SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v. NATIONAL LABOR RELATIONS COMMISSION et al.

480 SCRA 146 (2006) FACTS: Respondent Divina Montehermozo is a domestic helper deployed to Taiwan by Sunace International Management Services (Sunace) under a 12-month contract. Such employment was made with the assistance of Taiwanese broker Edmund Wang. After the expiration of the contract, Montehermozo continued her employment with her Taiwanese employer for another 2 years. When Montehermozo returned to the Philippines, she filed a complaint against Sunace, Wang, and her Taiwanese employer before the National Labor Relations Commission (NLRC). She alleges that she was underpaid and was jailed for three months in Taiwan. She further alleges that the 2-year extension of her employment contract was with the consent and knowledge of Sunace. Sunace, on the other hand, denied all the allegations. The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable thereof. The National Labor Relations Commission and Court of Appeals affirmed the labor arbiters decision. Hence, the filing of this appeal. ISSUE: Whether or not the 2-year extension of Montehermozos employment was made with the knowledge and consent of Sunace HELD: There is an implied revocation of an agency relationship when after the termination of the original employment contract, the foreign principal directly negotiated with the employee and entered into a new and separate employment contract. Contrary to the Court of Appeals finding, the alleged continuous communication was with the Taiwanese broker Wang, not with the foreign employer. The finding of the Court of Appeals solely on the basis of the telefax message written by Wang to Sunace, 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 Montehermozos allegedly withheld savings does not necessarily mean that Sunace ratified the extension of the contract.As can be seen from that letter communication, it was just an information given to Sunace that Montehermozo had taken already her savings from her foreign employer and that no deduction was made on her salary. It contains nothing about the extension or Sunaces consent thereto. 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 Montehermozos filing of the complaint on February 14, 2000. Respecting the decision of Court of Appeals following as agent of its foreign principal, [Sunace] cannot profess ignorance of such an extension as obviously, the act of its principal extending [Montehermozos] employment contract necessarily bound it, 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, not the other way around. The knowledge of the principalforeign 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 Montehermozos 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. 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 Montehermozo and entered into a new and separate employment contract in Taiwan. Article 1924 of the New Civil Code states that the agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC. FACTS:Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., under a POEAapproved contract of employment for 12 months, as Chief Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per month.On the date of his departure, Serrano was constrained to accept a downgraded employment contract upon the assurance and representation of respondents that he would be Chief Officer by the end of April 1998.Respondents did not deliver on their promise to make Serrano Chief Officer.Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines, serving only two months and 7 days, leaving an unexpired portion of nine months and twenty-three days. Upon complaint filed by Serrano before the Labor Arbiter (LA), the dismissal was declared illegal.On appeal, the NLRC modified the LA decision based on the provision of RA 8042.Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th paragraph of Section 10 of RA 8042. ISSUES:1. Whether or not the subject clause violates Section 10, Article III of the Constitution on

non-impairment of contracts;2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3, Article XIII on labor as a protected sector. HELD: On the first issue.The answer is in the negative. Petitioners claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will receive is not tenable.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.----On the second issue.The answer is in the affirmative.To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity.Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or more;Second, among OFWs with employment contracts of more than one year; and Third, OFWs vis--vis local workers with fixed-period employment; The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal protection.The subject clause or for three months for every year of the unexpired term, whichever is less in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL.