Acuña vs CA (2006) G.R.

159832
MERCEDITA ACUÑA, MYRNA RAMONES, and JULIET MENDEZ, Petitioners, vs. HON. COURT OF APPEALS and JOIN
INTERNATIONAL CORPORATION and/or ELIZABETH ALAÑON,Respondents.

Facts:
Petitioners are Filipino overseas workers deployed by private respondent Join International Corporation (JIC), a
licensed recruitment agency, to its principal, 3D Pre-Color Plastic, Inc., (3D) in Taiwan, Republic of China,
under a uniformly-worded employment contract for a period of two years. Private respondent Elizabeth Alañon
is the president of Join International Corporation.

Sometime in September 1999, petitioners filed with private respondents applications for employment abroad.
After their papers were processed, petitioners claimed they signed a uniformly-worded employment contract
with private respondents which stipulated that they were to work as machine operators with a monthly salary of
NT$15,840.00, exclusive of overtime, for a period of two years.

On December 9, 1999, they left for Taiwan. Upon arriving at the job site, a factory owned by 3D, they were
made to sign another contract which stated that their salary was only NT$11,840.00. They were informed that
the dormitory which would serve as their living quarters was still under construction. They were requested to
temporarily bear with the inconvenience but were assured that their dormitory would be completed in a short
time. Petitioners alleged that they were brought to a "small room with a cement floor so dirty and smelling with
foul odor". Forty women were jampacked in the room and each person was given a pillow. Since the ladies'
comfort room was out of order, they had to ask permission to use the men's comfort room. Petitioners claim they
were made to work twelve hours a day, from 8:00 p.m. to 8:00 a.m.

On December 16, 1999, due to unbearable working conditions, they were constrained to inform management that
they were leaving. They booked a flight home, at their own expense. Before they left, they were made to sign a
written waiver. In addition, petitioners were not paid any salary for work rendered on December 11-15, 1999.
Immediately upon arrival in the Philippines, petitioners went to private respondents' office, narrated what
happened, and demanded the return of their placement fees and plane fare. Private respondents refused.

On December 28, 1999, private respondents offered a settlement. Petitioner Mendez received P15,080. The next
day, petitioners Acuña and Ramones went back and received P13,640 10 and P16,200, respectively. They claim
they signed a waiver, otherwise they would not be refunded.

On January 14, 2000, petitioners Acuña and Mendez invoking Republic Act No. 8042 filed a complaint for
illegal dismissal and non-payment/underpayment of salaries or wages, overtime pay, refund of transportation
fare, payment of salaries/wages for 3 months, moral and exemplary damages, and refund of placement fee before
the National Labor Relations Commission (NLRC).

Issue: Whether or not petitioners were illegally dismissed under Rep. Act No. 8042, thus entitling them to
benefits plus damages.

Held: No illegal dismissal. Constructive dismissal covers the involuntary resignation resorted to when
continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or
a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee. Court found that petitioners did not deny that the accommodations were not as
homely as expected. Petitioners' admitted that they were told by the principal, upon their arrival, that the
dormitory was still under construction and were requested to bear with the temporary inconvenience and the
dormitory would soon be finished. Petitioners did not refute private respondents' assertion that they had
deployed approximately sixty other workers to their principal, and to the best of their knowledge, no other
worker assigned to the same principal has resigned, much less, filed a case for illegal dismissal. These cited
circumstances do not reflect malice by private respondents nor do they show the principal's intention to subject
petitioners to unhealthy accommodations. Under these facts, we cannot rule that there was constructive
dismissal.
Overtime pay is granted despite petitioners lack of proof that they actually rendered overtime work, since their
employment records were in the custody of the principal employer. It is a time-honored rule that in
controversies between a worker and his employer, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writing should be resolved in the worker's favor. private respondents are
solidarily liable with the foreign principal for the overtime pay claims of petitioners.

