Cases: OFWs dismissed from work

What is a Labor Law Case or Labor Jurisprudence? A Labor Law Case or Labor Jurisprudence is a decision/resolution on a labor dispute by the Supreme Court of the Philippines. Per Article 8 of the Civil Code, judicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines. 

Table of Contents

1. OFWS covered by security of tenure and due process

a. Due process requirement

1) Sameer Overseas Placement Agency, Inc. v. Cabiles (2014)

Sameer Overseas Placement Agency, Inc. v. Cabiles, En Banc, G.R. No. 170139, 05 August 2014

[BACKGROUND]

[the employer – local agency], Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency. Responding to an ad it published, [the employee], [[the employee] C. – henceforth the “employee”], submitted her application for a quality control job in Taiwan.

[The employee]’s application was accepted. [The employee] was later asked to sign a one year 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 ₱70,000.00 when she signed the employment contract.

[The employee] was deployed to work for Taiwan Wacoal, 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 informed [the employee], 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.”

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

On October 15, 1997, [the employee] filed a complaint with the National Labor Relations Commission against [the employer – local agency] 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 [the employee’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 ₱70,000.00.22 As evidence, it showed Official Receipt No. 14860 dated June 10, 1997, bearing the amount of ₱20,360.00.23 [the employer – local agency] added that Wacoal’s accreditation with [the employer – local agency] had already been transferred to the Pacific Manpower & Management Services, Inc. (Pacific) as of August 6, 1997.24 Thus, [the employer – local agency] asserts that it was already substituted by Pacific Manpower.

Pacific Manpower moved for the dismissal of [the employer – local agency]’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.29 It further denied that it assumed liability for [the employer – local agency]’s illegal acts.

[DECISION/RESOLUTION OF THE SUPREME COURT]

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

x x x

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

[the employer – local agency] likewise attempts to sidestep the medical certificate requirement by contending that since Osdana was working in Saudi Arabia, her employment was subject to the laws of the host country. Apparently, [the employer – local agency] hopes to make it appear that the labor laws of Saudi Arabia do not require any certification by a competent public health authority in the dismissal of employees due to illness.

Again, [the employer – local agency]’s argument is without merit.

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

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

It shall guarantee the rights of all workers to 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.

. . . .

This public policy should be borne in mind in this case because to allow foreign employers to determine for and by themselves whether an overseas contract worker may be dismissed on the ground of illness would encourage illegal or arbitrary pretermination of employment contracts…

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

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

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

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.

[the employer – local agency]’s allegation that [the employee] 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 [the employer – local agency] 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 to the employee; and 3) the communication was made at a reasonable time prior to the employee’s performance assessment.

This is similar to the law and jurisprudence on probationary employees, which allow termination 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.”

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 communicate work standards that would govern one’s employment “if [these are] to discharge in good faith [their] duty to adjudicate.”

In this case, [the employer – local agency] merely alleged that [the employee] failed to comply with her foreign employer’s work requirements and was inefficient in her work. No evidence was shown to support such allegations. [The employer – local agency] did not even bother to specify what requirements were not met, what efficiency standards were violated, or what particular acts of [the employee] constituted inefficiency.

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

The bare allegations of [the employer – local agency] are not sufficient to support a claim that there is just cause for termination. There is no proof that [the employee] was legally terminated.

[The employer – local agency] failed to comply with

the due process requirements

[The employee]’s dismissal less than one year from hiring and her repatriation on the same day show not only failure on the part of [the employer – local agency] 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. 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.” Aside from the notice requirement, the employee must also be given “an opportunity to be heard.”

[The employer – local agency] failed to comply with the twin notices and hearing requirements. [the employee] 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.

2. Remedies of illegally dismissed OFWs

a. Unexpired portion of the employment contract

1) Sameer Overseas Placement Agency, Inc. v. Cabiles (2014)

Sameer Overseas Placement Agency, Inc. v. Cabiles, supra.

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

Section 10 of Republic Act No. 8042,otherwise known as the Migrant Workers and Overseas Filipinos Act of1995, states that overseas workers who were terminated without just, valid, or authorized cause “shall be entitled to the full reimbursement of his placement fee with interest of twelve (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.”

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

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

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

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within four (4) months from the approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less…

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

x x x

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

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

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

A statute or provision which was declared unconstitutional is not a law. It “confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all.”

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

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

SEC. 10. Money Claims.– Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damage. Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with the developments in the global services industry.

