G.R. Nos.

L-58674-77 July 11, 1990

PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales & Olongapo City,
Branch III and SERAPIO ABUG, respondents.
CRUZ, J:
The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise known as the Labor
Code, reading as follows:
(b) Recruitment and placement' refers to any act of canvassing, enlisting, contracting, transporting,
hiring, or procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in
any manner, offers or promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo City
alleging that Serapio Abug, private respondent herein, "without first securing a license from the Ministry of Labor as
a holder of authority to operate a fee-charging employment agency, did then and there wilfully, unlawfully and
criminally operate a private fee charging employment agency by charging fees and expenses (from) and promising
employment in Saudi Arabia" to four separate individuals named therein, in violation of Article 16 in relation to Article
39 of the Labor Code. 1
Abug filed a motion to quash on the ground that the informations did not charge an offense because he was
accused of illegally recruiting only one person in each of the four informations. Under the proviso in Article 13(b), he
claimed, there would be illegal recruitment only "whenever two or more persons are in any manner promised or
offered any employment for a fee. " 2
Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court dated June 24 and
September 17, 1981. The prosecution is now before us on certiorari. 3
The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in relation to Article
16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first two cited articles penalize acts of
recruitment and placement without proper authority, which is the charge embodied in the informations, application of
the definition of recruitment and placement in Article 13(b) is unavoidable.
The view of the private respondents is that to constitute recruitment and placement, all the acts mentioned in this
article should involve dealings with two or m re persons as an indispensable requirement. On the other hand, the
petitioner argues that the requirement of two or more persons is imposed only where the recruitment and placement
consists of an offer or promise of employment to such persons and always in consideration of a fee. The other acts
mentioned in the body of the article may involve even only one person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or promise of
employment if the purpose was to apply the requirement of two or more persons to all the acts mentioned in the
basic rule. For its part, the petitioner does not explain why dealings with two or more persons are needed where the
recruitment and placement consists of an offer or promise of employment but not when it is done through
"canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an exception
thereto but merely to create a presumption. The presumption is that the individual or entity is engaged in recruitment
and placement whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an offer or
promise of employment is made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring (of) workers. "

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers.
Any of the acts mentioned in the basic rule in Article 13(b) win constitute recruitment and placement even if only one
prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in
consideration of a promise or offer of employment to two or more prospective workers, the individual or entity
dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words "shall be
deemed" create that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding the failure of a
public officer to produce upon lawful demand funds or property entrusted to his custody. Such failure shall beprima
facie evidence that he has put them to personal use; in other words, he shall be deemed to have malversed such
funds or property. In the instant case, the word "shall be deemed" should by the same token be given the force of a
disputable presumption or of prima facie evidence of engaging in recruitment and placement. (Klepp vs. Odin Tp.,
McHenry County 40 ND N.W. 313, 314.)
It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of records of
debates and deliberations that would otherwise have been available if the Labor Code had been enacted as a
statute rather than a presidential decree. The trouble with presidential decrees is that they could be, and sometimes
were, issued without previous public discussion or consultation, the promulgator heeding only his own counsel or
those of his close advisers in their lofty pinnacle of power. The not infrequent results are rejection, intentional or not,
of the interest of the greater number and, as in the instant case, certain esoteric provisions that one cannot read
against the background facts usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force to the campaign against illegal recruitment and
placement, which has victimized many Filipino workers seeking a better life in a foreign land, and investing hardearned savings or even borrowed funds in pursuit of their dream, only to be awakened to the reality of a cynical
deception at the hands of theirown countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four informations
against the private respondent reinstated. No costs.
SO ORDERED.

G.R. No. 113161 August 29, 1995

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
LOMA GOCE y OLALIA, DAN GOCE and NELLY D. AGUSTIN, accused. NELLY D. AGUSTIN, accusedappellant.

REGALADO, J.:
On January 12, 1988, an information for illegal recruitment committed by a syndicate and in large scale, punishable
under Articles 38 and 39 of the Labor Code (Presidential Decree No. 442) as amended by Section 1(b) of
Presidential Decree No. 2018, was filed against spouses Dan and Loma Goce and herein accused-appellant Nelly
Agustin in the Regional Trial Court of Manila, Branch 5, alleging
That in or about and during the period comprised between May 1986 and June 25, 1987, both dates
inclusive, in the City of Manila, Philippines, the said accused, conspiring and confederating together
and helping one another, representing themselves to have the capacity to contract, enlist and
transport Filipino workers for employment abroad, did then and there willfully and unlawfully, for a
fee, recruit and promise employment/job placement abroad, to (1) Rolando Dalida y Piernas, (2)
Ernesto Alvarez y Lubangco, (3) Rogelio Salado y Savillo, (4) Ramona Salado y Alvarez, (5)
Dionisio Masaya y de Guzman, (6) Dave Rivera y de Leon, (7) Lorenzo Alvarez y Velayo, and (8)
Nelson Trinidad y Santos, without first having secured the required license or authority from the
Department of Labor. 1
On January 21, 1987, a warrant of arrest was issued against the three accused but not one of them was
arrested.2 Hence, on February 2, 1989, the trial court ordered the case archived but it issued a standing warrant of arrest
against the accused. 3

Thereafter, on learning of the whereabouts of the accused, one of the offended parties, Rogelio Salado, requested
on March 17, 1989 for a copy of the warrant of arrest. 4 Eventually, at around midday of February 26, 1993, Nelly
Agustin was apprehended by the Paraaque police. 5 On March 8, 1993, her counsel filed a motion to revive the case and
requested that it be set for hearing "for purposes of due process and for the accused to immediately have her day in
court" 6 Thus, on April 15, 1993, the trial court reinstated the case and set the arraignment for May 3, 1993, 7 on which
date of Agustin pleaded not guilty 8 and the case subsequently went to trial.

Four of the complainants testified for the prosecution. Rogelio Salado was the first to take the witness stand and he
declared that sometime in March or April, 1987, he was introduced by Lorenzo Alvarez, his brother-in-law and a coapplicant, to Nelly Agustin in the latter's residence at Factor, Dongalo, Paraaque, Metro Manila. Representing
herself as the manager of the Clover Placement Agency, Agustin showed him a job order as proof that he could
readily be deployed for overseas employment. Salado learned that he had to pay P5,000.00 as processing fee,
which amount he gave sometime in April or May of the same year. He was issued the corresponding receipt. 9
Also in April or May, 1987, Salado, accompanied by five other applicants who were his relatives, went to the office of
the placement agency at Nakpil Street, Ermita, Manila where he saw Agustin and met the spouses Dan and Loma
Goce, owners of the agency. He submitted his bio-data and learned from Loma Goce that he had to give
P12,000.00, instead of the original amount of P5,000.00 for the placement fee. Although surprised at the new and
higher sum, they subsequently agreed as long as there was an assurance that they could leave for abroad. 10
Thereafter, a receipt was issued in the name of the Clover Placement Agency showing that Salado and his
aforesaid co-applicants each paid P2,000.00, instead of the P5,000.00 which each of them actually paid. Several
months passed but Salado failed to leave for the promised overseas employment. Hence, in October, 1987, along
with the other recruits, he decided to go to the Philippine Overseas Employment Administration (POEA) to verify the
real status of Clover Placement Agency. They discovered that said agency was not duly licensed to recruit job
applicants. Later, upon learning that Agustin had been arrested, Salado decided to see her and to demand the
return of the money he had paid, but Agustin could only give him P500.00. 11