On the award of moral and exemplary damages, we hold that such award lacks legal basis. Moral and
exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy. The person claiming moral damages must prove the existence of bad faith by clear
and convincing evidence, for the law always presumes good faith. Petitioners failed to prove bad faith, fraud or
ill motive on the part of private respondents. Moral damages cannot be awarded.

Without the award of moral damages, there can be no award of exemplary damages, nor attorney's fees.

Quitclaims are valid. Quitclaims executed by the employees are commonly frowned upon as contrary to public
policy and ineffective to bar claims for the full measure of the workers' legal rights, considering the economic
disadvantage of the employee and the inevitable pressure upon him by financial necessity. Nonetheless, the so-
called "economic difficulties and financial crises" allegedly confronting the employee is not an acceptable
ground to annul the compromise agreement unless it is accompanied by a gross disparity between the actual
claim and the amount of the settlement.

Records reveal that petitioners were not in any way deceived, coerced or intimidated into signing a quitclaim
waiver in the amounts of P13,640, P15,080 and P16,200 respectively. Nor was there a disparity between the
amount of the quitclaim and the amount actually due the petitioners. After conversion to Philippine pesos, the
amount of the quitclaim paid to petitioners was actually higher than the amount due them.

WHEREFORE, the petition is DISMISSED, without prejudice to the filing of illegal recruitment complaint against
the respondents pursuant to Section 6(i) of The Migrant Workers and Overseas Filipino Act of 1995 (Rep. Act No.
8042).
 SERRANO v. GALLANT MARITIME SERVICES INC. & MARLOWE NAVIGATION CO.,
INC.
G.R. No. 167614. March 24, 2009

Facts:

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents)
under a POEA-approved Contract of Employment. 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. However, respondents did not deliver on their promise to make petitioner Chief Officer. Hence,
petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May.

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 against respondents for constructive dismissal
and for payment of his money claims. LA rendered the dismissal of petitioner illegal and awarding him monetary
benefits. Respondents appealed to the NLRC to question the finding of the LA. Likewise, petitioner also
appealed 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 that in case of illegal dismissal, OFWs are
entitled to their salaries for the unexpired portion of their contracts.

Petitioner also appealed 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 that in case of illegal dismissal,
OFWs are entitled to their salaries for the unexpired portion of their contracts. Petitioner filed a Motion for Partial
Reconsideration; he questioned the constitutionality of the subject clause. Petitioner filed a Petition for Certiorari
with the CA, reiterating the constitutional challenge against the subject clause. CA affirmed the NLRC ruling on
the reduction of the applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.

The last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042, 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.

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

Issue:
 1.) Is petitioner entitled to his monetary claim which is the lump-sum salary for the entire unexpired
portion of his 12-month employment contract, and not just for a period of three months?
2.) Should petitioner’s overtime and leave pay 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?

Held:
1.) Yes. 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. The subject clause “or for
three months for every year of the unexpired term, whichever is less” in the 5th paragraph of Section 10 of
Republic Act No. 8042 is declared unconstitutional.

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.

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. 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.

2.) No. 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.
G.R. No. 170139 August 5, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,

vs.
JOY C. CABILES, Respondent.

FACTS:

 Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency. Responding to an ad
it published, respondent, Joy C. Cabiles, submitted her application for a quality control job in Taiwan.
 Joy’s application was accepted. Joy was later asked to sign a oneyear employment contract for a monthly salary of
NT$15,360.00. She alleged that Sameer Overseas Agency required her to pay a placement fee of P70,000.00 when
she signed the employment contract.
 Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997. She alleged that in her
employment contract, she agreed to work as quality control for one year. In Taiwan, she was asked to work as a
cutter.
 Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informedJoy,
without prior notice, that she was terminated and that "she should immediately report to their office to get her salary
and passport." She was asked to "prepare for immediate repatriation."
 Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of NT$9,000. According to
her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.
 Subsequently, Joy filed a complaint with the NLRC against petitioner and Wacoal. She claimed that she was illegally
dismissed. She asked for the return of her placement fee, the withheld amount for repatriation costs, payment of her
salary for 23 months as well as moral and exemplary damages. She identified Wacoal as Sameer Overseas
Placement Agency’s foreign principal.
 Sameer Overseas Placement Agency alleged that respondent's termination was due to her inefficiency, negligence
in her duties, and her "failure to comply with the work requirements [of] her foreign [employer]." The agency also
claimed that it did not ask for a placement fee of P70,000.00. As evidence, it showed an official receipt bearing the
amount of P20,360.00. Petitioner added that Wacoal's accreditation with petitioner had already been transferred to
the Pacific Manpower & Management Services, Inc. (Pacific). Thus, petitioner asserts that it was already substituted
by Pacific Manpower.
 Pacific Manpower moved for the dismissal of petitioner’s claims against it. It alleged that there was no employer-
employee relationship between them. Therefore, the claims against it were outside the jurisdiction of the Labor
Arbiter. Pacific Manpower argued that the employment contract should first be presented so that the employer’s
contractual obligations might be identified. It further denied that it assumed liability for petitioner’s illegal acts.
 Thereafter, the Labor Arbiter dismissed Joy’s complaint.
 Joy appealed to the NLRC.
 In a resolution, the NLRC declared that Joy was illegally dismissed. It reiterated the doctrine that the burden of proof
to show that the dismissal was based on a just or valid cause belongs to the employer. It found that Sameer
Overseas Placement Agency failed to prove that there were just causes for termination. There was no sufficient
proof to show that respondent was inefficient in her work and that she failed to comply with company
requirements. Furthermore, procedural due process was not observed in terminating respondent.
 The Commission denied the agency’s motion for reconsideration
 Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition for certiorari with the
CA assailing the NLRC’s resolutions.
 The CA affirmed the decision of the NLRC with respect to the finding of illegal dismissal.
 Dissatisfied, Sameer Overseas Placement Agency filed this petition.

ISSUE:

WON, the CA erred when it affirmed the ruling of the NLRC finding respondent illegally dismissed.

RULING:

No. CA has validly affirmed the ruling of the NLRC.

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

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

Employees are not stripped of their security of tenure when they move to work in a different jurisdiction. With respect to the
rights of overseas Filipino workers, we follow the principle of lex loci contractus (the law of the place where the contract is
made) which governs in this jurisdiction. There is no question that the contract of employment in this case was perfected here
in the Philippines. Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting labor apply in
this case. Furthermore, settled is the rule that the courts of the forum will not enforce any foreign claim obnoxious to the
forum’s public policy. Herein the Philippines, employment agreements are more than contractual in nature. The Constitution
itself, in Article XIII, Section 3, guarantees the special protection of workers, to wit:

The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all. It shall guarantee the rights of all workers to self organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall
be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law. By our laws, overseas Filipino
workers (OFWs) may only be terminated for a just or authorized cause and after compliance with procedural due process
requirements.

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

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

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

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

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

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

(e) Other causes analogous to the foregoing.

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

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

To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1) the employer has set standards of
conduct and workmanship against which the employee will be judged; 2) the standards of conduct and workmanship must
have been communicated tothe employee; and 3) the communication was made at a reasonable time prior to the employee’s
performance assessment. This is similar to the law and jurisprudence on probationary employees, which allow termination
ofthe employee only when there is "just cause or when [the probationary employee] fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time of his [or her]
engagement."72

However, we do not see why the application of that ruling should be limited to probationary employment. That rule is basic to
the idea of security of tenure and due process, which are guaranteed to all employees, whether their employment is
probationary or regular. The pre-determined standards that the employer sets are the bases for determining the probationary
employee’s fitness, propriety, efficiency, and qualifications as a regular employee. Due process requires that the probationary
employee be informed of such standards at the time of his or her engagement so he or she can adjust this or her character or
workmanship accordingly. Proper adjustment to fit the standards upon which the employee’s qualifications will be evaluated
will increase one’s chances of being positively assessed for regularization by his or her employer.