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

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

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within thirty (30) days from approval of the settlement by the appropriate authority.

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

In case of a final and executory judgement against a foreign employer/principal, it shall be automatically disqualified, without further proceedings, from participating in the Philippine Overseas Employment Program and from recruiting and hiring Filipino workers until and unless it fully satisfies the judgement award.

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

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

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

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

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

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

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

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

This may cause confusion on the part of the National Labor Relations Commission and the Court of Appeals. At minimum, the existence of Republic Act No. 10022 may delay the execution of the judgment in this case, further frustrating remedies to assuage the wrong done to [the employee].

Hence, there is a necessity to decide this constitutional issue.

x x x

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may exercise its powers in any manner inconsistent with the Constitution, regardless of the existence of any law that supports such exercise. The Constitution cannot be trumped by any other law. All laws must be read in light of the Constitution. Any law that is inconsistent with it is a nullity.

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

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

Likewise, there are special reasons of judicial efficiency and economy that attend to these cases. The new law puts our overseas workers in the same vulnerable position as they were prior to Serrano. Failure to reiterate the very ratio decidendi of that case will result in the same untold economic hardships that our reading of the Constitution intended to avoid. Obviously, we cannot countenance added expenses for further litigation that will reduce their hard-earned wages as well as add to the indignity of having been deprived of the protection of our laws simply because our precedents have not been followed. There is no constitutional doctrine that causes injustice in the face of empty procedural niceties. Constitutional interpretation is complex, but it is never unreasonable.

x x x

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

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

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

x x x

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

x x x

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

[The employee] is entitled to her salary for the unexpired portion of her contract, in accordance with Section 10 of Republic Act No. 8042. The award of the three-month equivalence of [the employee]’s salary must be modified accordingly. Since she started working on June 26, 1997 and was terminated on July 14, 1997, [the employee] is entitled to her salary from July 15, 1997 to June 25, 1998. “To rule otherwise would be iniquitous to [the employee] 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.”

2) Gutierrez v. Nawras Manpower Services, Inc. (2019)

Gutierrez v. Nawras Manpower Services, Inc., G.R. No. 234296, 27 November 2019

[BACKGROUND]

[The employee] is an Overseas Filipino Worker. He was hired by respondent NAWRAS Manpower Services, Inc. (NAWRAS) to work as respondent Al­ Adhamain Co. Ltd.’s (Al-Adhamain) “driver vehicle road” in Saudi Arabia for two years. [the employee] was offered a monthly salary of SR2,300.00. According to [the employee], other perks include SR300.00 food allowance, free accommodation, two hours’ worth of daily overtime, and a service vehicle. He was deployed to Saudi Arabia on July 31, 2013.

Upon arrival, [the employee] claimed that he was initially placed on floating status. He received his first salary only in November 2013 and received two months’ worth of salary on December 2, 2013. He received a service vehicle on December 3, 2013 but he had to personally shoulder the gasoline expenses going to Al-Adhamain’s asphalt plant. On February 15, 2014, the workshop supervisor informed [the employee] that he would be transferred to another site and was made to report to Al-Adhamain’s administrator. At the administrator’s office, he was only given a clearance form. In a meeting with Al-Adhamain’s owner, [the employee] was told that his contract would be terminated and he would be repatriated as soon as [the employee] completes his clearance. [the employee] then called NAWRAS about the pre-termination of his contract but was refrained from filing a complaint with the Philippine Overseas Labor Office in order to allow NAWRAS to talk to Al-Adhamain. [the employee] thus proceeded to submit the requirements for his clearance in the last week of February 2014. On March 15, 2014, [the employee] was given his remaining salary (sans 1-month salary) and a refund of his two months’ salary bond. He was then told to book his own flight back to the Philippines and that he would be reimbursed later on. However, of the SR3,100.00 that he spent for the airfare, Al-Adhamain’s owner only reimbursed him for SR2,000.00.

Upon repatriation, [the employee] filed a complaint for actual illegal dismissal with claims for underpaid overtime pay, unpaid salaries, and transportation expenses, termination pay, damages, and attorney’s fees against respondents.

Respondents averred that [the employee] was validly dismissed because of his poor performance. After [the employee’s] three-month probationary period, Al-Adhamain informed him of his unsatisfactory performance. [the employee] was thus transferred to a different site to afford him a chance to change his working attitude. They claimed that [the employee] was given several chances to change his work attitude to no avail. Despite extending several opportunities for [the employee] to improve, [the employee] opted to request for his last salary, benefits, termination pay, and return ticket. Lastly, respondents alleged that they complied with the notice and hearing requirement before terminating [the employee’s] employment.