Ramona Salado, the wife of Rogelio Salado, came to know through her brother, Lorenzo Alvarez, about Nelly
Agustin. Accompanied by her husband, Rogelio, Ramona went to see Agustin at the latter's residence. Agustin
persuaded her to apply as a cutter/sewer in Oman so that she could join her husband. Encouraged by Agustin's
promise that she and her husband could live together while working in Oman, she instructed her husband to give
Agustin P2,000.00 for each of them as placement fee, or the total sum of P4,000.00. 12
Much later, the Salado couple received a telegram from the placement agency requiring them to report to its office
because the "NOC" (visa) had allegedly arrived. Again, around February, or March, 1987, Rogelio gave P2,000.00
as payment for his and his wife's passports. Despite follow-up of their papers twice a week from February to June,
1987, he and his wife failed to leave for abroad. 13
Complainant Dionisio Masaya, accompanied by his brother-in-law, Aquiles Ortega, applied for a job in Oman with
the Clover Placement Agency at Paraaque, the agency's former office address. There, Masaya met Nelly Agustin,
who introduced herself as the manager of the agency, and the Goce spouses, Dan and Loma, as well as the latter's
daughter. He submitted several pertinent documents, such as his bio-data and school credentials. 14
In May, 1986, Masaya gave Dan Goce P1,900.00 as an initial downpayment for the placement fee, and in
September of that same year, he gave an additional P10,000.00. He was issued receipts for said amounts and was
advised to go to the placement office once in a while to follow up his application, which he faithfully did. Much to his
dismay and chagrin, he failed to leave for abroad as promised. Accordingly, he was forced to demand that his
money be refunded but Loma Goce could give him back only P4,000.00 in installments. 15
As the prosecution's fourth and last witness, Ernesto Alvarez took the witness stand on June 7, 1993. He testified
that in February, 1987, he met appellant Agustin through his cousin, Larry Alvarez, at her residence in Paraaque.
She informed him that "madalas siyang nagpapalakad sa Oman" and offered him a job as an ambulance driver at
the Royal Hospital in Oman with a monthly salary of about $600.00 to $700.00. 16
On March 10, 1987, Alvarez gave an initial amount of P3,000.00 as processing fee to Agustin at the latter's
residence. In the same month, he gave another P3,000.00, this time in the office of the placement agency. Agustin
assured him that he could leave for abroad before the end of 1987. He returned several times to the placement
agency's office to follow up his application but to no avail. Frustrated, he demanded the return of the money he had
paid, but Agustin could only give back P500.00. Thereafter, he looked for Agustin about eight times, but he could no
longer find her. 17
Only herein appellant Agustin testified for the defense. She asserted that Dan and Loma Goce were her neighbors
at Tambo, Paraaque and that they were licensed recruiters and owners of the Clover Placement Agency.
Previously, the Goce couple was able to send her son, Reynaldo Agustin, to Saudi Arabia. Agustin met the
aforementioned complainants through Lorenzo Alvarez who requested her to introduce them to the Goce couple, to
which request she acceded. 18
Denying any participation in the illegal recruitment and maintaining that the recruitment was perpetrated only by the
Goce couple, Agustin denied any knowledge of the receipts presented by the prosecution. She insisted that the
complainants included her in the complaint thinking that this would compel her to reveal the whereabouts of the
Goce spouses. She failed to do so because in truth, so she claims, she does not know the present address of the
couple. All she knew was that they had left their residence in 1987. 19
Although she admitted having given P500.00 each to Rogelio Salado and Alvarez, she explained that it was entirely
for different reasons. Salado had supposedly asked for a loan, while Alvarez needed money because he was sick at
that time. 20
On November 19, 1993, the trial court rendered judgment finding herein appellant guilty as a principal in the crime of
illegal recruitment in large scale, and sentencing her to serve the penalty of life imprisonment, as well as to pay a
fine of P100,000.00. 21
In her present appeal, appellant Agustin raises the following arguments: (1) her act of introducing complainants to
the Goce couple does not fall within the meaning of illegal recruitment and placement under Article 13(b) in relation
to Article 34 of the Labor Code; (2) there is no proof of conspiracy to commit illegal recruitment among appellant and

the Goce spouses; and (3) there is no proof that appellant offered or promised overseas employment to the
complainants. 22 These three arguments being interrelated, they will be discussed together.
Herein appellant is accused of violating Articles 38 and 39 of the Labor Code. Article 38 of the Labor Code, as
amended by Presidential Decree No. 2018, provides that any recruitment activity, including the prohibited practices
enumerated in Article 34 of said Code, undertaken by non-licensees or non-holders of authority shall be deemed
illegal and punishable under Article 39 thereof. The same article further provides that illegal recruitment shall be
considered an offense involving economic sabotage if any of these qualifying circumstances exist, namely, (a) when
illegal recruitment is committed by a syndicate, i.e., if it is carried out by a group of three or more persons conspiring
and/or confederating with one another; or (b) when illegal recruitment is committed in large scale, i.e., if it is
committed against three or more persons individually or as a group.
At the outset, it should be made clear that all the accused in this case were not authorized to engage in any
recruitment activity, as evidenced by a certification issued by Cecilia E. Curso, Chief of the Licensing and Regulation
Office of the Philippine Overseas Employment Administration, on November 10, 1987. Said certification states that
Dan and Loma Goce and Nelly Agustin are neither licensed nor authorized to recruit workers for overseas
employment. 23 Appellant does not dispute this. As a matter of fact her counsel agreed to stipulate that she was neither
licensed nor authorized to recruit applicants for overseas employment. Appellant, however, denies that she was in any
way guilty of illegal recruitment. 24

It is appellant's defensive theory that all she did was to introduce complainants to the Goce spouses. Being a
neighbor of said couple, and owing to the fact that her son's overseas job application was processed and facilitated
by them, the complainants asked her to introduce them to said spouses. Allegedly out of the goodness of her heart,
she complied with their request. Such an act, appellant argues, does not fall within the meaning of "referral" under
the Labor Code to make her liable for illegal recruitment.
Under said Code, recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not; provided, that any person or entity which, in any manner,
offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and
placement. 25 On the other hand, referral is the act of passing along or forwarding of an applicant for employment after an
initial interview of a selected applicant for employment to a selected employer, placement officer or bureau.

26

Hence, the inevitable query is whether or not appellant Agustin merely introduced complainants to the Goce couple
or her actions went beyond that. The testimonial evidence hereon show that she indeed further committed acts
constitutive of illegal recruitment. All four prosecution witnesses testified that it was Agustin whom they initially
approached regarding their plans of working overseas. It was from her that they learned about the fees they had to
pay, as well as the papers that they had to submit. It was after they had talked to her that they met the accused
spouses who owned the placement agency.
As correctly held by the trial court, being an employee of the Goces, it was therefore logical for appellant to
introduce the applicants to said spouses, they being the owners of the agency. As such, appellant was actually
making referrals to the agency of which she was a part. She was therefore engaging in recruitment activity. 27
Despite Agustin's pretensions that she was but a neighbor of the Goce couple, the testimonies of the prosecution
witnesses paint a different picture. Rogelio Salado and Dionisio Masaya testified that appellant represented herself
as the manager of the Clover Placement Agency. Ramona Salado was offered a job as a cutter/sewer by Agustin
the first time they met, while Ernesto Alvarez remembered that when he first met Agustin, the latter represented
herself as "nagpapaalis papunta sa Oman." 28 Indeed, Agustin played a pivotal role in the operations of the recruitment
agency, working together with the Goce couple.

There is illegal recruitment when one gives the impression of having the ability to send a worker abroad."

29

It is
undisputed that appellant gave complainants the distinct impression that she had the power or ability to send people
abroad for work such that the latter were convinced to give her the money she demanded in order to be so employed.

30

It cannot be denied that Agustin received from complainants various sums for purpose of their applications. Her act
of collecting from each of the complainants payment for their respective passports, training fees, placement fees,
medical tests and other sundry expenses unquestionably constitutes an act of recruitment within the meaning of the

law. In fact, appellant demanded and received from complainants amounts beyond the allowable limit of P5,000.00
under government regulations. It is true that the mere act of a cashier in receiving money far exceeding the amount
allowed by law was not considered per se as "recruitment and placement" in contemplation of law, but that was
because the recipient had no other participation in the transactions and did not conspire with her co-accused in
defrauding the victims. 31 That is not the case here.
Appellant further argues that "there is no evidence of receipts of collections/payments from complainants to
appellant." On the contrary, xerox copies of said receipts/vouchers were presented by the prosecution. For instance,
a cash voucher marked as Exhibit D, 32 showing the receipt of P10,000.00 for placement fee and duly signed by
appellant, was presented by the prosecution. Another receipt, identified as Exhibit E, 33 was issued and signed by
appellant on February 5, 1987 to acknowledge receipt of P4,000.00 from Rogelio and Ramona Salado for "processing of
documents for Oman." Still another receipt dated March 10, 1987 and presented in evidence as Exhibit F, shows that
appellant received from Ernesto Alvarez P2,000.00 for "processing of documents for Oman." 34

Apparently, the original copies of said receipts/vouchers were lost, hence only xerox copies thereof were presented
and which, under the circumstances, were admissible in evidence. When the original writing has been lost or
destroyed or cannot be produced in court, upon proof of its execution and loss or destruction, or unavailability, its
contents may be proved by a copy or a recital of its contents in some authentic document, or by the recollection of
witnesses. 35
Even assuming arguendo that the xerox copies presented by the prosecution as secondary evidence are not
allowable in court, still the absence thereof does not warrant the acquittal of appellant. In People vs. Comia, 36where
this particular issue was involved, the Court held that the complainants' failure to ask for receipts for the fees they paid to
the accused therein, as well as their consequent failure to present receipts before the trial court as proof of the said
payments, is not fatal to their case. The complainants duly proved by their respective testimonies that said accused was
involved in the entire recruitment process. Their testimonies in this regard, being clear and positive, were declared
sufficient to establish that factum probandum.

Indeed, the trial court was justified and correct in accepting the version of the prosecution witnesses, their
statements being positive and affirmative in nature. This is more worthy of credit than the mere uncorroborated and
self-serving denials of appellant. The lame defense consisting of such bare denials by appellant cannot overcome
the evidence presented by the prosecution proving her guilt beyond reasonable doubt. 37
The presence of documentary evidence notwithstanding, this case essentially involves the credibility of witnesses
which is best left to the judgment of the trial court, in the absence of abuse of discretion therein. The findings of fact
of a trial court, arrived at only after a hearing and evaluation of what can usually be expected to be conflicting
testimonies of witnesses, certainly deserve respect by an appellate court. 38 Generally, the findings of fact of the trial
court on the matter of credibility of witnesses will not be disturbed on appeal.

39

In a last-ditch effort to exculpate herself from conviction, appellant argues that there is no proof of conspiracy
between her and the Goce couple as to make her liable for illegal recruitment. We do not agree. The evidence
presented by the prosecution clearly establish that appellant confabulated with the Goces in their plan to deceive the
complainants. Although said accused couple have not been tried and convicted, nonetheless there is sufficient basis
for appellant's conviction as discussed above.
In People vs. Sendon, 40 we held that the non-prosecution of another suspect therein provided no ground for the
appellant concerned to fault the decision of the trial court convicting her. The prosecution of other persons, equally or
more culpable than herein appellant, may come later after their true identities and addresses shall have been ascertained
and said malefactors duly taken into custody. We see no reason why the same doctrinal rule and course of procedure
should not apply in this case.