Assessing an employee’s work performance does not stop after regularization. The employer, on a regular basis, determines
if an employee is still qualified and efficient, based on work standards. Based on that determination, and after complying with
the due process requirements of notice and hearing, the employer may exercise its management prerogative of terminating
the employee found unqualified.
The regular employee must constantly attempt to prove to his or her employer that he or she meets all the standards for
employment. This time, however, the standards to be met are set for the purpose of retaining employment or promotion. The
employee cannot be expected to meet any standard of character or workmanship if such standards were not communicated
to him or her. Courts should remain vigilant on allegations of the employer’s failure to communicatework standards that would
govern one’s employment "if [these are] to discharge in good faith [their] duty to adjudicate." In this case, petitioner merely
alleged that respondent failed to comply with her foreign employer’s work requirements and was inefficient in her work. No
evidence was shown to support such allegations. Petitioner did not even bother to specify what requirements were not met,
what efficiency standards were violated, or what particular acts of respondent constituted inefficiency.

There was also no showing that respondent was sufficiently informed of the standards against which her work efficiency and
performance were judged. The parties’ conflict as to the position held by respondent showed that even the matter as basic as
the job title was not clear. The bare allegations of petitioner are not sufficient to support a claim that there is just cause for
termination. There is no proof that respondent was legally terminated. Respondent’s dismissal less than one year from hiring
and her repatriation on the same day show not only failure on the part of petitioner to comply with the requirement of the
existence of just cause for termination. They patently show that the employers did not comply with the due process
requirement.

A valid dismissal requires both a valid cause and adherence to the valid procedure of dismissal. 75 The employer is required to
give the charged employee at least two written notices before termination. One of the written notices must inform the
employee of the particular acts that may cause his or her dismissal. The other notice must "[inform] the employee of the
employer’s decision."78 Aside from the notice requirement, the employee must also be given "an opportunity to be heard."
Petitioner failed to comply with the twin notices and hearing requirements. Respondent started working on June 26, 1997.
She was told that she was terminated on July 14, 1997 effective on the same day and barely a month from her first workday.
She was also repatriated on the same day that she was informed of her termination. The abruptness of the termination
negated any finding that she was properly notified and given the opportunity to be heard. Her constitutional right to due
process of law was violated.

WHEREFORE, the petition is DENIED. The decision of the CA is AFFIRMED with modification. Petitioner Sameer Overseas
Placement Agency is ORDERED to pay respondent Joy C. Cabiles the amount equivalent to her salary for the unexpired
portion of her employment contract at an interest of 6% per annum from the finality of this judgment. Petitioner is also
ORDERED to reimburse respondent the withheld NT$3,000.00 salary and pay respondent attorney's fees of NT$300.00 at
an interest of 6% per annum from the finality of this judgment.
CLAUDIO S. YAP, Petitioner, vs. THENAMARIS SHIP'S MANAGEMENT and INTERMARE
MARITIME AGENCIES, INC., Respondents. G.R. No. 179532, May 30, 2011
Facts: Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August 2001 by Intermare
Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. for a duration of 12 months. On 23 August
2001, Yap boarded M/T SEASCOUT and commenced his job as electrician. However, on or about 08 November 2001, the
vessel was sold. Yap, along with the other crewmembers, was informed by the Master of their vessel that the same was sold
and will be scrapped.

Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus. However, with respect to the
payment of his wage, he refused to accept the payment of one-month basic wage. He insisted that he was entitled to the
payment of the unexpired portion of his contract since he was illegally dismissed from employment. He alleged that he
opted for immediate transfer but none was made.

The Labor Arbiter

Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and Attorney’s Fees before the Labor
Arbiter (LA). On July 26, 2004, the LA rendered a decision in favor of petitioner, finding the latter to have been
constructively and illegally dismissed by respondents. LA opined that since the unexpired portion of petitioner’s contract
was less than one year, petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine
months.