[DECISION/RESOLUTION BY THE SUPREME COURT]

[The employee] is entitled to salary equivalent to the unexpired portion of the contract

The CA incorrectly reduced the award for [the employee]’s salary to SR13,800.00. In Sameer, this Court struck down the phrase “or for three (3) months for every year of the unexpired term, whichever is less” under Section 7 of R.A. 10022 because the same phrase was already declared unconstitutional in R.A. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995. [the employee] is, thus, entitled to “his salaries for the unexpired portion of his employment contract” – the operative clause of Section 7. As such, the LA’s computation of SR40,250.00 shall be reinstated.

3) Gallego v. [the local agency] Maritime Services, Inc.

Gallego v. [the local agency] Maritime Services, Inc., G.R. No. 216440, 19 February 2020

[BACKGROUND]

[The employee] claims that he was repeatedly hired by [the local agency] on a contractual basis as Marine Engineer since 1981. In 1999, he was rehired by [the local agency] as Marine Engineer with a contract term beginning December 1999 until December 10, 2000 on board M/V Eastern Falcon.

On August 4, 2000, [the employee’s] contract term was cut short and he was repatriated to Manila. [The employee] claims that he was an intra-company transferee worker for the foreign employer, SCANDIC. For this reason, he proceeded to the office of [the local agency] shortly after his repatriation to process his re-engagement for M/V Eastern Falcon or for another vessel. [The local agency] advised that [the employee] needed to wait for the results of the training of the newly recruited crew members of M/V Eastern Falcon.

Several months have passed but [the employee] did not receive any word from [the local agency] on his re-deployment. [The employee] returned to the office of [the local agency] numerous times in 2001, 2002 until 2003, only to be told to wait for the results of the new recruits for M/V Eastern Falcon. Due to the empty promises of [the local agency] that he would be re-deployed, on July 1, 2004, [the employee] filed his complaint for illegal dismissal and nonpayment of salary and benefits against his employers.

[The local agency], on the other hand, argues that the termination of [the employee’s] employment is valid because the vessel, M/V Eastern Falcon, had been sold to another shipping company. In addition, the labor complaint was barred by prescription considering that [the employee]’s suit had been filed four years after [the employee’s] repatriation in August 2000. Under the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC), claims arising from the employment shall be filed within three years from the date the cause of action accrues. Thus, [the employee’s] claims should be denied because he failed to timely file an action against the employers.

[DECISION/RESOLUTION BY THE SUPREME COURT]

[The employers] argue that there was valid termination of [the employee’s] employment due to the sale of the ship, M/V Eastern Falcon. Indeed, under Section 23 of the POEA-SEC, an employer may terminate a seafarer’s contract due to sale of ship, lay-up or discontinuance of voyage. For such termination to be valid, the same provision states that the seafarer shall immediately be paid his earned wages, repatriation costs and one-month basic pay as termination pay, unless arrangements have been made for the seafarer to join another ship belonging to the same principal to complete his contract, and in the latter case, the seafarer shall be entitled to his basic wages until the date of joining the other ship. Applying the foregoing provision and labor principles, [the employers] have the burden of proving the observance of due process and compliance to Section 23 of the POEA-SEC to consider the dismissal of [the employee] valid.

[The employers] failed to observe the foregoing rules. We did not find any proof that [the employee] was notified of the sale of the ship, M/V Eastern Falcon. If it were true that [the employers] had informed [the employee] in August 2000 that his employment was terminated due to the sale of the ship, [the employers] should have immediately paid his monetary benefits or alternatively arranged for him to join another ship to complete his contract. We give more credence to [the employee’s] position that he was repeatedly promised re-deployment. [the employers] do not even dispute [the employee’s] position. The foregoing clearly shows that [the employee]’s contract was pre-terminated without a just or valid cause for failure to notify him of the sale of the ship and to immediately pay the monetary benefits due him or to redeploy him to another vessel to finish his contract under the POEA-SEC.