WHEREFORE, the appealed judgment of the court a quo is hereby AFFIRMED in toto, with costs against accusedappellant Nelly D. Agustin.
SO ORDERED.

G.R. No. 110524

July 29, 2002

DOUGLAS MILLARES and ROGELIO LAGDA, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME AGENCY, INC. and ESSO
INTERNATIONAL SHIPPING CO., LTD. respondents.
RESOLUTION
KAPUNAN, J.:
On March 14, 2000, the Court promulgated its decision in the above-entitled case, ruling in favor of the petitioners.
The dispositive portion reads, as follows:
WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993, of the National Labor
Relations Commission is hereby REVERSED and SET ASIDE and a new judgment is hereby rendered
ordering the private respondents to:
(1) Reinstate petitioners Millares and Lagda to their former positions without loss of seniority rights, and to
pay full backwages computed from the time of illegal dismissal to the time of actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners Millares and Lagda separation pay
equivalent to one month's salary for every year of service; and,
(3) Jointly and severally pay petitioners One Hundred Percent (100%) of their total credited contributions as
provided under the Consecutive Enlistment Incentive Plan.
SO ORDERED.1
A motion for reconsideration was consequently filed2 by the private respondents to which petitioners filed an
Opposition thereto.3 In a Minute Resolution dated June 28, 2000, the Court resolved to deny the motion for
reconsideration with finality.4 Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME) filed a
Motion for Leave to Intervene and to Admit a Motion for Reconsideration in Intervention. Private respondents,
meanwhile, also filed a Motion for Leave to File a Second Motion for Reconsideration of our decision.
In both motions, the private respondents and FAME respectively pray in the main that the Court reconsider its ruling
that "Filipino seafarers are considered regular employees within the context of Article 280 of the Labor Code." They
claim that the decision may establish a precedent that will adversely affect the maritime industry.
The Court resolved to set the case for oral arguments to enable the parties to present their sides.
To recall, the facts of the case are, as follows:
Petitioner Douglas Millares was employed by private respondent ESSO International Shipping Company
LTD. (Esso International, for brevity) through its local manning agency, private respondent Trans-Global
Maritime Agency, Inc. (Trans-Global, for brevity) on November 16, 1968 as a machinist. In 1975, he was
promoted as Chief Engineer which position he occupied until he opted to retire in 1989. He was then
receiving a monthly salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to August 7, 1989.
In a letter dated June 14, 1989, Michael J. Estaniel, President of private respondent Trans-Global, approved
the request for leave of absence. On June 21, 1989, petitioner Millares wrote G.S. Hanly, Operations
Manager of Exxon International Co., (now Esso International) through Michael J. Estaniel, informing him of
his intention to avail of the optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP)
considering that he had already rendered more than twenty (20) years of continuous service. On July 13,
1989 respondent Esso International, through W.J. Vrints, Employee Relations Manager, denied petitioner
Millares' request for optional retirement on the following grounds, to wit: (1) he was employed on a

contractual basis; (2) his contract of enlistment (COE) did not provide for retirement before the age of sixty
(60) years; and (3) he did not comply with the requirement for claiming benefits under the CEIP, i.e., to
submit a written advice to the company of his intention to terminate his employment within thirty (30) days
from his last disembarkation date.
On August 9, 1989, petitioner Millares requested for an extension of his leave of absence from August 9 to
24, 1989. On August 19, 1989, Roy C. Palomar, Crewing Manager, Ship Group A, Trans-global, wrote
petitioner Millares advising him that respondent Esso International "has corrected the deficiency in its
manpower requirement specifically in the Chief Engineer rank by promoting a First Assistant Engineer to this
position as a result of (his) previous leave of absence which expired last August 8, 1989. The adjustment in
said rank was required in order to meet manpower schedules as a result of (his) inability."
On September 26, 1989, respondent Esso International, through H. Regenboog, Personnel Administrator,
advised petitioner Millares that in view of his absence without leave, which is equivalent to abandonment of
his position, he had been dropped from the roster of crew members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by private respondent Esso International as wiper/oiler in
June 1969. He was promoted as Chief Engineer in 1980, a position he continued to occupy until his last
COE expired on April 10, 1989. He was then receiving a monthly salary of US$1,939.00.
On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989 up to the whole
month of August 1989. On June 14, 1989, respondent Trans-Global's President, Michael J. Estaniel,
approved petitioner Lagda's leave of absence from June 22, 1989 to July 20, 1989 and advised him to report
for re-assignment on July 21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager of respondent Esso
International, through respondent Trans-Global's President Michael J. Estaniel, informing him of his intention
to avail of the optional early retirement plan in view of his twenty (20) years continuous service in the
complaint.
On July 13, 1989, respondent Trans-global denied petitioner Lagda's request for availment of the optional
early retirement scheme on the same grounds upon which petitioner Millares request was denied.
On August 3, 1989, he requested for an extension of his leave of absence up to August 26, 1989 and the
same was approved. However, on September 27, 1989, respondent Esso International, through H.
Regenboog, Personnel Administrator, advised petitioner Lagda that in view of his "unavailability for
contractual sea service," he had been dropped from the roster of crew members effective September 1,
1989.
On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed as POEA (M) 89-109671, for illegal dismissal and non-payment of employee benefits against private respondents Esso
International and Trans-Global, before the POEA.5
On July 17, 1991, the POEA rendered a decision dismissing the complaint for lack of merit.
On appeal to the NLRC, the decision of the POEA was affirmed on June 1, 1993 with the following disquisition:
The first issue must be decided in the negative. Complainants-appellants, as seamen and overseas contract
workers are not covered by the term "regular employment" as defined under Article 280 of the Labor Code.
The POEA, which is tasked with protecting the rights of the Filipino workers for overseas employment to fair
and equitable recruitment and employment practices and to ensure their welfare, prescribes a standard
employment contract for seamen on board ocean-going vessels for a fixed period but in no case to exceed
twelve (12) months (Part 1, Sec. C). This POEA policy appears to be in consonance with the international
maritime practice. Moreover, the Supreme Court in Brent School, Inc. vs. Zamora, 181 SCRA 702, had held
that a fixed term is essential and natural appurtenance of overseas employment contracts to which the
concept of regular employment with all that it implies is not applicable, Article 280 of the Labor Code
notwithstanding. There is, therefore, no reason to disturb the POEA Administrator's finding that

complainants-appellants were hired on a contractual basis and for a definite period. Their employment is
thus governed by the contracts they sign each time they are re-hired and is terminated at the expiration of
the contract period.6
Undaunted, the petitioners elevated their case to this Court 7 and successfully obtained the favorable action, which is
now vehemently being assailed.
At the hearing on November 15, 2000, the Court defined the issues for resolution in this case, namely:
I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE EMPLOYMENTS ARE
TERMINATED EVERYTIME THEIR CONTRACTS OF EMPLOYMENT EXPIRE?
II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES, WERE THEY DISMISSED WITHOUT
JUST CAUSE SO AS TO BE ENTITLED TO REINSTATEMENT AND BACKWAGES, INCLUDING
PAYMENT OF 100% OF THEIR TOTAL CREDITED CONTRIBUTIONS TO THE CONSECUTIVE
ENLISTMENT INCENTIVE PLAN (CEIP)?
III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT FOR SEAFARERS ON BOARD
FOREIGN VESSELS (SEC. C., DURATION OF CONTRACT) PRECLUDE THE ATTAINMENT BY
SEAMEN OF THE STATUS OF REGULAR EMPLOYEES?
IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524 CONTRAVENE INTERNATIONAL
MARITIME LAW, ALLEGEDLY PART OF THE LAW OF THE LAND UNDER SECTION 2, ARTICLE II OF
THE CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A DEPARTURE FROM ITS RULING
INCOYOCA VS. NLRC (G.R. NO. 113658, March 31, 1995)?8
In answer to the private respondents' Second Motion for Reconsideration and to FAME's Motion for Reconsideration
in Intervention, petitioners maintain that they are regular employees as found by the Court in the March 14, 2000
Decision. Considering that petitioners performed activities which are usually necessary or desirable in the usual
business or trade of private respondents, they should be considered as regular employees pursuant to Article 280,
Par. 1 of the Labor Code.9 Other justifications for this ruling include the fact that petitioners have rendered over
twenty (20) years of service, as admitted by the private respondents; 10 that they were recipients of Merit Pay which
is an express acknowledgment by the private respondents that petitioners are regular and not just contractual
employees;11 that petitioners were registered under the Social Security System (SSS).
The petitioners further state that the case of Coyoca v. NLRC12 which the private respondents invoke is not
applicable to the case at bar as the factual milieu in that case is not the same. Furthermore, private respondents'
fear that our judicial pronouncement will spell the death of the manning industry is far from real. Instead, with the
valuable contribution of the manning industry to our economy, these seafarers are supposed to be considered as
"Heroes of the Republic" whose rights must be protected. 13 Finally, the first motion for reconsideration has already
been denied with finality by this Court and it is about time that the Court should write finis to this case.
The private respondents, on the other hand, contend that: (a) the ruling holding petitioners as regular employees
was not in accord with the decision in Coyoca v. NLRC, 243 SCRA 190; (b) Art. 280 is not applicable as what
applies is the POEA Rules and Regulations Governing Overseas Employment; (c) seafarers are not regular
employees based on international maritime practice; (d) grave consequences would result on the future of seafarers
and manning agencies if the ruling is not reconsidered; (e) there was no dismissal committed; (f) a dismissed
seafarer is not entitled to back wages and reinstatement, that being not allowed under the POEA rules and the
Migrant Workers Act; and, (g) petitioners are not entitled to claim the total amount credited to their account under
the CEIP.14
Meanwhile, Intervenor Filipino Association of Mariners Employment (FAME) avers that our decision, if not
reconsidered, will have negative consequences in the employment of Filipino Seafarers overseas which, in turn,
might lead to the demise of the manning industry in the Philippines. As intervenor FAME puts it:

