMITTED ACTS OF UNFAIR LABOR PRACTICE.

-C-

THE COURT OF APPEALS ERRED IN NOT FINDING AND

CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR
 MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION
COSTS AND ATTORNEYS FEES.[15]

The petition has no merit.

We have no reason to deviate from the well-entrenched rule that findings of

fact of labor officials, who are deemed to have acquired expertise in matters within
their respective jurisdiction, are generally accorded not only respect but even
finality, and bind us when supported by substantial evidence.[16] This is particularly
true when the findings of the Labor Arbiter, the NLRC and the CA are in absolute
agreement.[17] In this case, the Labor Arbiter, the NLRC, and the CA uniformly
agreed that the petitioners were not constructively dismissed and that the transfer
orders did not amount to an unfair labor practice. But if only to disabuse the minds
of the petitioners who have persistently pursued this case on the mistaken belief that
the labor tribunals and the appellate court committed grievous errors, this Court will
go over the issues raised in this petition.

Petitioners mainly contend that the transfer orders amount to a constructive

dismissal. They maintain that the letter of the Bureau of Animal Industry is not
credible because it is not authenticated; it is only a ploy, solicited by respondents to
give them an excuse to effect a massive transfer of employees. They point out that
the Caloocan City office is still engaged in production activities until now and
respondents even hired new employees to replace them.

We do not agree.

We refuse to accept the petitioners wild and reckless imputation that the
Bureau of Animal Industry conspired with the respondents just to effect the transfer
of the petitioners. There is not an iota of proof to support this outlandish
claim. Absent any evidence, the allegation is not only highly irresponsible but is
grossly unfair to the government agency concerned. Even as this Court has given
litigants and counsel a relatively wide latitude to present arguments in support of
their cause, we will not tolerate outright misrepresentation or baseless
accusation. Let this be fair warning to counsel for the petitioners.
 Furthermore, Trycos decision to transfer its production activities to San
Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the
Bureau of Animal Industry, was within the scope of its inherent right to control and
manage its enterprise effectively. While the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.[18]

This prerogative extends to the managements right to regulate, according to

its own discretion and judgment, all aspects of employment, including the freedom
to transferand reassign employees according to the requirements of its
business.[19] Managements prerogative of transferring and reassigning employees
from one area of operation to another in order to meet the requirements of the
business is, therefore, generally not constitutive of constructive dismissal.[20] Thus,
the consequent transfer of Trycos personnel, assigned to the Production Department
was well within the scope of its management prerogative.

When the transfer is not unreasonable, or inconvenient, or prejudicial to the

employee, and it does not involve a demotion in rank or diminution of salaries,
benefits, and other privileges, the employee may not complain that it amounts to a
constructive dismissal.[21] However, the employer has the burden of proving that the
transfer of an employee is for valid and legitimate grounds. The employer must show
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee;
nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits.[22]

Indisputably, in the instant case, the transfer orders do not entail a demotion
in rank or diminution of salaries, benefits and other privileges of the petitioners.
Petitioners, therefore, anchor their objection solely on the ground that it would cause
them great inconvenience since they are all residents of Metro Manila and they
would incur additional expenses to travel daily from Manila to Bulacan.

The Court has previously declared that mere incidental inconvenience is not
sufficient to warrant a claim of constructive dismissal.[23] Objection to a transfer that
is grounded solely upon the personal inconvenience or hardship that will be caused
to the employee by reason of the transfer is not a valid reason to disobey an order of
transfer.[24]

Incidentally, petitioners cite Escobin v. NLRC[25] where the Court held that the
transfer of the employees therein was unreasonable. However, the distance of the
workplace to which the employees were being transferred can hardly compare to that
of the present case. In that case, the employees were being transferred from Basilan
to Manila; hence, the Court noted that the transfer would have entailed the separation
of the employees from their families who were residing in Basilan and accrual of
additional expenses for living accommodations in Manila. In contrast, the distance
from Caloocan to San Rafael, Bulacan is not considerably great so as to compel
petitioners to seek living accommodations in the area and prevent them from
commuting to Metro Manila daily to be with their families.

Petitioners, however, went further and argued that the transfer orders
amounted to unfair labor practice because it would paralyze and render the union
ineffective.

To begin with, we cannot see how the mere transfer of its members can
paralyze the union. The union was not deprived of the membership of the petitioners
whose work assignments were only transferred to another location.

More importantly, there was no showing or any indication that the transfer
orders were motivated by an intention to interfere with the petitioners right to
organize. Unfair labor practice refers to acts that violate the workers right to
organize. With the exception of Article 248(f) of the Labor Code of the Philippines,
the prohibited acts are related to the workers right to self-organization and to the
observance of a CBA. Without that element, the acts, no matter how unfair, are not
unfair labor practices.[26]

Finally, we do not agree with the petitioners assertion that the MOA is not
enforceable as it is contrary to law. The MOA is enforceable and binding against the
petitioners. Where it is shown that the person making the waiver did so voluntarily,
with full understanding of what he was doing, and the consideration for the quitclaim
is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking.[27]
 D.O. No. 21 sanctions the waiver of overtime pay in consideration of the
benefits that the employees will derive from the adoption of a compressed workweek
scheme, thus:

The compressed workweek scheme was originally conceived for

establishments wishing to save on energy costs, promote greater work
efficiency and lower the rate of employee absenteeism, among others.
Workers favor the scheme considering that it would mean savings on the
increasing cost of transportation fares for at least one (1) day a week;
savings on meal and snack expenses; longer weekends, or an additional
52 off-days a year, that can be devoted to rest, leisure, family
responsibilities, studies and other personal matters, and that it will spare
them for at least another day in a week from certain inconveniences that
are the normal incidents of employment, such as commuting to and from
the workplace, travel time spent, exposure to dust and motor vehicle
fumes, dressing up for work, etc. Thus, under this scheme, the generally
observed workweek of six (6) days is shortened to five (5) days but
prolonging the working hours from Monday to Friday without the
employer being obliged for pay overtime premium compensation for work
performed in excess of eight (8) hours on weekdays, in exchange for the
benefits abovecited that will accrue to the employees.

Moreover, the adoption of a compressed workweek scheme in the company

will help temper any inconvenience that will be caused the petitioners by their
transfer to a farther workplace.

Notably, the MOA complied with the following conditions set by the DOLE,
under D.O. No. 21, to protect the interest of the employees in the implementation of
a compressed workweek scheme:

1. The employees voluntarily agree to work more than eight (8)

hours a day the total in a week of which shall not exceed their
normal weekly hours of work prior to adoption of the compressed
workweek arrangement;

2. There will not be any diminution whatsoever in the weekly or

monthly take-home pay and fringe benefits of the employees;
 3. If an employee is permitted or required to work in excess of his
normal weekly hours of work prior to the adoption of the
compressed workweek scheme, all such excess hours shall be
considered overtime work and shall be compensated in accordance
with the provisions of the Labor Code or applicable Collective
Bargaining Agreement (CBA);

4. Appropriate waivers with respect to overtime premium pay for

work performed in excess of eight (8) hours a day may be devised
by the parties to the agreement.

5. The effectivity and implementation of the new working time

arrangement shall be by agreement of the parties.

PESALA v. NLRC,[28] cited by the petitioners, is not applicable to the present

case. In that case, an employment contract provided that the workday consists of 12
hours and the employee will be paid a fixed monthly salary rate that was above the
legal minimum wage. However, unlike the present MOA which specifically states
that the employee waives his right to claim overtime pay for work rendered beyond
eight hours, the employment contract in that case was silent on whether overtime
pay was included in the payment of the fixed monthly salary. This necessitated the
interpretation by the Court as to whether the fixed monthly rate provided under the
employment contract included overtime pay. The Court noted that if the employee
is paid only the minimum wage but with overtime pay, the amount is still greater
than the fixed monthly rate as provided in the employment contract. It, therefore,
held that overtime pay was not included in the agreed fixed monthly rate.

Considering that the MOA clearly states that the employee waives the
payment of overtime pay in exchange of a five-day workweek, there is no room for
interpretation and its terms should be implemented as they are written.

WHEREFORE, the petition is DENIED. The Court of Appeals Decision

dated July 24, 2001 and Resolution dated December 20, 2001 are AFFIRMED.

SO ORDERED.
ABDULJUAHID R. PIGCAULAN,⃰ G.R. No. 173648
 Petitioner,

Present:

- versus - CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,
DEL CASTILLO,
ABAD,⃰ ⃰ and
SECURITY and CREDIT VILLARAMA, JR., JJ.
INVESTIGATION, INC. and/or
RENE AMBY REYES , Promulgated:
Respondents. January 16, 2012
x-----------------------------------------------------------------
--x

DECISION

DEL CASTILLO, J.:

It is not for an employee to prove non-payment of benefits to which he is entitled by

law. Rather, it is on the employer that the burden of proving payment of these claims rests.

This Petition for Review on Certiorari[1] assails the February 24, 2006 Decision[2] of
the Court of Appeals (CA) in CA-G.R. SP No. 85515, which granted the petition
for certiorarifiled therewith, set aside the March 23, 2004[3] and June 14,
2004[4] Resolutions of the National Labor Relations Commission (NLRC), and dismissed
the complaint filed by Oliver R. Canoy (Canoy) and petitioner Abduljuahid R. Pigcaulan
(Pigcaulan) against respondent Security and Credit Investigation, Inc. (SCII) and its
General Manager, respondent Rene Amby Reyes.Likewise assailed is the June 28, 2006
Resolution[5] denying Canoys and Pigcaulans Motion for Reconsideration.[6]

Factual Antecedents

Canoy and Pigcaulan were both employed by SCII as security guards and were assigned
to SCIIs different clients. Subsequently, however, Canoy and Pigcaulan filed with the
Labor Arbiter separate complaints[7] for underpayment of salaries and non-payment of
overtime, holiday, rest day, service incentive leave and 13th month pays. These complaints
were later on consolidated as they involved the same causes of action.

Canoy and Pigcaulan, in support of their claim, submitted their respective daily time
records reflecting the number of hours served and their wages for the same. They likewise
presented itemized lists of their claims for the corresponding periods served.

Respondents, however, maintained that Canoy and Pigcaulan were paid their just
salaries and other benefits under the law; that the salaries they received were above the
statutory minimum wage and the rates provided by the Philippine Association of Detective
and Protective Agency Operators (PADPAO) for security guards; that their holiday pay
were already included in the computation of their monthly salaries; that they were paid
additional premium of 30% in addition to their basic salary whenever they were required
to work on Sundays and 200% of their salary for work done on holidays; and, that Canoy
and Pigcaulan were paid the corresponding 13th month pay for the years 1998 and 1999. In
support thereof, copies of payroll listings[8] and lists of employees who received their
13th month pay for the periods December 1997 to November 1998 and December 1998 to
November 1999[9] were presented. In addition, respondents contended that Canoys and
Pigcaulans monetary claims should only be limited to the past three years of employment
pursuant to the rule on prescription of claims.

Ruling of the Labor Arbiter

Giving credence to the itemized computations and representative daily time records
submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their
monetary claims in his Decision[10] dated June 6, 2002. The Labor Arbiter held that the
payroll listings presented by the respondents did not prove that Canoy and Pigcaulan were
duly paid as same were not signed by the latter or by any SCII officer. The 13th month
payroll was, however, acknowledged as sufficient proof of payment, for it bears Canoys
and Pigcaulans signatures. Thus, without indicating any detailed computation of the
judgment award, the Labor Arbiter ordered the payment of overtime pay, holiday pay,
service incentive leave pay and proportionate 13thmonth pay for the year 2000 in favor of
Canoy and Pigcaulan, viz:

WHEREFORE, the respondents are hereby ordered to pay the

complainants: 1) their salary differentials in the amount of P166,849.60 for
 Oliver Canoy and P121,765.44 for Abduljuahid Pigcaulan; 2) the sum
of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service incentive leave
pay and; [3]) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan as
proportionate 13th month pay for the year 2000. The rest of the claims are
dismissed for lack of sufficient basis to make an award.

SO ORDERED.[11]

Ruling of the National Labor Relations Commission

Respondents appealed to the NLRC. They alleged that there was no basis
for the awards made because aside from the self-serving itemized computations, no
representative daily time record was presented by Canoy and Pigcaulan. On the contrary,
respondents asserted that the payroll listings they submitted should have been given more
probative value. To strengthen their cause, they attached to their Memorandum on Appeal
payrolls[12] bearing the individual signatures of Canoy and Pigcaulan to show that the latter
have received their salaries, as well as copies of transmittal letters[13] to the bank to show
that the salaries reflected in the payrolls were directly deposited to the ATM accounts of
SCIIs employees.

The NLRC, however, in a Resolution[14] dated March 23, 2004, dismissed the
appeal and held that the evidence show underpayment of salaries as well as non-payment
of service incentive leave benefit. Accordingly, the Labor Arbiters Decision was
sustained. The motion for reconsideration thereto was likewise dismissed by the NLRC in
a Resolution[15] dated June 14, 2004.

Ruling of the Court of Appeals

In respondents petition for certiorari with prayer for the issuance of a temporary
restraining order and preliminary injunction[16] before the CA, they attributed grave abuse
of discretion on the part of the NLRC in finding that Canoy and Pigcaulan are entitled to
salary differentials, service incentive leave pay and proportionate 13th month pay and in
arriving at amounts without providing sufficient bases therefor.

The CA, in its Decision[17] dated February 24, 2006, set aside the rulings of
both the Labor Arbiter and the NLRC after noting that there were no factual and legal bases
mentioned in the questioned rulings to support the conclusions made. Consequently, it
dismissed all the monetary claims of Canoy and Pigcaulan on the following rationale:

First. The Labor Arbiter disregarded the NLRC rule that, in cases involving
money awards and at all events, as far as practicable, the decision shall embody
the detailed and full amount awarded.

Second. The Labor Arbiter found that the payrolls submitted by SCII have no
probative value for being unsigned by Canoy, when, in fact, said payrolls,
particularly the payrolls from 1998 to 1999 indicate the individual signatures of
Canoy.

Third. The Labor Arbiter did not state in his decision the substance of the
evidence adduced by Pigcaulan and Canoy as well as the laws or jurisprudence
that would show that the two are indeed entitled to the salary differential and
incentive leave pays.

Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment
of the claimed salaries and benefits despite the absence of proof that Reyes
deliberately or maliciously designed to evade SCIIs alleged financial obligation;
hence the Labor Arbiter ignored that SCII has a corporate personality separate
and distinct from Reyes. To justify solidary liability, there must be an allegation
and showing that the officers of the corporation deliberately or maliciously
designed to evade the financial obligation of the corporation.[18]

Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA
in a Resolution[19] dated June 28, 2006.

Hence, the present Petition for Review on Certiorari.

Issues

The petition ascribes upon the CA the following errors:

I. The Honorable Court of Appeals erred when it dismissed the

complaint on mere alleged failure of the Labor Arbiter and the NLRC to observe
 the prescribed form of decision, instead of remanding the case for reformation
of the decision to include the desired detailed computation.

II. The Honorable Court of Appeals erred when it [made] complainants

suffer the consequences of the alleged non-observance by the Labor Arbiter and
NLRC of the prescribed forms of decisions considering that they have complied
with all needful acts required to support their claims.

III. The Honorable Court of Appeals erred when it dismissed the

complaint allegedly due to absence of legal and factual [bases] despite
attendance of substantial evidence in the records.[20]

It is well to note that while the caption of the petition reflects both the names of
Canoy and Pigcaulan as petitioners, it appears from its body that it is being filed solely by
Pigcaulan. In fact, the Verification and Certification of Non-Forum Shopping was
executed by Pigcaulan alone.

In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not
strictly bound by the rules. And even so, the rules do not mandate that a detailed
computation of how the amount awarded was arrived at should be embodied in the
decision. Instead, a statement of the nature or a description of the amount awarded and the
specific figure of the same will suffice. Besides, his and Canoys claims were supported by
substantial evidence in the form of the handwritten detailed computations which the Labor
Arbiter termed as representative daily time records, showing that they were not properly
compensated for work rendered. Thus, the CA should have remanded the case instead of
outrightly dismissing it.