While [the employee] is illegally dismissed from employment, We cannot uphold the LA’s award of wages equivalent to 15 months from September 2000 to December 2001 and from January 2002 to December 2004. The LA treated [the employee] as a regular employee awarding him backwages from the time of his illegal dismissal until the decision of the LA was rendered. We stress that [the employee] is a seafarer and an overseas worker, whose contract is with a term. He is entitled to security of tenure at least for the period agreed upon in his contract. Hence, the provision of Section 10 of Republic Act No. 8042,31 as amended by Republic Act No. 10022, is applicable. The provision states that termination of overseas employment without just, valid or authorized cause shall entitle the worker to his or her salaries for the unexpired portion of his employment contract. In this case, [the employee] had a one-year contract with [the employers] from December 1999 until December 10, 2000. He was repatriated on August 4, 2000. Therefore, [the employee] still had an unexpired portion of contract of four months and six days for which he must be paid the value of US$8,182.00.

As to the issue on prescription, We find that [the employee] timely filed his complaint. Repatriated in August 2000, [the employee] was repeatedly instructed to wait for the results of the training of the newly recruited crew members of the vessel, M/V Eastern Falcon, he previously boarded, and was likewise promised for re-deployment. [the employee] patiently waited for three years or until February 2003. It cannot be said that his cause of action accrued from the time he was repatriated in August 2000 because he was thereafter promised re-deployment. Besides, We hold that [the employee] was illegally dismissed. The prescriptive period to file a complaint for illegal dismissal is four years from the time the cause of action accrued. An action for illegal dismissal or when one is arbitrarily and unjustly deprived of his job or means of livelihood is essentially a complaint for “injury to rights,” which falls under Article 1146 of the Civil Code of the Philippines. Therefore, [the employee’s] filing of the labor complaint on July 1, 2004 is within the four-year prescriptive period from the time the cause of action accrued in February 2003.

[The employee] patiently waited for three years hoping that he would be re-deployed as promised by [the employers]. He could have looked for other gainful employment during this period especially since he is a marine engineer and has been a seafarer since 1981. Thus, awarding [the employee] P200,000.00 moral damages is proper. In the same vein, We award P200,000.00 exemplary damages to serve as a deterrent to future and subsequent parties from the commission of a similar offense. We also award [the employee] attorney’s fees or 10% of the monetary award because [the employee] was forced to litigate and incur expenses to protect his rights and interests.

b. Last pay or salary

1) Gutierrez v. Nawras Manpower Services, Inc. (2019)

Gutierrez v. Nawras Manpower Services, Inc., supra.

[The employee] is entitled to repayment of his last salary

[The employee] was not given his November 2013 salary because Al­ Adhamain withheld it “as [the employee’s] placement fee.” The said salary deduction was improper because an illegally dismissed migrant worker is entitled to a full reimbursement of his/her placement fee. The LA’s directive to refund [the employee’s] placement fee is really one for the repayment of [the employee’s] November 2013 salary because [the employee] never paid respondents a placement fee.

c. Attorney’s fees

1) Sameer Overseas Placement Agency, Inc. v. Cabiles (2014)

Sameer Overseas Placement Agency, Inc. v. Cabiles, En Banc, G.R. No. 170139, 05 August 2014

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

2) Gutierrez v. Nawras Manpower Services, Inc. (2019)

Gutierrez v. Nawras Manpower Services, Inc., supra.

[The employee] is entitled to 10% attorney’s fees

In Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-­East Zone Union v. Manila Water Co., Inc., this Court differentiated the ordinary and extraordinary concepts of attorney’s fees. Attorney’s fees under the extraordinary concept refer to those awarded by the Court to the losing party. These may be awarded in specific instances enumerated under Article 2208 of the Civil Code. Under paragraph 7 of Article 2208, attorney’s fees may be recovered “[i]n actions for recovery of wages x x x.”

In actions for recovery of wages, such as the instant case, a specific provision under the Labor Code governs. Article 111 (a) of the Labor Code provides:

Art. 111. Attorney’s Fees. – (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered.

x x x x

We construed Article 111 of the Labor Code as an exception to the general rule of strict construction in the award of attorney’s fees. In Kaisahan, We held that “[a]lthough an express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld wages.” The findings of fact required to prove entitlement to attorney’s fees in labor cases refer to the unjustified withholding of lawful wages.

Here, it is undisputed that [the employee] was not paid lawful wages corresponding to the unexpired portion of the contract. Therefore, [the employee] is entitled to attorney’s fees.

d. Reimbursements

1) Sameer Overseas Placement Agency, Inc. v. Cabiles (2014)

Sameer Overseas Placement Agency, Inc. v. Cabiles, supra.