xxx
7.1 Foreign principals will start looking for alternative sources for seafarers to man their ships. AS reported
by the BIMCO/ISF study, "there is an expectancy that there will be an increasing demand for (and supply of)
Chinese seafarers, with some commentators suggesting that this may be a long-term alternative to the
Philippines." Moreover, "the political changes within the former Eastern Bloc have made new sources of
supply available to the international market." Intervenor's recent survey among its members shows that 50
Philippine manning companies had already lost some 6,300 slots to other Asian, East Europe and Chinese
competition for the last two years;
7.2 The Philippine stands to lose an annual foreign income estimated at U.S. DOLLARS TWO HUNDRED
SEVENTY FOUR MILLION FIVE HUNDRED FORTY NINE THOUSAND (US$ 274,549,000.00) from the
manning industry and another US DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION SEVEN
HUNDRED SIX THOUSAND (US$ 4,650,760,000.00) from the land-based sector if seafarers and equally
situated land-based contract workers will be declared regular employees;
7.3 Some 195,917 (as of 1998) deployed overseas Filipino seafarers will be rendered jobless should we lose
the market;
7.4 Some 360 manning agencies (as of 30 June 2000) whose principals may no longer be doing business
with them will close their shops;
7.5 The contribution to the Overseas Worker's Welfare Administration by the sector, which is USD 25.00 per
contract and translates to US DOLLARS FOUR MILLION (US$ 4,000,000.00)annually, will be drastically
reduced. This is not to mention the processing fees paid to POEA, Philippine Regulatory Commission
(PRC), Department of Foreign Affairs (DFA) and Maritime Industry Authority (MARINA) for the
documentation of these seafarers;
7.6 Worst, some 195,917 (as of 1998) families will suffer socially and economically, as their breadwinners
will be rendered jobless; and
7.7 It will considerably slow down the government's program of employment generation, considering that, as
expected foreign employers will now avoid hiring Filipino overseas contract workers as they will become
regular employees with all its concomitant effects. 15
Significantly, the Office of the Solicitor General, in a departure from its original position in this case, has now taken
the opposite view. It has expressed its apprehension in sustaining our decision and has called for a re-examination
of our ruling.16
Considering all the arguments presented by the private respondents, the Intervenor FAME and the OSG, we agree
that there is a need to reconsider our position with respect to the status of seafarers which we considered as regular
employees under Article 280 of the Labor Code. We, therefore, partially grant the second motion for reconsideration.
In Brent School Inc. v. Zamora,17 the Supreme Court stated that Article 280 of the Labor Code does not apply to
overseas employment.
In the light of the foregoing description of the development of the provisions of the Labor Code bearing on
term or fixed-period employment that the question posed in the opening paragraph of this opinion should
now be addressed. Is it then the legislative intention to outlaw stipulations in employment contracts laying
down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on
this account be accorded legitimacy?
On the other hand, there is the gradual and progressive elimination of references to term or fixed-period
employment in the Labor Code, and the specific statement of the rule that:
Regular and Casual Employment The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be

deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or service to be
employee is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph;
provided that, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which he
is employed and his employment shall continue while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the
validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints
on the freedom of the parties to fix the duration of a contract, whatever its object, be it specific, goods or
services, except the general admonition against stipulations contrary to law, morals, good customs, public
order or public policy. Under the Civil code, therefore, and as a general proposition, fixed-term employment
contracts are not limited, as they are under the present Labor Code, to those by natural seasonal or for
specific projects with predetermined dates of completion; they also include those to which the parties by free
choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contract which may be neither for seasonal
work nor for specific projects, but to which a fixed term is an essential and natural appurtenance:
overseas employment contracts, for one, to which, whatever the nature of the engagement, the
concept of regular employment with all that it implies does not appear ever to have been
applied.Article 280 of the Labor Code notwithstanding also appointments to the positions of dean, assistant
dean, college secretary, principal, and other administrative offices in educational institutions, which are by
practice or tradition rotated among the faculty members, and where fixed terms are a necessity without
which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy
Instructions. No. 8 of the Minister of Labor implicitly recognize that certain company officials may be elected
for what would amount to fix periods, at the expiration of which they would have to stand down, in providing
that these officials, xxx may lose their jobs as president, executive vice-president or vice-president, etc.
because the stockholders or the board of directors for one reason or another did not reelect them.
There can of course be no quarrel with the proposition that where from the circumstances it is apparent that
periods have been imposed to preclude acquisition of tenurial security by the employee, they should be
struck down or disregard as contrary to public policy, morals, etc. But where no such intent to circumvent the
law is shown, or stated otherwise, where the reason for the law does not exists, e.g., where it is indeed the
employee himself who insists upon a period or where the nature of the engagement is such that, without
being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement
fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the
scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee
to be secured in xxx his employment
As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a
narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the
lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable
distinctions, the right of an employee to freely stipulate within his employer the duration of his engagement, it
logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a
reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's
using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to
spite the face or, more relevantly, curing a headache by lopping of the head.
It is a salutary principle in statutory construction that there exists a valid presumption that
undesirable consequences were never intended by a legislative measure, and that a construction of
which the statute is fairly susceptible is favored, which will avoid all objectionable, mischievous,
indefensible, wrongful, evil, and injurious consequences."

Nothing is better settled than that courts are not to give words a meaning which would lead to absurd
or unreasonable consequences. That is a principle that goes back to In re Allen decided on October
27, 1902, where it was held that a literal interpretation is to be rejected if it would be unjust or lead to
absurd results. That is a strong argument against its adoption. The words of Justice Laurel are
particularly apt. Thus: "the appellants would lead to an absurdity is another argument for rejecting it."
xxx We have, here, then a case where the true intent of the law is clear that calls for the application
of the cardinal rule of statutory construction that such intent of spirit must prevail over the letter
thereof, for whatever is within the spirit of a statute is within the statute, since adherence to the letter
would result in absurdity, injustice and contradictions and would defeat the plain and vital purpose of
the statute.
Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept
of regular employment as defined therein should be construed to refer to the substantive evil that
the Code itself has singled out; agreements entered into precisely to circumvent security of tenure.
It should have no application to instances where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former over the latter. Unless
thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by
its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
Again, in Pablo Coyoca v. NLRC,18 the Court also held that a seafarer is not a regular employee and is not entitled
to separation pay. His employment is governed by the POEA Standard Employment Contract for Filipino Seamen.
x x x. In this connection, it is important to note that neither does the POEA standard employment contract for
Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing Overseas
Employment and the said Rules do not provide for separation or termination pay. What is embodied in
petitioner's contract is the payment of compensation arising from permanent partial disability during the
period of employment. We find that private respondent complied with the terms of contract when it paid
petitioner P42,315.00 which, in our opinion, is a reasonable amount, as compensation for his illness.
Lastly, petitioner claims that he eventually became a regular employee of private respondent and thus falls
within the purview of Articles 284 and 95 of the Labor Code. In support of this contention, petitioner cites the
case of Worth Shipping Service, Inc., et al. v. NLRC, et al., wherein we held that the crew members of the
shipping company had attained regular status and thus, were entitled to separation pay. However, the facts
of said case differ from the present. In Worth, we held that the principal and agent had "operational control
and management" over the MV Orient Carrier and thus, were the actual employers of their crew members.
From the foregoing cases, it is clear that seafarers are considered contractual employees. They can not be
considered as regular employees under Article 280 of the Labor Code. Their employment is governed by the
contracts they sign everytime they are rehired and their employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose
employment has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season. 19 We need not depart from the rulings of the Court in
the two aforementioned cases which indeed constitute stare decisis with respect to the employment status of
seafarers.
Petitioners insist that they should be considered regular employees, since they have rendered services which are
usually necessary and desirable to the business of their employer, and that they have rendered more than

twenty(20) years of service. While this may be true, the Brent case has, however, held that there are certain forms
of employment which also require the performance of usual and desirable functions and which exceed one year but
do not necessarily attain regular employment status under Article 280. 20 Overseas workers including seafarers fall
under this type of employment which are governed by the mutual agreements of the parties.
In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are governed by the Rules and
Regulations of the POEA. The Standard Employment Contract governing the employment of All Filipino seamen on
Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of
seamen shall be for a fixed period. And in no case should the contract of seamen be longer than 12 months. It
reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to exceed 12 months and shall be stated
in the Crew Contract. Any extension of the Contract period shall be subject to the mutual consent of the
parties.
Moreover, it is an accepted maritime industry practice that employment of seafarers are for a fixed period only.
Constrained by the nature of their employment which is quite peculiar and unique in itself, it is for the mutual interest
of both the seafarer and the employer why the employment status must be contractual only or for a certain period of
time. Seafarers spend most of their time at sea and understandably, they can not stay for a long and an indefinite
period of time at sea.21 Limited access to shore society during the employment will have an adverse impact on the
seafarer. The national, cultural and lingual diversity among the crew during the COE is a reality that necessitates the
limitation of its period.22
Petitioners make much of the fact that they have been continually re-hired or their contracts renewed before the
contracts expired (which has admittedly been going on for twenty (20) years). By such circumstance they claim to
have acquired regular status with all the rights and benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was dictated by practical
considerations that experienced crew members are more preferred. Petitioners were only given priority or
preference because of their experience and qualifications but this does not detract the fact that herein petitioners
are contractual employees. They can not be considered regular employees. We quote with favor the explanation of
the NLRC in this wise:
xxx The reference to "permanent" and "probationary" masters and employees in these papers is a misnomer
and does not alter the fact that the contracts for enlistment between complainants-appellants and
respondent-appellee Esso International were for a definite periods of time, ranging from 8 to 12 months.
Although the use of the terms "permanent" and "probationary" is unfortunate, what is really meant is "eligible
for-re-hire". This is the only logical conclusion possible because the parties cannot and should not violate
POEA's requirement that a contract of enlistment shall be for a limited period only; not exceeding twelve
(12)months.23
From all the foregoing, we hereby state that petitioners are not considered regular or permanent employees under
Article 280 of the Labor Code. Petitioners' employment have automatically ceased upon the expiration of their
contracts of enlistment (COE). Since there was no dismissal to speak of, it follows that petitioners are not entitled to
reinstatement or payment of separation pay or backwages, as provided by law.
With respect to the benefits under the Consecutive Enlistment Incentive Plan (CEIP), we hold that the petitioners are
still entitled to receive 100% of the total amount credited to him under the CEIP. Considering that we have declared
that petitioners are contractual employees, their compensation and benefits are covered by the contracts they
signed and the CEIP is part and parcel of the contract.
The CEIP was formulated to entice seamen to stay long in the company. As the name implies, the program serves
as an incentive for the employees to renew their contracts with the same company for as long as their services were
needed. For those who remained loyal to them, they were duly rewarded with this additional remuneration under the
CEIP, if eligible. While this is an act of benevolence on the part of the employer, it can not, however, be denied that

this is part of the benefits accorded to the employees for services rendered. Such right to the benefits is vested upon
them upon their eligibility to the program.
The CEIP provides that an employee becomes covered under the Plan when he completes thirty-six (36) months or
an equivalent of three (3) years of credited service with respect to employment after June 30, 1973. 24 Upon
eligibility, an amount shall be credited to his account as it provides, among others:
III. Distribution of Benefits
A. Retirement, Death and Disability
When the employment of an employee terminates because of his retirement, death or permanent and total
disability, a percentage of the total amount credited to his account will be distributed to him (or his eligible
survivor(s) in accordance with the following:
Reason for Termination

Percentage

a) Attainment of mandatory retirement age of 60.

100%

b) Permanent and total disability, while under

contract, that is not due to accident or
misconduct.

100%

c) Permanent and total disability, while under

contract, that is due to accident, and not due to
misconduct.

100%

xxx
B. Voluntary Termination
When an employee voluntary terminates his employment with at least 36 months of credited service without
any misconduct on his part, 18 percent of the total amount credited to his account, plus an additional of
one percent for each month (up to a maximum of 164 months of credited service in excess of 36, will be
distributed to him provided (1) the employee has completed his last Contract of Enlistment and (2) employee
advises the company in writing, within 30 days, from his last disembarkation date, of his intention to
terminate his employment. (To advise the Company in writing means that the original letter must be sent to
the Company's agent in the Philippines, a copy sent to the Company in New York).
xxx
C. Other Terminations
When the employment of an employee is terminated by the Company for a reason other than one in A and B
above, without any misconduct on his part, a percentage of the total amount credited to his account will be
distributed to him in accordance with the following.
Credited Service

Percentage

36 months

50%

48 "

75%

60 "

100%

When the employment of an employee is terminated due to his poor-performance, misconduct,

unavailability, etc., or if employee is not offered re-engagement for similar reasons, no distribution of any
portion of employee's account will ever be made to him (or his eligible survivor[s]).

It must be recalled that on June 21, 1989, Millares wrote a letter to his employer informing his intention to avail of
the optional retirement plan under the CEIP considering that he has rendered more than twenty (20) years of
continuous service. Lagda, likewise, manifested the same intention in a letter dated June 26, 1989. Private
respondent, however, denied their requests for benefits under the CEIP since: (1) the contract of enlistment (COE)
did not provide for retirement before 60 years of age; and that (2) petitioners failed to submit a written notice of their
intention to terminate their employment within thirty (30) days from the last disembarkation date pursuant to the
provision on Voluntary Termination of the CEIP. Petitioners were eventually dropped from the roster of crew
members and on grounds of "abandonment" and "unavailability for contractual sea service", respectively, they were
disqualified from receiving any benefits under the CEIP. 25
In our March 14, 2000 Decision, we, however, found that petitioners Millares and Lagda were not guilty of
"abandonment" or "unavailability for contractual sea service," as we have stated:
The absence of petitioners was justified by the fact that they secured the approval of private respondents to
take a leave of absence after the termination of their last contracts of enlistment. Subsequently, petitioners
sought for extensions of their respective leaves of absence. Granting arguendo that their subsequent
requests for extensions were not approved, it cannot be said that petitioners were unavailable or had
abandoned their work when they failed to report back for assignment as they were still questioning the
denial of private respondents of their desire to avail of the optional early retirement policy, which they
believed in good faith to exist.26
Neither can we consider petitioners guilty of poor performance or misconduct since they were recipients of Merit Pay
Awards for their exemplary performances in the company.
Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989 (for Lagda) which private respondent
considered as belated written notices of termination, we find such assertion specious. Notwithstanding, we could
conveniently consider the petitioners eligible under Section III-B of the CEIP (Voluntary Termination), but this would,
however, award them only a measly amount of benefits which to our mind, the petitioners do not rightfully deserve
under the facts and circumstances of the case. As the CEIP provides:
III. Distribution of Benefits
xxx
E. Distribution of Accounts

When an employee terminates under conditions that would qualify for a distribution of more than one
specified in A, B or C above, the largest single amount, only, will be distributed.
Since petitioners' termination of employment under the CEIP do not fall under Section III-A (Retirement, Death and
Disability) or Section III-B (Voluntary Termination), nor could they be they be considered under the second
paragraph of Section III-C, as earlier discussed; it follows that their termination falls under the first paragraph of
Section III-C for which they are entitled to 100% of the total amount credited to their accounts. The private
respondents can not now renege on their commitment under the CEIP to reward deserving and loyal employees as
the petitioners in this case.
In taking cognizance of private respondent's Second Motion for Reconsideration, the Court hereby suspends the
rules to make them comformable to law and justice and to subserve an overriding public interest.
IN VIEW OF THE FOREGOING, the Court Resolved to Partially GRANT Private Respondent's Second Motion for
Reconsideration and Intervenor FAMES' Motion for Reconsideration in Intervention. The Decision of the National
Labor Relations Commission dated June 1, 1993 is hereby REINSTATED with MODIFICATION. The Private
Respondents, Trans-Global Maritime Agency, Inc. and Esso International Shipping Co., Ltd. are hereby jointly and
severally ORDERED to pay petitioners One Hundred Percent (100%) of their total credited contributions as provided
under the Consecutive Enlistment Incentive Plan(CEIP).
SO ORDERED.

G.R. No. 127195

August 25, 1999

MARSAMAN MANNING AGENCY, INC. and DIAMANTIDES MARITIME, INC., petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and WILFREDO T. CAJERAS, respondents.
BELLOSILLO, J.:
MARSAMAN MANNING AGENCY, INC. (MARSAMAN) and its foreign principal DIAMANTIDES MARITIME, INC.
(DIAMANTIDES) assail the Decision of public respondent National Labor Relations Commission dated 16
September 1996 as well as its Resolution dated 12 November 1996 affirming the Labor Arbiter's decision finding
them guilty of illegal dismissal and ordering them to pay respondent Wilfredo T. Cajeras salaries corresponding to
the unexpired portion of his employment contract, plus attorney's fees.
Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local manning agent of petitioner
DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned and operated by DIAMANTIDES, for a contract
period of ten (10) months with a monthly salary of US$600.00, evidenced by a contract between the parties dated
15 June 1995. Cajeras started work on 8 August 1995 but less than two (2) months later, or on 28 September 1995,
he was repatriated to the Philippines allegedly by "mutual consent."
On 17 November 1995 private respondent Cajeras filed a complaint for illegal dismissal against petitioners with the
NLRC National Capital Region Arbitration Branch alleging that he was dismissed illegally, denying that his
repatriation was by mutual consent, and asking for his unpaid wages, overtime pay, damages, and attorney's
fees.1 Cajeras alleged that he was assigned not only as Chief Cook Steward but also as assistant cook and
messman in addition to performing various inventory and requisition jobs. Because of his additional assignments he
began to feel sick just a little over a month on the job constraining him to request for medical attention. He was
refused at first by Capt. Kouvakas Alekos, master of the MV Prigipos, who just ordered him to continue working.
However a day after the ship's arrival at the port of Rotterdam, Holland, on 26 September 1995 Capt. Alekos
relented and had him examined at the Medical Center for Seamen. However, the examining physician, Dr. Wden
Hoed, neither apprised private respondent about the diagnosis nor issued the requested medical certificate allegedly
because he himself would forward the results to private respondent's superiors. Upon returning to the vessel, private
respondent was unceremoniously ordered to prepare for immediate repatriation the following day as he was said to
be suffering from a disease of unknown origin.
1wphi1.nt

On 28 September 1995 he was handed his Seaman's Service Record Book with the following entry: "Cause of
discharge Mutual Consent."2 Private respondent promptly objected to the entry but was not able to do anything
more as he was immediately ushered to a waiting taxi which transported him to the Amsterdam Airport for the return
flight to Manila. After his arrival in Manila on 29 September 1995. Cajeras complained to MARSAMAN but to no
avail.3
MARSAMAN and DIAMANTIDES, on the other hand, denied the imputation of illegal dismissal. They alleged that
Cajeras approached Capt. Alekos on 26 September 1995 and informed the latter that he could not sleep at night
because he felt something crawling over his body. Furthermore, Cajeras reportedly declared that he could no longer
perform his duties and requested for repatriation. The following paragraph in the vessel's Deck Log was allegedly
entered by Capt. Alekos, to wit:
Cajeras approached me and he told me that he cannot sleep at night and that he feels something crawling
on his body and he declared that he can no longer perform his duties and he must be repatriated. 4
Private respondent was then sent to the Medical Center for Seamen at Rotterdam where he was examined by Dr.
Wden Hoed whose diagnosis appeared in a Medical Report as "paranoia" and "other mental
problems."5Consequently, upon Dr. Hoed's recommendation, Cajeras was repatriated to the Philippines on 28
September 1995.
On 29 January 1996 Labor Arbiter Ernesto S. Dinopol resolved the dispute in favor of private respondent Cajeras
ruling that the latter's discharge from the MV Prigipos allegedly by "mutual consent" was not proved by convincing
evidence. The entry made by Capt. Alekos in the Deck Log was dismissed as of little probative value because it was
a mere unilateral act unsupported by any document showing mutual consent of Capt. Alekos, as master of the MV

Prigipos, and Cajeras to the premature termination of the overseas employment contract as required by Sec. H of
the Standard Employment Contract Governing the Employment of all Filipino Seamen on Board Ocean-Going
Vessels. Dr. Hoed's diagnosis that private respondent was suffering from "paranoia" and "other mental problems"
was likewise dismissed as being of little evidentiary value because it was not supported by evidence on how the
paranoia was contracted, in what stage it was, and how it affected respondent's functions as Chief Cook Steward
which, on the contrary, was even rated "Very Good" in respondent's Service Record Book. Thus, the Labor Arbiter
disposed of the case as follows:
WHEREFORE, judgment is hereby rendered declaring the repatriation and dismissal of complaint Wilfredo
T. Cajeras as illegal and ordering respondents Marsaman Manning Agency, Inc. and Diamantides Maritime,
Inc. to jointly and severally pay complainant the sum of USD 5,100.00 or its peso equivalent at the time of
payment plus USD 510.00 as 10% attorney's fees it appearing that complainant had to engage the service
of counsel to protect his interest in the prosecution of this case.
The claims for nonpayment of wages and overtime pay are dismissed for having been withdrawn (Minutes,
December 18, 1995). The claims for damages are likewise dismissed for lack of merit, since no evidence
was presented to show that bad faith characterized the dismissal. 6
Petitioners appealed to the NLRC.7 On 16 September 1996 the NLRC affirmed the appealed findings and
conclusions of the Labor Arbiter.8 The NLRC subscribed to the view that Cajeras' repatriation by alleged mutual
consent was not proved by petitioners, especially after noting that private respondent did not actually sign his
Seaman's Service Record Book to signify his assent to the repatriation as alleged by petitioners. The entry made by
Capt. Alekos in the Deck Log was not considered reliable proof that private respondent agreed to his repatriation
because no opportunity was given the latter to contest the entry which was against his interest. Similarly, the
Medical Report issued by Dr. Hoed of Holland was dismissed as being of dubious value since it contained only a
sweeping statement of the supposed ailment of Cajeras without any elaboration on the factual basis thereof.
Petitioners' motion for reconsideration was denied by the NLRC in its Resolution dated 12 November 1996. 9Hence,
this petition contending that the NLRC committed grave abuse of discretion: (a) in not according full faith and credit
to the official entry by Capt. Alekos in the vessel's Deck Log conformably with the rulings in Haverton Shipping
Ltd. v. NLRC 10 and Wallem Maritime Services, Inc. v. NLRC;11 (b) in not appreciating the Medical Report issued by
Dr. Wden Hoed as conclusive evidence that respondent Cajeras was suffering from paranoia and other mental
problems; (c) in affirming the award of attorney's fees despite the fact that Cajeras' claim for exemplary damages
was denied for lack of merit; and, (d) in ordering a monetary award beyond the maximum of three (3) months' salary
for every year of service set by RA 8042.
We deny the petition. In the Contract of Employment 12 entered into with private respondent, petitioners convenanted
strict and faithful compliance with the terms and conditions of the Standard Employment Contract approved by the
POEA/DOLE13 which provides:
1. The employment of the seaman shall cease upon expiration of the contract period indicated in the Crew
Contract unless the Master and the Seaman, by mutual consent, in writing agree to an early termination . . . .
(emphasis our).
Clearly, under the foregoing, the employment of a Filipino seaman may be terminated prior to the expiration of the
stipulated period provided that the master and the seaman (a) mutually consent thereto and (b) reduce their
consent in writing.
In the instant case, petitioners do not deny the fact that they have fallen short of the requirement. No document
exists whereby Capt. Alekos and private respondent reduced to writing their alleged "mutual consent" to the
termination of their employment contract. Instead, petitioners presented the vessel's Deck Log wherein an
entryunilaterally made by Capt. Alekos purported to show that private respondent himself asked for his repatriation.
However, the NLRC correctly dismissed its evidentiary value. For one thing, it is a unilateral act which is vehemently
denied by private respondent. Secondly, the entry in no way satisfies the requirement of a bilateral documentation to
prove early termination of an overseas employment contract by mutual consent required by the Standard
Employment Contract. Hence, since the latter sets the minimum terms and conditions of employment for the
protection of Filipino seamen subject only to the adoption of better terms and conditions over and above the
minimum standards,14 the NLRC could not be accused of grave abuse of discretion in not accepting any thing less.

However petitioners contend that the entry should be considered prima facie evidence that respondent himself
requested his repatriation conformably with the rulings in Haverton Shipping Ltd. v. NLRC 15 and Abacast Shipping
and Management Agency, Inc. v. NLRC.16 Indeed, Haverton says that a vessel's log book is prima facieevidence of
the facts stated therein as they are official entries made by a person in the performance of a duty required by law.
However, this jurisprudential principle does not apply to win the case for petitioners. In Wallem Maritime
Services, Inc. v. NLRC 17 the Haverton ruling was not given unqualified application because the log book presented
therein was a mere typewritten collation of excerpts from what could be the log book. 18 The Court reasoned that
since the log book was the only piece of evidence presented to prove just cause for the termination of respondent
therein, the log book had to be duly identified and authenticated lest an injustice would result from a blind adoption
of its contents which were but prima facie evidence of the incidents stated therein.
In the instant case, the disputed entry in the Deck Log was neither authenticated nor supported by credible
evidence. Although petitioners claim that Cajeras signed his Seaman's Service Record Book to signify his
conformity to the repatriation, the NLRC found the allegation to be actually untrue since no signature of private
respondent appeared in the Record Book.
Neither could the "Medical Report" prepared by Dr. Hoed be considered corroborative and conclusive evidence that
private respondent was suffering from "paranoia" and "other mental problems," supposedly just causes for his
repatriation. Firstly, absolutely no evidence, not even an allegation, was offered to enlighten the NLRC or this Court
as to Dr. Hoed's qualifications to diagnose mental illnesses. It is a matter of judicial notice that there are various
specializations in medical science and that a general practitioner is not competent to diagnose any and all kinds of
illnesses and diseases. Hence, the findings of doctors who are not proven experts are not binding on this
Court.19 Secondly, the Medical Report prepared by Dr. Hoed contained only a general statement that private
respondent was suffering from "paranoia" and "other mental problems" without providing the details on how the
diagnosis was arrived at or in what stage the illness was. If Dr. Hoed indeed competently examined private
respondent then he would have been able to discuss at length the circumstances and precedents of his diagnosis.
Petitioners cannot rely on the presumption of regularity in the performance of official duties to make the Medical
Report acceptable because the presumption applies only to public officers from the highest to the lowest in the
service of the Government, departments, bureaus, offices, and/or its political subdivisions,20 which Dr. Wden Hoed
was not shown to be. Furthermore, neither did petitioners prove that private respondent was incompetent or
continuously incapacitated for the duties for which he was employed by reason of his alleged mental state. On the
contrary his ability as Chief Cook Steward, up to the very moment of his repatriation, was rated "Very Good" in his
Seaman's Service Record Book as correctly observed by public respondent.
Considering all the foregoing we cannot ascribe grave abuse of discretion on the part of the NLRC in ruling that
petitioners failed to prove just cause for the termination of private respondent's overseas employment. Grave abuse
of discretion is committed only when the judgment is rendered in a capricious, whimsical, arbitrary or despotic
manner, which is not true in the present case. 21
With respect to attorney's fees, suffice it to say that in actions for recovery of wages or where an employee was
forced to litigate and thus incurred expenses to protect his rights and interests, a maximum award of ten percent
(10%) of the monetary award by way of attorney's fees is legally and morally justifiable under Art. 111 of the Labor
Code,22 Sec. 8, Rule VIII, Book III of its Implementing Rules, 23 and par. 7, Art. 220824 of the Civil Code.25The case
of Albenson Enterprises Corporation v. Court of Appeals26 cited by petitioners in arguing against the award of
attorney's fees is clearly not applicable, being a civil action for damages which deals with only one of the eleven (11)
instances when attorney's fees could be recovered under Art. 2208 of the Civil Code.
Lastly, on the amount of salaries due private respondent, the rule has always been that an illegally dismissed worker
whose employment is for a fixed period is entitled to payment of his salaries corresponding to the unexpired portion
of his employment.27 However on 15 July 1995, RA 8042 otherwise known as the "Migrant Workers and Overseas
Filipinos Act of 1995" took effect, Sec. 10 of which provides:
Sec. 10. 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 the employment contract or
for three (3) months for every year of the unexpired term whichever is less (emphasis ours).