In their Comment,[21] respondents point out that since it was only Pigcaulan who
filed the petition, the CA Decision has already become final and binding upon Canoy. As
to Pigcaulans arguments, respondents submit that they were able to present sufficient
evidence to prove payment of just salaries and benefits, which bits of evidence were
unfortunately ignored by the Labor Arbiter and the NLRC. Fittingly, the CA reconsidered
these pieces of evidence and properly appreciated them. Hence, it was correct in dismissing
the claims for failure of Canoy and Pigcaulan to discharge their burden to disprove
payment.
 Pigcaulan, this time joined by Canoy, asserts in his Reply[22] that his filing of the
present petition redounds likewise to Canoys benefit since their complaints were
consolidated below.As such, they maintain that any kind of disposition made in favor or
against either of them would inevitably apply to the other. Hence, the institution of the
petition solely by Pigcaulan does not render the assailed Decision final as to
Canoy. Nonetheless, in said reply they appended Canoys affidavit[23] where he verified
under oath the contents and allegations of the petition filed by Pigcaulan and also attested
to the authenticity of its annexes. Canoy, however, failed to certify that he had not filed any
action or claim in another court or tribunal involving the same issues. He likewise explains
in said affidavit that his absence during the preparation and filing of the petition was caused
by severe financial distress and his failure to inform anyone of his whereabouts.

Our Ruling

The assailed CA Decision is considered final as

to Canoy.

We have examined the petition and find that same was filed by Pigcaulan solely on his
own behalf. This is very clear from the petitions prefatory which is phrased as follows:

COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel,

unto this Honorable Court x x x. (Emphasis supplied.)

Also, under the heading Parties, only Pigcaulan is mentioned as petitioner and consistent
with this, the body of the petition refers only to a petitioner and never in its plural form
petitioners. Aside from the fact that the Verification and Certification of Non-Forum
Shopping attached to the petition was executed by Pigcaulan alone, it was plainly and
particularly indicated under the name of the lawyer who prepared the same, Atty. Josefel
P. Grageda, that he is the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view of
these, there is therefore, no doubt, that the petition was brought only on behalf of
Pigcaulan. Since no appeal from the CA Decision was brought by Canoy, same has already
become final and executory as to him.
Canoy cannot now simply incorporate in his affidavit a verification of the contents and
allegations of the petition as he is not one of the petitioners therein. Suffice it to state that it
would have been different had the said petition been filed in behalf of both Canoy and
Pigcaulan. In such a case, subsequent submission of a verification may be allowed as non-
compliance therewith or a defect therein does not necessarily render the pleading, or the
petition as in this case, fatally defective.[24] The court may order its submission or
correction, or act on the pleading if the attending circumstances are such that strict
compliance with the Rule may be dispensed with in order that the ends of justice may be
served thereby. Further, a verification is deemed substantially complied with when one
who has ample knowledge to swear to the truth of the allegations in the complaint or
petition signs the verification, and when matters alleged in the petition have been made in
good faith or are true and correct.[25] However, even if it were so, we note that Canoy still
failed to submit or at least incorporate in his affidavit a certificate of non-forum shopping.

The filing of a certificate of non-forum shopping is mandatory so much so

that non-compliance could only be tolerated by special circumstances and compelling
reasons.[26] This Court has held that when there are several petitioners, all of them must
execute and sign the certification against forum shopping; otherwise, those who did not
sign will be dropped as parties to the case.[27] True, we held that in some cases, execution
by only one of the petitioners on behalf of the other petitioners constitutes substantial
compliance with the rule on the filing of a certificate of non-forum shopping on the ground
of common interest or common cause of action or defense.[28] We, however, find that
common interest is not present in the instant petition. To recall, Canoys and Pigcaulans
complaints were consolidated because they both sought the same reliefs against the same
respondents. This does not, however, mean that they share a common interest or
defense. The evidence required to substantiate their claims may not be the same. A
particular evidence which could sustain Canoys action may not effectively serve as
sufficient to support Pigcaulans claim.

Besides, assuming that the petition is also filed on his behalf, Canoy failed to show
any reasonable cause for his failure to join Pigcaulan to personally sign the Certification of
Non-Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims
against SCII, especially so, if he was indeed suffering from financial distress. However,
Canoy failed to advance any justifiable reason why he did not inform anyone of his
whereabouts when he knows that he has a pending case against his former
employer. Sadly, his lack of prudence and diligence cannot merit the courts consideration
or sympathy. It must be emphasized at this point that procedural rules should not be ignored
simply because their non-observance may result in prejudice to a partys substantial
rights. The Rules of Court should be followed except only for the most persuasive of
reasons.[29]
Having declared the present petition as solely filed by Pigcaulan, this Court shall
consider the subsequent pleadings, although apparently filed under his and Canoys name,
as solely filed by the former.

There was no substantial evidence to support the

grant of overtime pay.

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive
leave pay and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor
Arbiter relied heavily on the itemized computations they submitted which he considered
as representative daily time records to substantiate the award of salary differentials. The
NLRC then sustained the award on the ground that there was substantial evidence of
underpayment of salaries and benefits.

We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten
itemized computations are self-serving, unreliable and unsubstantial evidence to sustain
the grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated
as they are, there is no way of verifying the truth of the handwritten entries stated
therein. Written only in pieces of paper and solely prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by the Labor Arbiter, can hardly be considered
as competent evidence to be used as basis to prove that the two were underpaid of their
salaries. We find nothing in the records which could substantially support Pigcaulans
contention that he had rendered service beyond eight hours to entitle him to overtime pay
and during Sundays to entitle him to restday pay. Hence, in the absence of any concrete
proof that additional service beyond the normal working hours and days had indeed been
rendered, we cannot affirm the grant of overtime pay to Pigcaulan.

Pigcaulan is entitled to holiday pay, service

incentive leave pay and proportionate
13th month pay for year 2000.
However, with respect to the award for holiday pay, service incentive leave
pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:

ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid
his regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;

xxxx

While Article 95 of the Labor Code provides:

ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every

employee who has rendered at least one year of service shall be entitled to a
yearly service incentive of five days with pay.

xxxx

Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if
he does not work.[30] Likewise, express provision of the law entitles him to service
incentive leave benefit for he rendered service for more than a year already. Furthermore,
under Presidential Decree No. 851,[31] he should be paid his 13th month pay. As employer,
SCII has the burden of proving that it has paid these benefits to its employees.[32]

SCII presented payroll listings and transmittal letters to the bank to show that Canoy
and Pigcaulan received their salaries as well as benefits which it claimed are already
integrated in the employees monthly salaries. However, the documents presented do not
prove SCIIs allegation. SCII failed to show any other concrete proof by means of records,
pertinent files or similar documents reflecting that the specific claims have been paid. With
respect to 13th month pay, SCII presented proof that this benefit was paid but only for the
years 1998 and 1999. To repeat, the burden of proving payment of these monetary claims
rests on SCII, being the employer. It is a rule that one who pleads payment has the burden
of proving it. Even when the plaintiff alleges non-payment, still the general rule is that the
burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-
payment.[33] Since SCII failed to provide convincing proof that it has already settled the
claims, Pigcaulan should be paid his holiday pay, service incentive leave benefits and
proportionate 13th month pay for the year 2000.

The CA erred in dismissing the claims instead of

remanding the case to the Labor Arbiter for a
detailed computation of the judgment award.

Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary
awards granted. Such failure, however, should not result in prejudice to the substantial
rights of the party. While we disallow the grant of overtime pay and restday pay in favor
of Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service
incentive leave pay and 13th month pay for year 2000. Hence, the CA is not correct in
dismissing Pigcaulans claims in its entirety.

Consistent with the rule that all money claims arising from an employer-employee
relationship shall be filed within three years from the time the cause of action
accrued,[34] Pigcaulan can only demand the amounts due him for the period within three
years preceding the filing of the complaint in 2000. Furthermore, since the records are
insufficient to use as bases to properly compute Pigcaulans claims, the case should be
remanded to the Labor Arbiter for a detailed computation of the monetary benefits due to
him.