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

2) Gutierrez v. Nawras Manpower Services, Inc. (2019)

Gutierrez v. Nawras Manpower Services, Inc., supra.

[The employee] is entitled to SR1,100.00 as reimbursement for his airfare ticket

[The employee] claimed that he paid SR3,100.00 as airfare to the Philippines but was only reimbursed SR2,000.00 by Al-Adhamain. Respondents countered that it was Al-Adhamain that purchased [the employee’s] airplane ticket. The LA ordered respondents to reimburse [the employee] the unpaid airfare of SR1,100.00 for failure of respondents to present any evidence proving their claim. On appeal, the NLRC affirmed the LA’s findings because of [the employee]’s attachment of his ticket receipt showing [the employee’s] payment of the airplane ticket. The NLRC also noted that respondents “opted not to comment on the [[the employee]’s] plane ticket.” However, the CA reversed such findings because [the employee’s] only evidence was an e-ticket absent any indication of how much was paid.

This Court is more inclined to believe that [the employee] was able to substantiate his claim of paying SR3,100.00 for his airplane ticket. Aside from the fact that respondents kept silent on the matter in their appeal before the NLRC, the NLRC pointed out that [the employee] presented a ticket receipt as proof that [the employee] paid for the airplane ticket. This is bolstered by the LA’s findings that respondents failed to present any proof of payment for the ticket. A reading of the CA’s decision, likewise, reveals that respondents failed to present any proof to substantiate their claim that they paid for [the employee]’s ticket. As such, it is proper to reinstate the LA and NLRC’s order for respondents to reimburse [the employee] the excess SR1,100.00 payment.

e. Legal interest

1) Sameer Overseas Placement Agency, Inc. v. Cabiles (2014)

Sameer Overseas Placement Agency, Inc. v. Cabiles, supra.

On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21, 2013, which revised the interest rate for loan or forbearance from 12% to 6% in the absence of stipulation, applies in this case. The pertinent portions of Circular No. 799, Series of 2013, read: The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982…

x x x

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

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

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

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

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

Circular No. 799 is applicable only in loans and forbearance of money, goods, or credits, and in judgments when there is no stipulation on the applicable interest rate. Further, it is only applicable if the judgment did not become final and executory before July 1, 2013.

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

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

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

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

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

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

2) Gutierrez v. Nawras Manpower Services, Inc. (2019)

Gutierrez v. Nawras Manpower Services, Inc., supra.

[The employee] is not entitled to 12% interest on the “refund” of placement fee

The LA, the NLRC, and the CA incorrectly considered [the employee] entitled to a “refund” of his placement fee because [the employee]’s latest salary (i.e., for November 2013) was deducted for such purpose. [the employee] is not entitled to a refund because he never paid respondents any placement fee. Consequently, [the employee] is not entitled to a 12% interest on the same.

x x x

[The employee] is entitled to legal interest on the judgment award

In the case of Lara’s Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc., this Court clarified the imposition of interest previously stated in the case of Nacar v. Gallery Frames. When the monetary obligation does not constitute a loan or forbearance of money, goods, or credits and there is no stipulation as to the payment of interest on the damages, a legal interest of 6% per annum under Article 220938 of the Civil Code shall be imposed. The imposition of such legal interest shall be reckoned from the date of extrajudicial or judicial demand and shall continue to run until full payment.39 In the case of Hun Hyung Park v. Eung Won Choi, this Court explained that such interest – called compensatory interest – will not be subject to the imposition of further interest under Article 2212 of the Civil Code.

Therefore, the amounts of SR40,250.00 as unexpired portion of the contract and SR1,100.00 as excess payment for airfare awarded to [the employee] shall earn a legal interest of 6% from the time the complaint was filed until full payment.

f. Damages

1) Gutierrez v. Nawras Manpower Services, Inc. (2019)

Gutierrez v. Nawras Manpower Services, Inc., supra.

[The employee] is not entitled to moral and exemplary damages

[The employee] is not entitled to moral and exemplary damages

[The employee] claimed to have substantially proven respondents’ wanton, oppressive, and malevolent manner in terminating him to entitle [the employee] to an award of moral and exemplary damages. However, the LA and the CA both found [the employee’s] evidence insufficient to prove his entitlement to moral and exemplary damages. Thus, We shall not disturb these factual findings as this Court is not a trier of facts in petitions for review on certiorari.