The Labor Arbiter, rationalizing that the aforesaid law did not apply since it became effective only one (1) month
after respondent's overseas employment contract was entered into on 15 June 1995, simply awarded private
respondent his salaries corresponding to the unexpired portion of his employment contract, i.e., for 8.6 months. The
NLRC affirmed the award and the Office of the Solicitor General (OSG) fully agreed. But petitioners now insist that
Sec. 10, RA 8042 is applicable because although private respondent's contract of employment was entered into
before the law became effective his alleged cause of action, i.e., his repatriation on 28 September 1995 without just,
valid or authorized cause, occurred when the law was already in effect. Petitioners' purpose in so arguing is to
invoke the law in justifying a lesser monetary award to private respondent, i.e., salaries for three (3) months only
pursuant to the last portion of Sec. 10 as opposed to the salaries for 8.6 months awarded by the Labor Arbiter and
affirmed by the NLRC.
We agree with petitioners that Sec. 10, RA 8042, applies in the case of private respondent and to all overseas
contract workers dismissed on or after its effectivity on 15 July 1995 in the same way that Sec. 34,28 RA 6715,29is
made applicable to locally employed workers dismissed on or after 21 March 1989. 30 However, we cannot subscribe
to the view that private respondent is entitled to three (3) months' salary only. 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 . . . 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 effect31 since the law-making
body is presumed to know the meaning of the words employed in the statue and to have used them advisedly. 32 Ut
res magis valeat quam pereat.33
WHEREFORE, the questioned Decision and Resolution dated 16 September 1996 and 12 November 1996,
respectively, of public respondent National Labor Relations Commission are AFFIRMED. Petitioners MARSAMAN
MANNING AGENCY, INC., and DIAMANTIDES MARITIME, INC., are ordered, jointly and severally, to pay private
respondent WILFREDO T. CAJERAS his salaries for the unexpired portion of his employment contract or
USD$5,100.00, reimburse the latter's placement fee with twelve percent (12%) interest per annum conformably with
Sec. 10 of RA 8042, as well as attorney's fees of ten percent (10%) of the total monetary award. Costs against
petitioners.
1wphi1 .nt

SO ORDERED.

G.R. No. 167614

March 24, 2009

ANTONIO M. SERRANO, Petitioner,

vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their
earnings have built houses, provided health care, equipped schools and planted the seeds of businesses. They
have woven together the world by transmitting ideas and knowledge from country to country. They have provided
the dynamic human link between cultures, societies and economies. Yet, only recently have we begun to
understand not only how much international migration impacts development, but how smart public policies can
magnify this effect.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act
(R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or
for three (3) months for every year of the unexpired term, whichever is less.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but exacerbates
the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal to their lump-sum salary
either for the unexpired portion of their employment contract "or for three months for every year of the unexpired
term, whichever is less" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutional
rights in that it impairs the terms of their contract, deprives them of equal protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004
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 Complaint 9 against respondents for constructive dismissal and for
payment of his money claims in the total amount of US$26,442.73, broken down as follows:
May
27/31,
1998 (5
days)
incl.
Leave
pay

US$ 413.90

June
01/30,
1998

2,590.00

July
01/31,
1998

2,590.00

August
01/31,
1998

2,590.00

Sept.
01/30,
1998

2,590.00

Oct.
01/31,
1998

2,590.00

Nov.
01/30,
1998

2,590.00

Dec.
01/31,
1998

2,590.00

Jan.
01/31,
1999

2,590.00

Feb.
01/28,
1999

2,590.00

Mar.
1/19,
1999
(19

1,640.00

days)
incl.
leave
pay
-------------------------------------------------------------------------------25,382.23
Amount
adjusted
to chief
mate's
salary
(March
19/31,
1998 to
April
1/30,
1998) +

1,060.5010

---------------------------------------------------------------------------------------------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:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the
complainant (petitioner) by the respondents in the above-entitled case was illegal and the respondents are
hereby ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the
rate of exchange prevailing at the time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED
SEVENTY U.S. DOLLARS (US $8,770.00), representing the complainants salary for three (3) months
of the unexpired portion of the aforesaid contract of employment.
1avvphi1

The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in Philippine
Currency, based on the rate of exchange prevailing at the time of payment, the amount of FORTY FIVE U.S.
DOLLARS (US$ 45.00),12 representing the complainants claim for a salary differential. In addition, the
respondents are hereby ordered to pay the complainant, jointly and severally, in Philippine Currency, at the
exchange rate prevailing at the time of payment, the complainants (petitioner's) claim for attorneys fees
equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under this Decision.
The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary
period of three months only -- rather than the entire unexpired portion of nine months and 23 days of
petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of
US$2,590.00, consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month, fixed
overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month." 14

Respondents 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 Commission 17 that in case of illegal
dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts. 18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered to pay
complainant, jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of
payment the following:
1. Three (3) months salary
$1,400 x 3 US$4,200.00
2. Salary differential

45.00

US$4,245.00
3. 10% Attorneys fees

424.50

TOTAL US$4,669.50
The other findings are affirmed.
SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable
salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 "does not provide for the award of overtime
pay, which should be proven to have been actually performed, and for vacation leave pay." 20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject
clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge against the subject
clause.24 After initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed
by this Court in its Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as G.R. No.
151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the applicable salary
rate; however, the CA skirted the constitutional issue raised by petitioner. 25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to this Court on the
following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision
of the Supreme Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired
portion of his contract of employment instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their interpretation of
Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals gravely erred in law when it failed to

discharge its judicial duty to decide questions of substance not theretofore determined by the Honorable Supreme
Court, particularly, the constitutional issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas workers to three (3)
months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals
gravely erred in law in excluding from petitioners award the overtime pay and vacation pay provided in his contract
since under the contract they form part of his salary. 28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he
intends to make use of the monetary award for his medical treatment and medication. 29 Required to comment,
counsel for petitioner filed a motion, urging the court to allow partial execution of the undisputed monetary award
and, at the same time, praying that the constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the
petition mindful of the extreme importance of the constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise
not disputed is the salary differential of US$45.00 awarded to petitioner in all three fora. What remains disputed is
only the computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate
of US$1,400.00 covering the period of three months out of the unexpired portion of nine months and 23 days of his
employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00
awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his
salaries for the entire nine months and 23 days left of his employment contract, computed at the monthly rate of
US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to
negotiate for and stipulate in their overseas employment contracts a determinate employment period and a fixed
salary package.32 It also impinges on the equal protection clause, for it treats OFWs differently from local Filipino
workers (local workers) by putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of
illegal dismissal, while setting no limit to the same monetary award for local workers when their dismissal is declared
illegal; that the disparate treatment is not reasonable as there is no substantial distinction between the two
groups;33 and that it defeats Section 18,34 Article II of the Constitution which guarantees the protection of the rights
and welfare of all Filipino workers, whether deployed locally or overseas. 35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing
jurisprudence on the issue of money claims of illegally dismissed OFWs. Though there are conflicting rulings on this,
petitioner urges the Court to sort them out for the guidance of affected OFWs. 36
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but
to benefit local placement agencies. He marks the statement made by the Solicitor General in his
Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that
jurisdiction over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation.
Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for
the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying

Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis
supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause sacrifices the wellbeing of OFWs. Not only that, the provision makes foreign employers better off than local employers because in
cases involving the illegal dismissal of employees, foreign employers are liable for salaries covering a maximum of
only three months of the unexpired employment contract while local employers are liable for the full lump-sum
salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of backwages they have to give
their employees they have illegally dismissed, following well-entrenched and unequivocal jurisprudence on the
matter. On the other hand, foreign employers will only be limited to giving the illegally dismissed migrant workers the
maximum of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that can be more
than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the salaries
and other emoluments he is entitled to under his fixed-period employment contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should not be entertained,
for this was belatedly interposed by petitioner in his appeal before the CA, and not at the earliest opportunity, which
was when he filed an appeal before the NLRC. 40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not
have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having preceded petitioner's contract,
the provisions thereof are deemed part of the minimum terms of petitioner's employment, especially on the matter of
money claims, as this was not stipulated upon by the parties. 42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such
that their rights to monetary benefits must necessarily be treated differently. The OSG enumerates the essential
elements that distinguish OFWs from local workers: first, while local workers perform their jobs within Philippine
territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction,
or against whom it is almost impossible to enforce judgment; and second, as held in Coyoca v. National Labor
Relations Commission43 and Millares v. National Labor Relations Commission,44 OFWs are contractual employees
who can never acquire regular employment status, unlike local workers who are or can become regular employees.
Hence, the OSG posits that there are rights and privileges exclusive to local workers, but not available to OFWs;
that these peculiarities make for a reasonable and valid basis for the differentiated treatment under the subject
clause of the money claims of OFWs who are illegally dismissed. Thus, the provision does not violate the equal
protection clause nor Section 18, Article II of the Constitution. 45
Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the
solidary liability of placement agencies for this "redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that
migrant workers are properly deployed and are employed under decent and humane conditions." 46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the
Congress, it does so only when these conditions obtain: (1) that there is an actual case or controversy involving a
conflict of rights susceptible of judicial determination; 47 (2) that the constitutional question is raised by a proper
party48 and at the earliest opportunity;49 and (3) that the constitutional question is the very lis mota of the
case,50otherwise the Court will dismiss the case or decide the same on some other ground. 51