The NLRC

Aggrieved, respondents sought recourse from the NLRC. The NLRC affirmed the LA’s findings that petitioner was
indeed constructively and illegally dismissed. However, the NLRC held that instead of an award of salaries corresponding
to nine months, petitioner was only entitled to salaries for three months as provided under Section 108 of Republic Act
(R.A.) No. 8042,9 as enunciated in our ruling in Marsaman Manning Agency, Inc. v. National Labor Relations
Commission.

Respondents filed a Motion for Partial Reconsideration. Finding merit in petitioner’s arguments, the NLRC reversed its
earlier Decision, holding that "there can be no choice to grant only three (3) months salary for every year of the unexpired
term because there is no full year of unexpired term which this can be applied."

The Court of Appeals

The CA affirmed the findings and ruling of the LA and the NLRC that petitioner was constructively and illegally dismissed.
However, the CA ruled that the NLRC erred in sustaining the LA’s interpretation of Section 10 of R.A. No. 8042. In this
regard, the CA relied on the clause "or for three months for every year of the unexpired term, whichever is less" provided
in the 5th paragraph of Section 10 of R.A. No. 8042.

Issue: Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords an illegally dismissed migrant worker the
lesser benefit of – "salaries for [the] unexpired portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less" – is unconstitutional. –YES

Whether or not the Court of Appeals gravely erred in granting petitioner only three (3) months backwages when his
unexpired term of 9 months is far short of the "every year of the unexpired term" threshold. -YES

The Supreme Court

In the meantime, while this case was pending before this Court, we declared as unconstitutional the clause "or for three
months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No.
8042 in the case of Serrano v. Gallant Maritime Services, Inc. on March 24, 2009. This case should not be different from
Serrano.

The said provision of law has long been a source of abuse by callous employers against migrant workers; and that said
provision violates the equal protection clause under the Constitution because, while illegally dismissed local workers are
guaranteed under the Labor Code of reinstatement with full backwages computed from the time compensation was withheld
from them up to their actual reinstatement. 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.

Respondents, aware of our ruling in Serrano, aver that our pronouncement of unconstitutionality should not apply in this
case because Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and obligations of the parties in case
of Illegal Dismissal of a migrant worker and is not merely procedural in character. Thus, pursuant to the Civil Code, there
should be no retroactive application of the law in this case.

As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it
creates no office; it is inoperative as if it has not been passed at all. The doctrine of operative fact serves as an exception
to the aforementioned general rule.

The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies
the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of
unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot
always be erased by a new judicial declaration. The doctrine is applicable when a declaration of unconstitutionality
will impose an undue burden on those who have relied on the invalid law.

Following Serrano, we hold that this case should not be included in the aforementioned exception. To rule otherwise
would be iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers and
recruitment/manning agencies may violate an OFW’s security of tenure which an employment contract embodies and
actually profit from such violation based on an unconstitutional provision of law.

Invoking Serrano, respondents claim that the tanker allowance should be excluded from the definition of the term "salary."

Fair play, justice, and due process dictate that this Court cannot now, for the first time on appeal, pass upon this question.
Matters not taken up below cannot be raised for the first time on appeal. A close perusal of the contract reveals that the
tanker allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause,
hence, forming part of the basic salary of petitioner.

A final note.

We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte v. Nayona, this Court held that:

Our overseas workers belong to a disadvantaged class. Most of them come from the poorest sector of our society. Their
profile shows they live in suffocating slums, trapped in an environment of crimes. Hardly literate and in ill health, their only
hope lies in jobs they find with difficulty in our country. Their unfortunate circumstance makes them easy prey to avaricious
employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just to survive. Out of
despondence, they will work under sub-human conditions and accept salaries below the minimum. The least we can do is to
protect them with our laws.
Saturday, June 09, 2018

CASE DIGEST: STOLT-NIELSEN V.