WHEREFORE, the petition is GRANTED. The Decision dated

February 24, 2006 and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R.
SP No. 85515 are REVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is
hereby declared ENTITLED to holiday pay and service incentive leave pay for the years
1997-2000 and proportionate 13th month pay for the year 2000.

The case is REMANDED to the Labor Arbiter for further proceedings to determine the
exact amount and to make a detailed computation of the monetary benefits due
Abduljuahid R. Pigcaulan which Security and Credit Investigation Inc. should pay without
delay.

G.R. No. 182848 October 5, 2011

EMIRATE SECURITY AND MAINTENANCE SYSTEMS, INC. and ROBERTO A. YAN, Petitioners,
vs.
GLENDA M. MENESE, Respondent.

DECISION

BRION, J.:

Before the Court is the petition for review on certiorari1 which assails the decision2 and the
resolution3 of the Court of Appeals (CA) rendered on February 28, 2008 and May 14, 2008,
respectively, in CA-G.R. SP. No. 100073.4

The Antecedents

The facts of the case are summarized below.

On June 5, 2001, respondent Glenda M. Menese (Menese) filed a complaint for constructive
dismissal; illegal reduction of salaries and allowances; separation pay; refund of contribution to cash
bond; overtime, holiday, rest day and premium pay; damages; and attorney’s fees against the
petitioners, Emirate Security and Maintenance Systems, Inc. (agency) and its General Manager,
Robert A. Yan (Yan).

Menese alleged in the compulsory arbitration proceedings that on April 1, 1999, the agency engaged
her services as payroll and billing clerk. She was assigned to the agency’s security detachment at
the Philippine General Hospital (PGH). She was given a monthly salary of ₱9,200.00 and an
allowance of ₱2,500.00, for a total of ₱11,700.00 in compensation. Effective May 2001, her
allowance was allegedly reduced to ₱1,500.00 without notice, and ₱100.00 was deducted from her
salary every month as her contribution to a cash bond which lasted throughout her employment. She
was required to work seven (7) days a week, from 8:00 a.m. to 5:00 p.m. She was also required to
report for work on holidays, except on New Year’s Day and Christmas. She claimed that she was
never given overtime, holiday, rest day and premium pay.

Menese further alleged that on May 4, 2001, she started getting pressures from the agency for her to
resign from her position because it had been committed to a certain Amy Claro, a protégée of Mrs.
Violeta G. Dapula (Dapula) the new chief of the Security Division of the University of the Philippines
(UP) Manila and PGH. Menese raised the matter with Yan who told her that the agency was in the
process of establishing goodwill with Dapula, so it had to sacrifice her position to accommodate
Dapula’s request to hire Claro.

Menese claimed that she was told not to worry because if she was still interested in working with the
agency, she could still be retained as a lady guard with a salary equivalent to the minimum wage.
She would then be detailed to another detachment because Dapula did not like to see her around
anymore. If the offer was acceptable to her, she should report to the agency’s personnel officer for
the issuance of the necessary duty detail order. Menese thought about the offer and soon realized
that she was actually being demoted in rank and salary. She eventually decided to decline the offer.
She continued reporting to the PGH detachment and performed her usual functions as if nothing
happened.

Menese alleged that at this juncture, Claro reported at the agency’s PGH detachment and performed
the functions she was doing. She bewailed that thereafter she continuously received harassment
calls and letters. She was also publicly humiliated and badly treated at the detachment. The agency,
through Security Officer Alton Acab, prohibited her from using the office computer. On May 18, 2001,
Jose Dante Chan, the agency’s PGH detachment commander, arrogantly told her to leave PGH.
Again on May 25, 2001, Chan shouted at her and told her to pack her things and to leave
immediately, and not to return to the detachment anymore; otherwise, she would be physically
driven out of the office.

Still not satisfied with what they did, the petitioners allegedly withheld her salary for May 16-31,
2001. She claimed that the petitioners dismissed her from the service without just cause and due
process.

The petitioners, for their part, denied liability. They alleged that on May 8, 2001, Dapula informed the
agency in writing,5 through Yan, that she had been receiving numerous complaints from security
guards and other agency employees about Menese’s unprofessional conduct. She told the
petitioners that she was not tolerating Menese’s negative work attitude despite the fact that she is
the wife of Special Police Major Divino Menese who is a member of the UP Manila police force, and
that as a matter of policy and out of delicadeza, she does not condone nepotism in her division.

On the basis of Dapula’s letter, Yan sent Menese a memorandum dated May 16, 2001,6 instructing
her to report to the agency’s head office and, there and then, discussed with her Dapula’s letter. Yan
informed Menese that upon Dapula’s request, she would be transferred to another assignment which
would not involve any demotion in rank or diminution in her salary and other benefits. Although
Menese said that she would think about the matter, the petitioners were surprised to receive
summons from the labor arbiter regarding the complaint.

The Compulsory Arbitration Rulings

In a decision dated March 14, 2002,7 Labor Arbiter Jovencio LL. Mayor, Jr. declared Menese to have
been constructively dismissed. He found the petitioners wanting in good faith in transferring Menese
to another detachment as she would be suffering a demotion in rank and a diminution in pay.
Accordingly, he ordered the petitioners to immediately reinstate Menese and, solidarily, to pay her
full backwages of ₱83,443.75 (latest computation); ₱66,924.00 in monetary benefits; ₱50,000.00
and ₱20,000.00 in moral and exemplary damages, respectively; and attorney’s fees of ₱15,036.74.

The petitioners appealed to the National Labor Relations Commission (NLRC). On September 30,
2003, the NLRC Second Division issued a resolution8 granting the appeal and reversing the labor
arbiter’s decision. It ruled that Menese was not constructively dismissed but was merely transferred
to another detachment. It opined that the transfer was a valid exercise of the petitioners’
management prerogative. However, it ruled that despite Menese’s refusal to accept the transfer, she
cannot be made liable for abandonment as her refusal was based on her honest belief that she was
being constructively dismissed. The NLRC ordered Menese, at her option, to immediately report to
the agency’s head office and the agency to accept her back to work. It absolved Yan from liability,
and deleted the award of backwages, overtime pay and damages.

On October 28, 2003, Menese filed a partial motion for reconsideration9 of the NLRC resolution and
later (on June 17, 2005), a motion to recall the entry of judgment of October 31, 2003. On June 1,
2007, the NLRC rendered a resolution10 setting aside the entry of judgment and denying Menese’s
partial motion for reconsideration.

The Petition for Certiorari

Menese elevated her case to the CA through a petition for certiorari11 under Rule 65 of the Rules of
Court. In the main, she argued that the agency was in bad faith when it issued the memoranda dated
May 16, 2001,12 May 22, 200113 and May 28, 2001,14 ordering her transfer from the PGH detachment
to the agency’s head office. She posited that it was a ploy to create a vacancy in the detachment to
accommodate the entry of Claro, Dapula’s protégée. She regarded the transfer as a removal from
her position at PGH — a constructive dismissal.

The agency, in rebuttal, posited that Menese was not illegally dismissed, but was merely transferred
to its head office in response to the request of the new head of the UP-PGH security division for the
transfer. The action, it maintained, was a valid exercise of its management prerogative. Thus,
Menese was guilty of abandoning her employment when she refused to report for work at her new
posting.

The CA Decision

The CA granted the petition in its decision of February 28, 2008.15 It set aside the assailed
resolutions of the NLRC and reinstated the March 14, 2002 decision of the labor arbiter.

As the labor arbiter did, the CA found Menese to have been constructively, and therefore illegally,
dismissed. It noted that the memoranda16 on Menese’s transfer were prompted by Dacula’s letter,
dated May 8, 2001,17 to Yan, which contained allegations on Menese’s supposed unprofessional
conduct and involvement in nepotism. It further noted that when Yan asked Dapula in writing18 to
provide the agency with documents/evidence that would support her allegations, she failed to do so.
The CA thus concluded that the reasons for Menese’s transfer did not exist or that no substantial
evidence was presented in that regard.

