G.R. No.

170139, August 05, 2014

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

CABILES, Respondent.

DECISION

LEONEN, J.:

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

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

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 cralawred

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

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

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

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

On October 15, 1997, Joy filed a complaint17 with the National Labor Relations
Commission against petitioner and Wacoal. She claimed that she was illegally
dismissed.18 She asked for the return of her placement fee, the withheld amount for
repatriation costs, payment of her salary for 23 months as well as moral and exemplary
damages.19 She identified Wacoal as Sameer Overseas Placement Agency’s foreign
principal.20 cralawred
Sameer Overseas Placement Agency alleged that respondent's termination was due to
her inefficiency, negligence in her duties, and her “failure to comply with the work
requirements [of] her foreign [employer].”21 The agency also claimed that it did not ask
for a placement fee of ?70,000.00.22 As evidence, it showed Official Receipt No. 14860
dated June 10, 1997, bearing the amount of ?20,360.00.23 Petitioner added that
Wacoal's accreditation with petitioner had already been transferred to the Pacific
Manpower & Management Services, Inc. (Pacific) as of August 6, 1997.24 Thus,
petitioner asserts that it was already substituted by Pacific Manpower.25 cralawred

Pacific Manpower moved for the dismissal of 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 cralawred

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

Joy appealed36 to the National Labor Relations Commission.

In a resolution37 dated March 31, 2004, the National Labor Relations Commission

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

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 cralawred

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

The Commission denied the agency’s motion for reconsideration47 dated May 12, 2004
through a resolution48 dated July 2, 2004.
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a
petition49 for certiorari with the Court of Appeals assailing the National Labor Relations
Commission’s resolutions dated March 31, 2004 and July 2, 2004.

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

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

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

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

WHEREFORE, premises considered, the assailed Resolutions are hereby

partly AFFIRMED in accordance with the foregoing discussion, but subject to the
caveat embodied in the last sentence. No costs.

SO ORDERED.53

Dissatisfied, Sameer Overseas Placement Agency filed this petition.54 cralawred

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

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

Petitioner also reiterates that since Wacoal’s accreditation was validly transferred to
Pacific at the time respondent filed her complaint, it should be Pacific that should now
assume responsibility for Wacoal’s contractual obligations to the workers originally
recruited by petitioner.57
cralawred
Sameer Overseas Placement Agency’s petition is without merit. We find for respondent.

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

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

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

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

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

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

Petitioner likewise attempts to sidestep the medical certificate requirement by

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

Again, petitioner’s argument is without merit.

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

It shall guarantee the rights of all workers to self-organization, collective bargaining

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

.... chanrobleslaw

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

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

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

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

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

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

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

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

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

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

(e) Other causes analogous to the foregoing.

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

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

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

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

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

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

Assessing an employee’s work performance does not stop after regularization. The
employer, on a regular basis, determines if an employee is still qualified and efficient,
based on work standards. Based on that determination, and after complying with the
due process requirements of notice and hearing, the employer may exercise its
management prerogative of terminating the employee found unqualified.
The regular employee must constantly attempt to prove to his or her employer that he
or she meets all the standards for employment. This time, however, the standards to be
met are set for the purpose of retaining employment or promotion. The employee
cannot be expected to meet any standard of character or workmanship if such
standards were not communicated to him or her. Courts should remain vigilant on
allegations of the employer’s failure to communicate work standards that would govern
one’s employment “if [these are] to discharge in good faith [their] duty to
adjudicate.”73cralawred

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

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

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

Petitioner failed to comply with

the due process requirements

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

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

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

II

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

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

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

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

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

Any compromise/amicable settlement or voluntary agreement on money claims

inclusive of damages under this section shall be paid within four (4) months from the
approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause

as defined by law or contract, the workers shall be entitled to the full reimbursement of
his placement fee with interest of twelve (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less.

....

(Emphasis supplied) chanrobleslaw

Section 15 of Republic Act No. 8042 states that “repatriation of the worker and the
transport of his [or her] personal belongings shall be the primary responsibility of the
agency which recruited or deployed the worker overseas.” The exception is when
“termination of employment is due solely to the fault of the worker,”80 which as we
have established, is not the case. It reads:chanRoblesvirtualLawlibrary
SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. – The
repatriation of the worker and the transport of his personal belongings shall be the
primary responsibility of the agency which recruited or deployed the worker overseas.
All costs attendant to repatriation shall be borne by or charged to the agency concerned
and/or its principal. Likewise, the repatriation of remains and transport of the personal
belongings of a deceased worker and all costs attendant thereto shall be borne by the
principal and/or local agency. However, in cases where the termination of employment
is due solely to the fault of the worker, the principal/employer or agency shall not in
any manner be responsible for the repatriation of the former and/or his belongings.