MEDEQUILLO
G.R. No. 177498 : January 18, 2012

STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI

SHIP MANAGEMENT, Petitioners, v. SULPECIO MEDEQUILLO, JR.,
Respondent.

PEREZ,J.:

FACTS:

Sulpecio Medequillo (respondent) filed a complaint before the Adjudication Office of

the Philippine Overseas Employment Administration (POEA) against the petitioners
for illegal dismissal under a first contract and for failure to deploy under a second
contract. He prayed for actual, moral and exemplary damages as well as attorneys fees
for his illegal dismissal and in view of the Petitioners bad faith in not complying with
the Second Contract.

The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of the
Migrant Workers and Overseas Filipinos Act of 1995.

The parties were required to submit their respective position papers before the Labor
Arbiter. However, petitioners failed to submit their respective pleadings despite the
opportunity given to them.

Labor Arbiter Vicente R. Layawen rendered a judgmentfinding that the respondent

was constructively dismissed by the petitioners. The Labor Arbiter found the first
contract entered into by and between the complainant and the respondents to have
been novated by the execution of the second contract. In other words, respondents
cannot be held liable for the first contract but are clearly and definitely liable for the
breach of the second contract.

The petitioners appealed the adverse decision before the National Labor Relations
Commission assailing that they were denied due process, that the respondent cannot
be considered as dismissed from employment because he was not even deployed yet
and the monetary award in favor of the respondent was exorbitant and not in
accordance with law.

NLRC affirmed with modification the Decision of the Labor Arbiter. The NLRC upheld
the finding of unjustified termination of contract for failure on the part of the
petitioners to present evidence that would justify their non-deployment of the
respondent.

The petitioners filed a Petition forCertioraribefore the Court of Appeals. Finding no

grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of the labor
tribunal.

ISSUE: Whether or not the first employment contract between petitioners and the
private respondent is different from and independent of the second contract
subsequently executed upon repatriation of respondent to Manila which justifies
termination of respondent?

HELD: Court of Appeals decision is sustained.

CIVIL LAW

Novation is the extinguishment of an obligation by the substitution or change of the

obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor. In order for
novation to take place, the concurrence of the following requisites is indispensable:
1. There must be a previous valid obligation,
2. There must be an agreement of the parties concerned to a new contract,
3. There must be the extinguishment of the old contract, and
4. There must be the validity of the new contract.
LABOR LAW

Equally settled is the rule that factual findings of labor officials, who are deemed to
have acquired expertise in matters within their jurisdiction, are generally accorded not
only respect but even finality by the courts when supported by substantial
evidence,i.e., the amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion.But these findings are not infallible. When there is a
showing that they were arrived at arbitrarily or in disregard of the evidence on record,
they may be examined by the courts.In this case, there was no showing of any
arbitrariness on the part of the lower courts in their findings of facts. Hence, we follow
the settled rule.

LABOR LAW

The POEA Standard Employment Contract provides that employment shall commence
upon the actual departure of the seafarer from the airport or seaport in the port of
hire.We adhere to the terms and conditions of the contract so as to credit the valid
prior stipulations of the parties before the controversy started. Else, the obligatory
force of every contract will be useless. Parties are bound not only to the fulfillment of
what has been expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law.
We rule that distinction must be made between the perfection of the employment
contract and the commencement of the employer-employee relationship. The
perfection of the contract, which in this case coincided with the date of execution
thereof, occurred when petitioner and respondent agreed on the object and the cause,
as well as the rest of the terms and conditions therein. The commencement of the
employer-employee relationship, as earlier discussed, would have taken place had
petitioner been actually deployed from the point of hire. Thus, even before the start of
any employer-employee relationship, contemporaneous with the perfection of the
employment contract was the birth of certain rights and obligations, the breach of
which may give rise to a cause of action against the erring party. Thus, if the reverse
had happened, that is the seafarer failed or refused to be deployed as agreed upon, he
would be liable for damages.

DENIED