The CA brushed aside the petitioners’ argument that it was their prerogative to transfer Menese from
the agency’s PGH detachment to its head office at Ortigas Avenue, Mandaluyong City. Relying on
applicable jurisprudence, the appellate court pointed out that while it is the management’s
prerogative to transfer an employee from one office to another within the business establishment, it
is not without limitation. It must be exercised in such a way that there is no demotion in rank or
diminution in pay, benefits and other privileges. Otherwise, the transfer amounts to a constructive
dismissal, as correctly pointed out by the labor arbiter in his decision of March 14, 2002.19 In this
light, the CA held that the petitioners failed to prove that Menese abandoned her employment.

The CA sustained all the other findings of the labor arbiter. On the whole, it ruled that the NLRC
misappreciated the evidence in the case. The petitioners moved for reconsideration, but the CA
denied the motion in its resolution of May 14, 2008.20

The Petitioners’ Case

Aside from the petition itself,21 the petitioners filed a reply to Menese’s comment22 and a
memorandum23 where they asked for a reversal of the assailed CA rulings on the ground that the CA
gravely erred in:

(1) Affirming the labor arbiter’s findings that Menese was constructively dismissed;

(2) Holding Yan solidarily liable with the agency for damages; and

(3) Sustaining the award of backwages, damages and attorney’s fees, as well as overtime
pay.

The petitioners insist that Menese was not illegally dismissed. They argue that it was Menese who
deliberately and unjustifiably refused to work despite several notices24 to her after she was validly
relieved from her current work assignment due to a client’s request. They maintain that since
Menese chose not to return to work, she must be considered either to have resigned from or to have
abandoned her employment. They further maintain that nothing on record shows any positive or
overt act of the agency in dismissing Menese.

Moreover, the petitioners regard Menese’s continued refusal to report to the agency’s head office as
an act of gross insubordination constituting a just cause for termination under Article 282(a) of the
Labor Code. They argue that under this law, an employer may terminate an employment for serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or his
representative in connection with his work.

The petitioners posit that she is not entitled to reinstatement and backwages since she failed to
comply with the reinstatement option stated in the NLRC resolution. Neither is she entitled to
overtime pay because she did not work beyond the eight (8)-hour working period; her one (1) hour
time off from twelve noon to 1:00 p.m. is not compensable. Neither is Menese entitled to moral and
exemplary damages because the evidence on record does not show any malice or bad faith on their
part to justify the award.

The petitioners likewise take exception to the award of attorney’s fees as the labor arbiter’s decision
and the NLRC’s resolution failed to state the justification for the award. They further contend that the
CA gravely erred in upholding the labor arbiter’s ruling that Yan is solidarily liable with the agency, as
Yan was merely acting in his capacity as the agency’s general manager, and that there is no
showing that Yan acted maliciously or in bad faith when he ordered Menese’s transfer. They also
point out that Menese did not challenge before the CA the NLRC ruling absolving Yan from any
liability.

The Case for Menese

By way of her comment25 and memorandum,26 Menese asks that the appeal be denied for lack of
merit.

She claims that at the arbitration stage, the petitioners readily admitted the fact of her removal,
manifesting in open session their lack of interest to settle the case amicably as they have a strong
evidence to support their defense of her dismissal for cause. She observed during the hearing that
the petitioners were very confident about their case, because according to them, they had Dapula’s
letter asking for her immediate removal.27

Menese further claims that the petitioners realized that they did not have the necessary evidence, so
Yan wrote Dapula a letter asking her for proof of the complaints or grievances of the security guards
against Menese.28 Dapula did not produce or present the evidence they asked for resulting in their
failure to substantiate their defense of dismissal for cause. Menese contends that the petitioners
then revised their theory of the case and made it appear that she was not actually dismissed but was
merely transferred, purportedly in the exercise of their management prerogative.

She posits that her transfer was motivated by ill will and bad faith, as it was done to facilitate the
entry of a favored applicant to the PGH detachment. She intimates that the labor arbiter resolved the
case correctly when he found her to have been constructively or illegally dismissed. She bewails the
NLRC’s surprising reversal of the labor arbiter’s decision, but feels vindicated when the CA set aside
the NLRC ruling.

Menese submits that the CA is correct in nullifying the NLRC’s reversal of her illegal dismissal case
because the labor tribunal closed its eyes to the fact that bad faith attended her transfer. She points
out that the petitioners’ twin directives, vis-à-vis her transfer upon which the NLRC based its ruling,
"were both issued for a selfish and immoral purpose;"29 the first, dated May 16, 2001,30 was issued
for the purpose of creating a vacancy, and the second, dated May 22, 2001,31 was intended to cover
up the wrongdoing that was earlier committed. In other words, the directives were tainted with malice
and ill will. On the matter of Yan’s liability, Menese maintains that the NLRC committed a serious
error in allowing him to get away with his wrongdoing considering the injustice done to her as a
result of her unceremonious dismissal.

In a different vein, Menese assails the NLRC’s exclusion of the one-hour meal break as overtime
work, for it erroneously assumed that her employer had been giving its employees a 60 minute time-
off for regular meals and that she was not performing work during the period. She argues that this
was not the actual practice in the workplace, contending that she continued working even during the
one-hour meal break.

Finally, Menese maintains that the CA correctly reinstated the labor arbiter’s award of attorney’s fees
and the imposition of solidary liability on Yan and the agency. She posits that in her quest for justice
because of her unceremonious dismissal, she was constrained to engage the services of a counsel
to handle her case.

The Court’s Ruling

We deny the petition for lack of merit. The evidence of Menese’s unwarranted, unjustified and, in her
own language, "unceremonious" dismissal is so glaring that to ignore it is to commit, as the NLRC
did, grave abuse of discretion.

We note as a starting point that at the time material to the case, Menese ceased to be the agency’s
payroll and billing clerk at its PGH detachment. The position was taken away from her as she had
been transferred to the agency’s main office on Ortigas Avenue, Mandaluyong City, upon the
request of Dapula, the new chief of the UP-PGH Security Division. The transfer was to be carried out
through a memorandum dated May 16, 200132 issued by Yan; a second memorandum dated May
22, 200133 issued by Personnel Officer Edwin J. Yabes, reminding Menese of Yan’s instruction for
her to report to the main office; and a third memorandum dated May 28, 2001,34 also issued by
Yabes informing Menese that it was her second notice to assume her work detail at the main office.
Yabes instructed her to report for work on May 30, 2001.

Citing Mendoza v. Rural Bank of Lucban,35 the petitioners argue that the transfer was undertaken in
the exercise of management prerogative in the pursuit of their legitimate interests. They submit that
Menese refused to comply with the valid transfer orders they issued, making her liable for
abandonment and insubordination. They argue that nothing on record shows that she was illegally
dismissed as no dismissal had been imposed on her.

On a superficial consideration, the petitioners’ position looks unassailable as indeed an employer

can regulate, generally without restraint and according to its own discretion and judgment, every
aspect of its business, including work assignments and transfer of employees, subject only to
limitations imposed by law.36 This submission, however, glossed over or suppressed a crucial factor
in the present labor controversy. We refer to Dapula’s letter to Yan in early May 2001,37 asking for
Menese’s transfer allegedly due to numerous complaints from security guards and co-workers
regarding her unprofessionalism and because of nepotism; Menese is the wife of a member of the
UP Manila police force.

Had Yan inquired into Dapula’s claim of Menese’s alleged unprofessionalism, ideally through an
administrative investigation, he could have been provided with a genuine reason — assuming proof
of Dapula’s accusation existed — for Menese’s transfer or even for her dismissal, if warranted. That
the agency did not get into the bottom of Dapula’s letter before it implemented Menese’s transfer is
indicative of the sheer absence of an objective justification for the transfer. The most that the agency
did was to write Dapula a letter, through Yan, asking her to provide documents/evidence in support
of her request for Menese’s transfer.38 Significantly, Yan’s request came after the labor arbiter’s
summons to Yan regarding Menese’s complaint. Dapula never responded to Yan’s letter and neither
did she provide the evidence needed for the agency’s defense in the complaint.