2. Solidarily liability

a. Local agency and foreign employer

1) Sameer Overseas Placement Agency, Inc. v. Cabiles (2014)

Sameer Overseas Placement Agency, Inc. v. Cabiles, supra.

Finally, we clarify the liabilities of Wacoal as principal and [the employer – local agency] as the employment agency that facilitated [the employee]’s overseas employment.

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

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

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

It may be argued, for instance, that the foreign employer must be impleaded in the complaint as an indispensable party without which no final determination can be had of an action.1

The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995 assures overseas workers that their rights will not be frustrated with these complications. The fundamental effect of joint and several liability is that “each of the debtors is liable for the entire obligation.” A final determination may, therefore, be achieved even if only one of the joint and several debtors are impleaded in an action. Hence, in the case of overseas employment, either the local agency or the foreign employer may be sued for all claims arising from the foreign employer’s labor law violations. This way, the overseas workers are assured that someone — the foreign employer’s local agent — may be made to answer for violations that the foreign employer may have committed.

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

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

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

3. Quitclaims or Compromise Agreements

a. Valid but frowned upon

1) Aldovino v. Gold and Green Manpower Management and Development Services, Inc. (June 2019)

Aldovino v. Gold and Green Manpower Management and Development Services, Inc., G.R. No. 200811, 19 June 2019

[BACKGROUND]

Aldovino and her co-applicants applied for work at Gold and Green Manpower Management and Development Services, Inc. (Gold and Green Manpower), a local manning agency whose foreign principal is Sage International Development Company, Ltd. (Sage International).

Eventually, they were hired as sewers for Dipper Semi-Conductor Company, Ltd. (Dipper Semi-Conductor), a Taiwan-based company. Their respective employment contracts provided an eight (8)-hour working day, a fixed monthly salary, and entitlement to overtime pay, among others.

Before they could be deployed for work, Gold and Green Manpower required each applicant to pay a ₱72,000.00 placement fee. But since the applicants were unable to produce the amount on their own, Gold and Green Manpower referred them to E-Cash Paylite and Financing, Inc. (E-Cash Paylite), where they loaned their placement fees.

Once Aldovino and her co-workers arrived in Taiwan, Gold and Green Manpower took all their travel documents, including their passports. They were then made to sign another contract that provides that they would be paid on a piece-rate basis instead of a fixed monthly salary.

During their employment, Aldovino and her co-workers toiled from 8:00 a.m. to 9:00 p.m. for six (6) days a week. At times, they were forced to work on Sundays without any overtime premium. Because they were paid on a piece-rate basis, they received less than the fixed monthly salary stipulated in their original contract. When Aldovino and her co-workers inquired, Dipper Semi-Conductor refused to disclose the schedule of payment on a piece-rate basis. Eventually, they defaulted on their loan obligations with E-Cash Paylite.

On January 19, 2009, Aldovino and her co-workers, except De Jesus, filed before a local court in Taiwan a Complaint against their employers, Dipper Semi-Conductor and Sage International.

On March 26, 2009, the parties met before the Bureau of Labor Affairs for a dialogue. There, Dipper Semi-Conductor ordered Aldovino and her co-workers to return to the Philippines as it was no longer interested in their services. They were then made to immediately pack their belongings, after which they were dropped off at a train station in Taipei. After a few hours, a friend brought them to the Manila Economic and Cultural Office, where they stayed for a week. They were then transferred to Hope Shelter, where they remained for four (4) months while the case was pending.

Eventually, the parties entered into a Compromise Agreement,13 which read:

1. Event:

A. Reconciliation Part:

This issue is pertaining to the labor Case No. 86 of 2009 at Ban Qiao District Court, wherein Party A is asking for the payment of salary, etc. from party B. This was caused by the differences in interpreting the basic salary and the method in calculation of piece work salary. Both parties is hereby reach (sic) a reconciliation.

B. Compensation Part:

With regard to the damages and fees incurred in the process of this controversy, Party B shall voluntarily give monetary compensation to Party A.

2. Amount of Payment:

A. Amount of Reconciliation: NT$500,000.00

B. Amount of Compensation: On top of the fees incurred by Party A during the period Party A left the company of Party B and waiting for going back to their home country, including board and lodging, livelihood cost, the loss of Recruitment Agency’s commission borne by Party A, airplane ticket, etc. Party B shall pay another compensation of NT$1 Million.