Without a doubt, there exists in this case an actual controversy directly involving petitioner who is personally
aggrieved that the labor tribunals and the CA computed his monetary award based on the salary period of three
months only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement that a constitutional issue
be raised at the earliest opportunity entails the interposition of the issue in the pleadings before acompetent 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 forCertiorari before the
CA.54 Nonetheless, the issue is deemed seasonably raised because it is not the NLRC but the CA which has the
competence to resolve the constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial
function its function in the present case is limited to determining questions of fact to which the legislative policy of
R.A. No. 8042 is to be applied and to resolving such questions in accordance with the standards laid down by the
law itself;55 thus, its foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the validity
of its provisions. The CA, on the other hand, is vested with the power of judicial review or the power to declare
unconstitutional a law or a provision thereof, such as the subject clause.56Petitioner's interposition of the
constitutional issue before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to take up
the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because the
monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-month employment
contract, and not just for a period of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his
employment and the fixed salary package he will receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
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.61 Police power legislations adopted by the State to promote the health, morals, peace, education, good
order, safety, and general welfare of the people are generally applicable not only to future contracts but even to

those already in existence, for all private contracts must yield to the superior and legitimate measures taken by the
State to promote public welfare.62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the
equal protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without distinction as to
place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic
security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all
monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws
which is enjoyed by, or spared the burden imposed on, others in like circumstances. 65
Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system
of classification into its legislation; however, to be valid, the classification must comply with these requirements: 1) it
is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing
conditions only; and 4) it applies equally to all members of the class. 66
There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a
law: a) the deferential or rational basis scrutiny in which the challenged classification needs only be shown to be
rationally related to serving a legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state interest and that the
classification is at least substantially related to serving that interest; 68 and c) strict judicial scrutiny69 in which a
legislative classification which impermissibly interferes with the exercise of a fundamental right 70 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 theleast restrictive
means to protect such interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications 73 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 Courts solemn duty to strike down any
law repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its instrumentalities. Oppressive acts will
be struck down regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is
akin to a distinction based on economic class and status, with the higher grades as recipients of a benefit
specifically withheld from the lower grades. Officers of the BSP now receive higher compensation packages that are
competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by the
SSL. The implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the
SSL while employees higher in rank - possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to stay. Considering that majority, if not all,
the rank-and-file employees consist of people whose status and rank in life are less and limited, especially in terms
of job marketability, it is they - and not the officers - who have the real economic and financial need for the
adjustment . This is in accord with the policy of the Constitution "to free the people from poverty, provide adequate
social services, extend to them a decent standard of living, and improve the quality of life for all." Any act of

Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass
muster. (Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in the present case also employs
the standard of strict judicial scrutiny, for it perceives in the subject clause a suspect classification prejudicial to
OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer
examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at
two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts
ofone year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one
year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations
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 respondents employment contract is eight (8) months. Private
respondent should therefore be paid his basic salary corresponding to three (3) months or a total of SR3,600. 82
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division,
December 1998),83 which involved an OFW (therein respondent Erlinda Osdana) who was originally granted a 12-

month contract, which was deemed renewed for another 12 months. After serving for one year and seven-and-a-half
months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired
portion of four and one-half months of her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:
Case Title

Contract
Period

Period of
Service

Unexpired
Period

Period Applied in
the Computation
of the Monetary
Award

Skippers v.
Maguad84

6 months

2 months

4 months

4 months

Bahia Shipping
v. Reynaldo
Chua 85

9 months

8 months

4 months

4 months

Centennial
Transmarine v.
dela Cruz l86

9 months

4 months

5 months

5 months

Talidano v.
Falcon87

12 months

3 months

9 months

3 months

Univan v. CA88

12 months

3 months

9 months

3 months

Oriental v. CA89

12 months

more than 2
months

10 months

3 months

PCL v. NLRC90

12 months

more than 2
months

more or less 9
months

3 months

Olarte v.
Nayona91

12 months

21 days

11 months and 9
days

3 months

JSS v.Ferrer92

12 months

16 days

11 months and
24 days

3 months

9 months and
7 days

2 months and 23
days

2 months and 23
days

Pentagon v.
Adelantar93

12 months

Phil. Employ v.
Paramio, et
al.94

12 months

10 months

2 months

Unexpired portion

Flourish
Maritime v.
Almanzor 95

2 years

26 days

23 months and 4
days

6 months or 3
months for each
year of contract

Athenna
Manpower v.
Villanos 96

1 year, 10
months and
28 days

1 month

1 year, 9 months
and 28 days

6 months or 3
months for each
year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first category
includes OFWs with fixed-period employment contracts of less than one year; in case of illegal dismissal, they are
entitled to their salaries for the entire unexpired portion of their contract. The second category consists of OFWs with
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

Period of
Service

Unexpired
Period

Period Applied in the

Computation of the
Monetary Award

ATCI v. CA, et
al.98

2 years

2 months

22 months

22 months

Phil. Integrated
v. NLRC99

2 years

7 days

23 months
and 23 days

23 months and 23
days

JGB v. NLC100

2 years

9 months

15 months

15 months

Agoy v.
NLRC101

2 years

2 months

22 months

22 months

EDI v. NLRC,
et al.102

2 years

5 months

19 months

19 months

Barros v.
NLRC, et al.103

12 months

4 months

8 months

8 months

Philippine
Transmarine v.
Carilla104

12 months

6 months
and 22 days

5 months and
18 days

5 months and 18 days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof,
were treated alike in terms of the computation of their monetary benefits in case of illegal dismissal. Their claims
were subjected to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of
their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money
claims of illegally dismissed OFWs based on their employment periods, in the process singling out one category
whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of
having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is
less, but all the while sparing the other category from such prejudice, simply because the latter's unexpired
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
forevery year of the unexpired term, whichever is less" shall apply is not the length of the original contract period as
held in Marsaman,106 but the length of the unexpired portion of the contract period -- the subject clause applies in
cases when the unexpired portion of the contract period is at least one year, which arithmetically requires that the
original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods
are for more than one year: those who are illegally dismissed with less than one year left in their contracts shall be
entitled to their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one
year or more remaining in their contracts shall be covered by the subject clause, and their monetary benefits limited
to their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes
hypothetical OFW-C and OFW-D, who each have a 24-month contract at a salary rate of US$1,000.00 per month.
OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there is at least
12 months remaining in the contract period of OFW-C, the subject clause applies to the computation of the latter's
monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total salaries for the 12 months
unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of
the 12-month unexpired term of the contract. On the other hand, OFW-D is spared from the effects of the subject
clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to
US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired portion.
OFWs vis--vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally
dismissed OFWs was in place. This uniform system was applicable even to local workers with fixed-term
employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce
(1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees should have been made of
a fixed period, none of the contracting parties, without the consent of the other, may withdraw from the fulfillment of
said contract until the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the
provisions contained in the following articles.
In Reyes v. The Compaia Maritima,109 the Court applied the foregoing provision to determine the liability of a
shipping company for the illegal discharge of its managers prior to the expiration of their fixed-term employment.
The Court therein held the shipping company liable for the salaries of its managers for the remainder of their fixedterm 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. Gay 114 held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the
contrary under Spanish jurisprudence, that when an employee is wrongfully discharged it is his duty to seek other
employment of the same kind in the same community, for the purpose of reducing the damages resulting from such
wrongful discharge. However, while this is the general rule, the burden of showing that he failed to make an effort to
secure other employment of a like nature, and that other employment of a like nature was obtainable, is upon the
defendant. When an employee is wrongfully discharged under a contract of employment his prima facie damage is
the amount which he would be entitled to had he continued in such employment until the termination of the period.
(Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2
(Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of
Work), Chapter 3, Title VIII, Book IV. 116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the
Civil Code do not expressly provide for the remedies available to a fixed-term worker who is illegally discharged.
However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich, 117 the Court carried over the principles on
the payment of damages underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving
the illegal discharge of a local worker whose fixed-period 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-avis their foreign principals, there are mechanisms already in place that can be employed to achieve that purpose
without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers,
dated February 4, 2002, imposes administrative disciplinary measures on erring foreign employers who default on
their contractual obligations to migrant workers and/or their Philippine agents. These disciplinary measures range
from temporary disqualification to preventive suspension. The POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary
measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement
agencies in enforcing the solidary liability of their foreign principals.

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