As Menese noted, the petitioners did not submit as annex to the petition Yan’s letter to Dapula, and
the reason appears to be obvious — they were trying to avoid calling attention to the absence of
proof of Menese’s alleged unprofessionalism and her involvement in nepotism. Evidently, the basis
for Dapula’s request did not exist. We thus find credible Menese’s contention that her transfer was a
ploy to remove her from the PGH detachment to accommodate the entry of Dapula’s protégée. In
short, the agency wanted to create a vacancy for Claro, the protégée. Confronted with this clear
intent of the petitioners, we cannot see how Menese’s transfer could be considered a valid exercise
of management prerogative. As Menese rightly put it, her transfer was arbitrarily done, motivated no
less by ill will and bad faith.

In Blue Dairy Corporation v. NLRC,39 the Court stressed as a matter of principle that the managerial
prerogative to transfer personnel must be exercised without abuse of discretion, bearing in mind the
basic elements of justice and fair play. Having the right should not be confused with the manner in
which that right is exercised. Thus, it should not be used as a subterfuge by the employer to get rid
of "an undesirable worker." Measured against this basic precept, the petitioners undoubtedly abused
their discretion or authority in transferring Menese to the agency’s head office. She had become
"undesirable" because she stood in the way of Claro’s entry into the PGH detachment. Menese had
to go, thus the need for a pretext to get rid of her. The request of a client for the transfer became the
overriding command that prevailed over the lack of basis for the transfer.

We cannot blame Menese for refusing Yan’s offer to be transferred. Not only was the transfer
1avv phi 1

arbitrary and done in bad faith, it would also result, as Menese feared, in a demotion in rank and a
diminution in pay. Although Yan informed Menese that "based on the request of the client, she will
be transferred to another assignment which however will not involve any demotion in rank nor
diminution in her salaries and other benefits,"40 the offer was such as to invite reluctance and
suspicion as it was couched in a very general manner. We find credible Menese’s submission on this
point, i.e., that under the offered transfer: (1) she would hold the position of lady guard and (2) she
would be paid in accordance with the statutory minimum wage, or from ₱11,720.00 to ₱7,500.00.

In these lights, Menese’s transfer constituted a constructive dismissal as it had no justifiable basis
and entailed a demotion in rank and a diminution in pay for her. For a transfer not to be considered a
constructive dismissal, the employer must be able to show that the transfer is for a valid reason,
entails no diminution in the terms and conditions of employment, and must be unreasonably
inconvenient or prejudicial to the employee. If the employer fails to meet these standards, the
employee’s transfer shall amount, at the very least, to constructive dismissal.41The petitioners,
unfortunately for them, failed to come up to these standards.

In declaring Menese’s transfer to be in the valid exercise of the petitioners’ management prerogative,
the NLRC grossly misappreciated the evidence and, therefore, gravely abused its discretion in
closing its eyes to the patent injustice committed on Menese. It completely disregarded the obvious
presence of bad faith in Menese’s transfer. Labor justice demands that Menese be awarded moral
and exemplary damages42 and, for having been constrained to litigate in order to protect her rights,
attorney’s fees.43
Yan’s solidary liability

Yan had been aware all the time of the utter lack of a valid reason for Menese’s transfer. He had
been aware all the time that Dapula’s charges against Menese — the ostensible reason for the
transfer — were nonexistent as Dapula failed to substantiate the charges. He was very much a part
of the flagrant and duplicitous move to get rid of Menese to give way to Claro, Dapula’s protégée.

Based on the facts, Yan is as guilty as the agency in causing the transfer that was undertaken in bad
faith and in a wanton and oppressive manner. Thus, he should be solidarily liable with the agency for
Menese’s monetary awards.

The overtime pay award

While the labor arbiter declared that Menese’s claim for overtime pay is unrebutted44 and, indeed,
nowhere in the petitioners’ position paper did they controvert Menese’s claim, we hold that the claim
must still be substantiated. In Global Incorporated v. Commissioner Atienza,45 a claim for overtime
pay will not be granted for want of factual and legal basis. In this respect, the records indicate that
the labor arbiter granted Menese’s claim for holiday pay, rest day and premium pay on the basis of
payrolls.46 There is no such proof in support of Menese’s claim for overtime pay other than her
contention that she worked from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show that
she was working during the entire one hour meal break. We thus find the NLRC’s deletion of the
overtime pay award in order.

Also, the NLRC noted that the award of ₱2,600.00 for the refund of the cash bond deposit is
overstated and should be adjusted to ₱600.00 only, as indicated by the payrolls. We likewise find the
adjustment in order.

All told, except for the above clarifications on the overtime pay award and the refund of the cash
bond deposit, we reiterate and so declare the petition to be devoid of merit.

WHEREFORE, premises considered, except for the overtime pay award and the refund of deposit
for the cash bond, the petition is DENIED for lack of merit. The assailed decision and resolution of
the Court of Appeals are AFFIRMED, with the following modifications:

1) The deletion of the overtime pay award; and

2) Adjustment of the refund of the cash or surety bond deposit award from ₱2,500.00 to
₱600.00.

Costs against the petitioners.

SO ORDERED.

.R. No. 189404 December 11, 2013

WILGEN LOON, JERRY ARCILLA, ALBERTPEREYE, ARNOLD PEREYE, EDGARDO OBOSE,

ARNEL MALARAS, PATROCINO TOETIN, EVELYN LEONARDO, ELMER GLOCENDA, RUFO
CUNAMAY, ROLANDOSAJOL, ROLANDO ABUCAYON, JENNIFER NATIVIDAD, MARITESS
TORION, ARMANDO LONZAGA, RIZAL GELLIDO, EVIRDE HAQUE,1 MYRNA VINAS,
RODELITO AYALA, WINELITO OJEL, RENATO RODREGO, NENA ABINA, EMALYN
OLIVEROS, LOUIE ILAGAN, JOEL ENTIG, ARNEL ARANETA, BENJAMIN COSE, WELITO
LOON and WILLIAM ALIPAO, Petitioners,
vs.
POWER MASTER, INC., TRI-C GENERAL SERVICES, and SPOUSES HOMER and CARINA
ALUMISIN,Respondents.

DECISION

BRION, J.:

We resolve the petition for review on certiorari,2 filed by petitioners Wilgen Loon, Jerry Arcilla, Albert
Pereye, Arnold Pereye, Edgardo Obose, Arnel Malaras, Patrocino Toetin, Evelyn Leonardo, Elmer
Glocenda, Rufo Cunamay, Rolando Sajol, Rolando Abucayon, Jennifer Natividad, Maritess Torion,
Armando Lonzaga, Rizal Gellido, Evirde Haque, Myrna Vinas, Rodelito Ayala, Winelito Ojel, Renato
Rodrego, Nena Abina, Emalyn Oliveros, Louie Ilagan, Joel Entig, Arnel Araneta, Benjamin Cose,
Welito Loon, William Alipao (collectively, the petitioners), to challenge the June 5, 2009 decision3 and
the August 28, 2009 resolution4 of the Court of Appeals (CA) in CA-G.R. SP No. 95182.

The Factual Antecedents

Respondents Power Master, Inc. and Tri-C General Services employed and assigned the petitioners
as janitors and leadsmen in various Philippine Long Distance Telephone Company (PLDT) offices in
Metro Manila area. Subsequently, the petitioners filed a complaint for money claims against Power
Master, Inc., Tri-C General Services and their officers, the spouses Homer and Carina Alumisin
(collectively, the respondents). The petitioners alleged in their complaint that they were not paid
minimum wages, overtime, holiday, premium, service incentive leave, and thirteenth month pays.
They further averred that the respondents made them sign blank payroll sheets. On June 11, 2001,
the petitioners amended their complaint and included illegal dismissal as their cause of action. They
claimed that the respondents relieved them from service in retaliation for the filing of their original
complaint.

Notably, the respondents did not participate in the proceedings before the Labor Arbiter except on
April 19, 2001 and May 21, 2001 when Mr. Romulo Pacia, Jr. appeared on the respondents’
behalf.5 The respondents’ counsel also appeared in a preliminary mandatory conference on
July 5, 2001.6 However, the respondents neither filed any position paper nor proffered pieces of
evidence in their defense despite their knowledge of the pendency of the case.