....

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

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

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

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

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 cralawred

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

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

read as follows:chanRoblesvirtualLawlibrary

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

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

Any compromise/amicable settlement or voluntary agreement on money claims

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

In case of termination of overseas employment without just, valid or authorized cause

as defined by law or contract, or any unauthorized deductions from the migrant
worker’s salary, the worker shall be entitled to the full reimbursement if [sic] his
placement fee and the deductions made with interest at twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.

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

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

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

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

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

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

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

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

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

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

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

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

In the hierarchy of laws, the Constitution is supreme. No branch or office of the

government may exercise its powers in any manner inconsistent with the Constitution,
regardless of the existence of any law that supports such exercise. The Constitution
cannot be trumped by any other law. All laws must be read in light of the Constitution.
Any law that is inconsistent with it is a nullity.

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

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

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

The new law puts our overseas workers in the same vulnerable position as they were
prior to Serrano. Failure to reiterate the very ratio decidendi of that case will result in
the same untold economic hardships that our reading of the Constitution intended to
avoid. Obviously, we cannot countenance added expenses for further litigation that will
reduce their hard-earned wages as well as add to the indignity of having been deprived
of the protection of our laws simply because our precedents have not been followed.
There is no constitutional doctrine that causes injustice in the face of empty procedural
niceties. Constitutional interpretation is complex, but it is never unreasonable.
Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the Office of
the Solicitor General to comment on the constitutionality of the reinstated clause in
Republic Act No. 10022.

In its comment,89 petitioner argued that the clause was constitutional.90 The legislators

intended a balance between the employers’ and the employees’ rights by not unduly
burdening the local recruitment agency.91 Petitioner is also of the view that the clause
was already declared as constitutional in Serrano.92 cralawred

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

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

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

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages

that should be recovered by an illegally dismissed overseas worker to three
months is both a violation of due process and the equal protection clauses of
the Constitution.

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

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

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

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 cralawred

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

In Serrano, we identified the classifications made by the reinstated clause. It

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

The Congress’ classification may be subjected to judicial review. In Serrano, there is a

“legislative classification which impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar disadvantage of a suspect class.”109 cralawred

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 cralawred

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

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 cralawred

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

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

Overseas workers regardless of their classifications are entitled to security of tenure, at

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

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

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

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

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

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

As Justice Brion said in his concurring opinion in Serrano: chanRoblesvirtualLawlibrary

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

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

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

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

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

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

III

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

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

Section 1. The rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of an express contract as to
such rate of interest, shall be six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for
Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for
Non-Bank Financial Institutions are hereby amended accordingly.

This Circular shall take effect on 1 July 2013.

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

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

1. When the obligation is breached, and it consists in the payment of a sum of

money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due shall
itself earn legal interest from the time it is judicially demanded. In the absence
of stipulation, the rate of interest shall be 6% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is

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

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

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

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

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

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

Moreover, laws are deemed incorporated in contracts. “The contracting parties need not
repeat them. They do not even have to be referred to. Every contract, thus, contains
not only what has been explicitly stipulated, but the statutory provisions that have any
bearing on the matter.”135 There is, therefore, an implied stipulation in contracts
between the placement agency and the overseas worker that in case the overseas
worker is adjudged as entitled to reimbursement of his or her placement fees, the
amount shall be subject to a 12% interest per annum. This implied stipulation has the
effect of removing awards for reimbursement of placement fees from Circular No. 799’s
coverage.

The same cannot be said for awards of salary for the unexpired portion of the
employment contract under Republic Act No. 8042. These awards are covered by
Circular No. 799 because the law does not provide for a specific interest rate that
should apply.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But it seems that we have not said enough.

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

Unknown to them, they keep our economy afloat through the ebb and flow of political
and economic crises. They are our true diplomats, they who show the world the
resilience, patience, and creativity of our people. Indeed, we are a people who
contribute much to the provision of material creations of this world.
This government loses its soul if we fail to ensure decent treatment for all Filipinos. We
default by limiting the contractual wages that should be paid to our workers when their
contracts are breached by the foreign employers. While we sit, this court will ensure
that our laws will reward our overseas workers with what they deserve: their dignity.

Inevitably, their dignity is ours as well.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals

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

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

SO ORDERED.