C. Aside from this, Party A can’t ask for compensation of any kind, and all the civil cases involved shall be cancelled.

3. Mode of Payment

A. When this case reach (sic) reconciliation, Party B will pay to the appointed lawyer of Party A an amount of NT$500,000 in cash in one transaction. This will be witness (sic) by the Philippine Labor Center.

B. Both parties will present the following civil and criminal case requests and affidavit of waiver to the related agencies, lawyers of both will change the documents, and Party B will secure a RECEIPT AND RELEASE/QUITCLAIM (as in attachment A) signed by TORZAR SIONY TARROZA, after which, Party B will pay to the appointed lawyer of Party A an amount of NT$1 Million in cash in one transaction. This will be witness (sic) by the Philippine Labor Center.

. . . .

6. After the effectivity of this reconciliation agreement, Party A shall withdraw the case from the civil court of the Taiwan Banqiao Local court, Party A shall bear the cost of civil proceeding.

7. After the effectivity of this reconciliation agreement, Party A shall give up all other rights of compensation. They shall not ask for any compensation based on any other causes.

Based on the Compromise Agreement, Aldovino and her co-workers, except De Jesus, executed an Affidavit of Quitclaim and Release. On July 28, 2009, all of them returned to the Philippines. They eventually filed before the Labor Arbiter a case for illegal termination, underpayment of salaries, human trafficking, illegal signing of papers, and other money claims such as overtime pay, return of placement fees, and moral and exemplary damages.

[DECISION/RESOLUTION BY THE SUPREME COURT]

It must be noted that this case is governed by Philippine laws. Both the Constitution40 and the Labor Code41 guarantee the security of tenure. It is not stripped off when Filipinos work in a different jurisdiction.42 We follow the lex loci contractus principle, which means that the law of the place where the contract is executed governs the contract.

x x x

Indeed, because petitioners’ employment contracts were executed in the Philippines, Philippine laws govern them. Respondents, then, must answer and be held liable under our laws.

x x x

Respondents claim that the Compromise Agreement barred petitioners from holding them liable for claims. This is outright erroneous.

Waivers and quitclaims executed by employees are generally frowned upon for being contrary to public policy. This is based on the recognition that employers and employees do not stand on equal footing.

x x x

Quitclaims do not bar employees from filing labor complaints and demanding benefits to which they are legally entitled. They are “ineffective in barring recovery of the full measure of a worker’s rights, and the acceptance of benefits therefrom does not amount to estoppel.” The law does not recognize agreements that result in compensation less than what is mandated by law. These quitclaims do not prevent employees from subsequently claiming benefits to which they are legally entitled.

x x x

Here, the parties entered into the Compromise Agreement to terminate the case for underpayment of wages, which petitioners had previously filed against respondents in Taiwan. The object and foundation of the Compromise Agreement was to settle the payment of salaries and overtime premiums to which petitioners were legally entitled. Hence, it should not be construed as a restriction on petitioners’ right to prosecute other legitimate claims they may have against respondents.

x x x

Respondents further justify the dismissal by arguing that petitioners voluntarily severed their employment when they signed the Compromise Agreement.

This argument is also untenable.

Under the Labor Code, employers may only terminate employment for a just or authorized cause and after complying with procedural due process requirements. Articles 297 and 300 of the Labor Code enumerate the causes of employment termination either by employers or employees x x x

In illegal dismissal cases, the burden of proof that employees were validly dismissed rests on the employers. Failure to discharge this burden means that the dismissal is illegal.

A review of the records here shows that the termination of petitioners’ employment was effected merely because respondents no longer wanted their services. This is not an authorized or just cause for dismissal under the Labor Code. Employment contracts cannot be terminated on a whim.

Moreover, petitioners did not voluntarily sever their employment when they signed the Compromise Agreement, which, again, cannot be used to justify a dismissal.

Furthermore, petitioners were not accorded due process. A valid dismissal must comply with substantive and procedural due process: there must be a valid cause and a valid procedure. The employer must comply with the two (2)-notice requirement, while the employee must be given an opportunity to be heard.56 Here, petitioners were only verbally dismissed, without any notice given or having been informed of any just cause for their dismissal.

This Court cannot rest easy on respondents’ insistence that petitioners voluntarily terminated their employment. Contrary to their assertion, petitioners were left with no choice but to accept the Compromise Agreement and to go back to the Philippines.