The Labor Arbiter’s Ruling

In a decision7 dated March 15, 2002, Labor Arbiter (LA) Elias H. Salinas partially ruled in favor of the
petitioners. The LA awarded the petitioners salary differential, service incentive leave, and
thirteenth month pays. In awarding these claims, the LA stated that the burden of proving the
payment of these money claims rests with the employer. The LA also awarded attorney’s fees in
favor of the petitioners, pursuant to Article 111 of the Labor Code.8

However, the LA denied the petitioners’ claims for backwages, overtime, holiday, and premium
pays. The LA observed that the petitioners failed to show that they rendered overtime work and
worked on holidays and rest days without compensation. The LA further concluded that the
petitioners cannot be declared to have been dismissed from employment because they did not show
any notice of termination of employment. They were also not barred from entering the respondents’
premises.

The Proceedings before the NLRC

Both parties appealed the LA’s ruling with the National Labor Relations Commission. The petitioners
disputed the LA’s denial of their claim for backwages, overtime, holiday and premium pays.
Meanwhile, the respondents questioned the LA’s ruling on the ground that the LA did not acquire
jurisdiction over their persons.

The respondents insisted that they were not personally served with summons and other processes.
They also claimed that they paid the petitioners minimum wages, service incentive leave and
thirteenth month pays. As proofs, they attached photocopied and computerized copies of
payroll sheets to their memorandum on appeal.9 They further maintained that the petitioners were
validly dismissed. They argued that the petitioners’ repeated defiance to their transfer to different
workplaces and their violations of the company rules and regulations constituted serious misconduct
and willful disobedience.10

On January 3, 2003, the respondents filed an unverified supplemental appeal. They attached
photocopied and computerized copies of list of employees with automated teller machine
(ATM) cards to the supplemental appeal. This list also showed the amounts allegedly deposited in
the employees’ ATM cards.11 They also attached documentary evidence showing that the
petitioners were dismissed for cause and had been accorded due process.

On January 22, 2003, the petitioners filed an Urgent Manifestation and Motion12 where they asked
for the deletion of the supplemental appeal from the records because it allegedly suffered from
infirmities. First, the supplemental appeal was not verified. Second, it was belatedly filed six months
from the filing of the respondents’ notice of appeal with memorandum on appeal. The petitioners
pointed out that they only agreed to the respondents’ filing of a responsive pleading until December
18, 2002.13 Third¸ the attached documentary evidence on the supplemental appeal bore the
petitioners’ forged signatures.

They reiterated these allegations in an Urgent Motion to Resolve Manifestation and Motion (To
Expunge from the Records Respondents’ Supplemental Appeal, Reply and/or
Rejoinder) dated January 31, 2003.14Subsequently, the petitioners filed an Urgent Manifestation
with Reiterating Motion to Strike-Off the Record Supplemental Appeal/Reply, Quitclaims and
Spurious Documents Attached to Respondents’ Appeal dated August 7, 2003.15 The petitioners
argued in this last motion that the payrolls should not be given probative value because they were
the respondents’ fabrications. They reiterated that the genuine payrolls bore their signatures, unlike
the respondents’ photocopies of the payrolls. They also maintained that their signatures in the
respondents’ documents (which showed their receipt of thirteenth month pay) had been forged.

The NLRC Ruling

In a resolution dated November 27, 2003, the NLRC partially ruled in favor of the respondents.16 The
NLRC affirmed the LA’s awards of holiday pay and attorney’s fees. It also maintained that the LA
acquired jurisdiction over the persons of the respondents through their voluntary appearance.

However, it allowed the respondents to submit pieces of evidence for the first time on appeal
on the ground that they had been deprived of due process. It found that the respondents did not
actually receive the LA’s processes. It also admitted the respondents’ unverified supplemental
appeal on the ground that technicalities may be disregarded to serve the greater interest of
substantial due process. Furthermore, the Rules of Court do not require the verification of a
supplemental pleading.

The NLRC also vacated the LA’s awards of salary differential, thirteenth month and service
incentive leave pays. In so ruling, it gave weight to the pieces of evidence attached to the
memorandum on appeal and the supplemental appeal. It maintained that the absence of the
petitioners’ signatures in the payrolls was not an indispensable factor for their authenticity. It pointed
out that the payment of money claims was further evidenced by the list of employees with ATM
cards. It also found that the petitioners’ signatures were not forged. It took judicial notice that many
people use at least two or more different signatures.

The NLRC further ruled that the petitioners were lawfully dismissed on grounds of serious
misconduct and willful disobedience. It found that the petitioners failed to comply with various
memoranda directing them to transfer to other workplaces and to attend training seminars for the
intended reorganization and reshuffling.

The NLRC denied the petitioners’ motion for reconsideration in a resolution dated April 28,
2006.17 Aggrieved, the petitioners filed a petition for certiorari under Rule 65 of the Rules of Court
before the CA.18

The CA Ruling

The CA affirmed the NLRC’s ruling. The CA held that the petitioners were afforded substantive and
procedural due process. Accordingly, the petitioners deliberately did not explain their side. Instead,
they continuously resisted their transfer to other PLDT offices and violated company rules and
regulations. It also upheld the NLRC’s findings on the petitioners’ monetary claims.

The CA denied the petitioners’ motion for reconsideration in a resolution dated August 28, 2009,
prompting the petitioners to file the present petition.19

The Petition

In the petition before this Court, the petitioners argue that the CA committed a reversible error when
it did not find that the NLRC committed grave abuse of discretion. They reiterate their arguments
before the lower tribunals and the CA in support of this conclusion. They also point out that the
respondents posted a bond from a surety that was not accredited by this Court and by the NLRC. In
effect, the respondents failed to perfect their appeal before the NLRC. They further insist that the
NLRC should not have admitted the respondents’ unverified supplemental appeal.20

The Respondents’ Position

In their Comments, the respondents stress that the petitioners only raised the issue of the validity of
the appeal bond for the first time on appeal. They also reiterate their arguments before the NLRC
and the CA. They additionally submit that the petitioners’ arguments have been fully passed upon
and found unmeritorious by the NLRC and the CA.21

The Issues

This case presents to us the following issues:

1) Whether the CA erred when it did not find that the NLRC committed grave abuse of
discretion in giving due course to the respondents’ appeal;

a) Whether the respondents perfected their appeal before the NLRC; and

b) Whether the NLRC properly allowed the respondents’ supplemental appeal

 2) Whether the respondents were estopped from submitting pieces of evidence for the first
time on appeal;

3) Whether the petitioners were illegally dismissed and are thus entitled to backwages;

4) Whether the petitioners are entitled to salary differential, overtime, holiday, premium,
service incentive leave, and thirteenth month pays; and

5) Whether the petitioners are entitled to attorney’s fees.

The Court’s Ruling

The respondents perfected their

appeal with the NLRC because the
revocation of the bonding company's
authority has a prospective
application

Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of a judgment involving a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment appealed from."

Contrary to the respondents’ claim, the issue of the appeal bond’s validity may be raised for the first
time on appeal since its proper filing is a jurisdictional requirement.22 The requirement that the appeal
bond should be issued by an accredited bonding company is mandatory and jurisdictional. The
rationale of requiring an appeal bond is to discourage the employers from using an appeal to delay
or evade the employees' just and lawful claims. It is intended to assure the workers that they will
receive the money judgment in their favor upon the dismissal of the employer’s appeal.23

In the present case, the respondents filed a surety bond issued by Security Pacific Assurance
Corporation (Security Pacific) on June 28, 2002. At that time, Security Pacific was still an accredited
bonding company. However, the NLRC revoked its accreditation on February 16,
2003.24 Nonetheless, this subsequent revocation should not prejudice the respondents who relied on
its then subsisting accreditation in good faith. In Del Rosario v. Philippine Journalists, Inc.,25 we ruled
that a bonding company’s revocation of authority is prospective in application.

However, the respondents should post a new bond issued by an accredited bonding company in
compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of Procedure. This provision
states that "[a] cash or surety bond shall be valid and effective from the date of deposit or
posting, until the case is finally decided, resolved or terminated or the award satisfied."

The CA correctly ruled that the

NLRC properly gave due course to
the respondents’ supplemental
appeal

The CA also correctly ruled that the NLRC properly gave due course to the respondents’
supplemental appeal. Neither the laws nor the rules require the verification of the supplemental
appeal.26 Furthermore, verification is a formal, not a jurisdictional, requirement. It is mainly intended
for the assurance that the matters alleged in the pleading are true and correct and not of mere
speculation.27 Also, a supplemental appeal is merely an addendum to the verified memorandum on
appeal that was earlier filed in the present case; hence, the requirement for verification has
substantially been complied with.

The respondents also timely filed their supplemental appeal on January 3, 2003. The records of the
case show that the petitioners themselves agreed that the pleading shall be filed until December 18,
2002. The NLRC further extended the filing of the supplemental pleading until January 3, 2003 upon
the respondents’ motion for extension.

A party may only adduce evidence

for the first time on appeal if he
adequately explains his delay in the
submission of evidence and he
sufficiently proves the allegations
sought to be proven

In labor cases, strict adherence to the technical rules of procedure is not required. Time and again,
we have allowed evidence to be submitted for the first time on appeal with the NLRC in the interest
of substantial justice.28 Thus, we have consistently supported the rule that labor officials should use
all reasonable means to ascertain the facts in each case speedily and objectively, without regard to
technicalities of law or procedure, in the interest of due process.29

However, this liberal policy should still be subject to rules of reason and fairplay. The liberality of
procedural rules is qualified by two requirements: (1) a party should adequately explain any
delay in the submission of evidence; and (2) a party should sufficiently prove the allegations
sought to be proven.30 The reason for these requirements is that the liberal application of the rules
before quasi-judicial agencies cannot be used to perpetuate injustice and hamper the just resolution
of the case. Neither is the rule on liberal construction a license to disregard the rules of procedure.31

Guided by these principles, the CA grossly erred in ruling that the NLRC did not commit grave abuse
of discretion in arbitrarily admitting and giving weight to the respondents’ pieces of evidence for the
first time on appeal.

A. The respondents failed to

adequately explain their delay
in the submission of evidence

We cannot accept the respondents’ cavalier attitude in blatantly disregarding the NLRC Rules of
Procedure. The CA gravely erred when it overlooked that the NLRC blindly admitted and arbitrarily
gave probative value to the respondents’ evidence despite their failure to adequately explain their
delay in the submission of evidence. Notably, the respondents’ delay was anchored on their
assertion that they were oblivious of the proceedings before the LA. However, the respondents did
not dispute the LA’s finding that Mr. Romulo Pacia, Jr. appeared on their behalf on April 19, 2001
and May 21, 2001.32 The respondents also failed to contest the petitioners’ assertion that the
respondents’ counsel appeared in a preliminary mandatory conference on July 5, 2001.33

Indeed, the NLRC capriciously and whimsically admitted and gave weight to the respondents’
evidence despite its finding that they voluntarily appeared in the compulsory arbitration proceedings.
The NLRC blatantly disregarded the fact that the respondents voluntarily opted not to participate, to
adduce evidence in their defense and to file a position paper despite their knowledge of the
pendency of the proceedings before the LA. The respondents were also grossly negligent in not
informing the LA of the specific building unit where the respondents were conducting their business
and their counsel’s address despite their knowledge of their non-receipt of the processes.34

B. The respondents failed to

sufficiently prove the
allegations sought to be
proven

Furthermore, the respondents failed to sufficiently prove the allegations sought to be proven. Why
the respondents’ photocopied and computerized copies of documentary evidence were not
presented at the earliest opportunity is a serious question that lends credence to the petitioners’
claim that the respondents fabricated the evidence for purposes of appeal. While we generally
admit in evidence and give probative value to photocopied documents in administrative
proceedings, allegations of forgery and fabrication should prompt the adverse party to
present the original documents for inspection.35 It was incumbent upon the respondents to
present the originals, especially in this case where the petitioners had submitted their specimen
signatures. Instead, the respondents effectively deprived the petitioners of the opportunity to
examine and controvert the alleged spurious evidence by not adducing the originals. This Court is
thus left with no option but to rule that the respondents’ failure to present the originals raises the
presumption that evidence willfully suppressed would be adverse if produced.36

It was also gross error for the CA to affirm the NLRC’s proposition that "[i]t is of common knowledge
that there are many people who use at least two or more different signatures."37 The NLRC cannot
take judicial notice that many people use at least two signatures, especially in this case where the
petitioners themselves disown the signatures in the respondents’ assailed documentary
evidence.38 The NLRC’s position is unwarranted and is patently unsupported by the law and
jurisprudence.

Viewed in these lights, the scales of justice must tilt in favor of the employees. This conclusion is
consistent with the rule that the employer’s cause can only succeed on the strength of its own
evidence and not on the weakness of the employee’s evidence.39

The petitioners are entitled to

backwages

Based on the above considerations, we reverse the NLRC and the CA’s finding that the petitioners
were terminated for just cause and were afforded procedural due process. In termination cases, the
burden of proving just and valid cause for dismissing an employee from his employment rests upon
the employer. The employer’s failure to discharge this burden results in the finding that the dismissal
is unjustified.40 This is exactly what happened in the present case.

The petitioners are entitled to salary

differential, service incentive,
holiday, and thirteenth month pays

We also reverse the NLRC and the CA’s finding that the petitioners are not entitled to salary
differential, service incentive, holiday, and thirteenth month pays. As in illegal dismissal cases, the
general rule is that the burden rests on the defendant to prove payment rather than on the plaintiff to
prove non-payment of these money claims.41 The rationale for this rule is that the pertinent personnel
files, payrolls, records, remittances and other similar documents – which will show that differentials,
service incentive leave and other claims of workers have been paid – are not in the possession of
the worker but are in the custody and control of the employer.42
The petitioners are not entitled to
overtime and premium pays

However, the CA was correct in its finding that the petitioners failed to provide sufficient factual basis
for the award of overtime, and premium pays for holidays and rest days. The burden of proving
entitlement to overtime pay and premium pay for holidays and rest days rests on the employee
because these are not incurred in the normal course of business.43 In the present case, the
petitioners failed to adduce any evidence that would show that they actually rendered service in
excess of the regular eight working hours a day, and that they in fact worked on holidays and rest
days.

The petitioners are entitled to

attorney’s fees

The award of attorney’s fees is also warranted under the circumstances of this case. An employee
1âwphi 1

is entitled to an award of attorney’s fees equivalent to ten percent (10%) of the amount of the wages
in actions for unlawful withholding of wages.44

As a final note, we observe that Rodelito Ayala, Winelito Ojel, Renato Rodrego and Welito Loon are
also named as petitioners in this case. However, we deny their petition for the reason that they were
not part of the proceedings before the CA. Their failure to timely seek redress before the CA
precludes this Court from awarding them monetary claims.

All told, we find that the NLRC committed grave abuse of discretion in admitting and giving probative
value to the respondents' evidence on appeal, which errors the CA replicated when it upheld the
NLRC rulings.

WHEREFORE, based on these premises, we REVERSE and SET ASIDE the decision dated June
5, 2009, and the resolution dated August 28, 2009 of the Court of Appeals in CA-G.R. SP No.
95182. This case is REMANDED to the Labor Arbiter for the sole purpose of computing petitioners'
(Wilgen Loon, Jerry Arcilla, Albert Pereye, Arnold Pereye, Edgardo Obose, Arnel Malaras, Patrocino
Toetin, Evelyn Leonardo, Elmer Glocenda, Rufo Cunamay, Rolando Sajol, Rolando Abucayon,
Jennifer Natividad, Maritess Torion, Ammndo Lonzaga, Rizal Gellido, Evirdly Haque, Myrna Vinas,
Nena Abina, Emalyn Oliveros, Louie Ilagan, Joel Entig, Amel Araneta, Benjamin Cose and William
Alipao) full backwages (computed from the date of their respective dismissals up to the finality of this
decision) and their salary differential, service incentive leave, holiday, thirteenth month pays, and
attorney's fees equivalent to ten percent (10%) of the withheld wages. The respondents are further
directed to immediately post a satisfactory bond conditioned on the satisfaction of the awards
affirmed in this Decision.

SO ORDERED.