After accumulating a huge amount of debt to work abroad, petitioners were burdened to continue working for respondents that they were constrained to sign the piece-rate-based contract upon arriving in Taiwan. As a result, they were paid less than if they were paid on a monthly basis and, worse, they were deprived of their overtime premium. Petitioners inevitably defaulted on their loan obligations. To make matters worse, they were terminated from employment on a whim and were left homeless.

One can only imagine how all these compounded a heavy burden upon petitioners. Overseas Filipino workers venture out into unfamiliar lands in the hope of providing a better future for their families. They endure years of being away from their loved ones while bearing a life of toil abroad. Our laws afford protection to our workers, whether employed locally or abroad. It is this Court’s bounden duty to uphold these laws and dispense justice for petitioners. With their right to substantive and procedural due process denied, it is clear that petitioners were illegally dismissed from service.

As a consequence of the illegal dismissal, petitioners are also entitled to moral damages, exemplary damages, and attorney’s fees…

x x x

Petitioners have sufficiently shown how bad faith attended respondents’ actions. They were made to sign a new employment contract on a piece-rate basis, which violates the Migrant Workers and Overseas Filipinos Act. Under that contract, petitioners were underpaid and deprived of their overtime premium.

Moreover, petitioners’ employment contracts were unilaterally terminated. After their meeting before the Bureau of Labor, respondents told petitioners that they were no longer employed. As the Court of Appeals noted, respondents did not refute petitioners’ narration that they were immediately escorted back to the factory, ordered to pack their possessions, and were left at a train station.59 Petitioners were forced to stay in shelters for months without any means of livelihood. Worse, they were deprived of due process when they were terminated without any notice or opportunity to be heard.

Being deprived of their hard-earned salaries and, eventually, of their employment, caused petitioners mental anguish, wounded feelings, and serious anxiety. The award of moral damages is but appropriate.

Consequently, the award of exemplary damages is necessary to deter future employers from committing the same acts.

Additionally, petitioners are also entitled to the award of attorney’s fees under Article 2208 of the Civil Code…

x x x

The award of attorney’s fees is proper because: (1) exemplary damages is also awarded; (2) respondents acted in gross bad faith in refusing to pay petitioners their hard-earned salaries in form of overtime premiums; and (3) this case is also a complaint for recovery of wages.

In addition, we further sustain the Court of Appeals’ ruling in having ordered the reimbursement of petitioners’ placement fees.1âшphi1 As they were terminated without just, valid, or authorized cause, petitioners are entitled to the full reimbursement of their placement fees with interest at 12% per annum in accordance with Section 7 of Republic Act No. 10022.

4. Jurisdiction

a. Labor Arbiter

1) Augustin International Center, Inc. v. Bartolome (January 2019)

Augustin International Center, Inc. v. Bartolome, G.R. No. 226578, 28 January 2019

[BACKGROUND]

In 2010, Bartolome and Yamat applied as carpenter and tile setter, respectively, with AICI, an employment agency providing manpower to foreign corporations. They were eventually engaged by Golden Arrow Company, Ltd. (Golden Arrow), which had its office in Khartoum, Republic of Sudan. Thereafter, they signed their respective employment contracts stating that they would render services for a period not less than twenty-four (24) months. In their contracts, there was a provision on dispute settlement that reads:

14. Settlement of disputes: All claims and complaints relative to the employment contract of the employee shall be settled in accordance with Company policies, rules[,] and regulations. In case the Employee contests the decision of the employer, the matter shall be settled amicably with [the] participation of the Labour Attache or any authorised representative of the Philippines Embassy nearest the site of employment. x x x

Upon their arrival in Sudan sometime in. March and April 2011, Golden Arrow transferred their employment to its sister company, Al Mamoun Trading and Investment Company (Al Mamoun). A year later, or on May 2, 2012, Al Mamoun served Notices of Termination of Service8 to respondents, causing them to return tothe Philippines. On May 22, 2012, they filed their complaint 9 before the NLRC seeking that AICI and Al Mamoun be held liable for illegal dismissal, breach of contract, and payment of the unexpired portion of the contract.

For their part, AICI and Al Mamoun claimed that respondents abandoned their duties by mid-2012, based on the e-mail message11 from Golden Arrow to that effect, viz.:

2. Illegal Termination – I understand Mr[.] [Yamat] and Mr[.] Bartolome refused to work resulting in the work they were designated to complete remaining pending. It is our policy that should a member of staff refuse to carry out their normal duties without a satisfactory and timely explanation then we believe they have terminated their employment themselves.

The LA’s Ruling In a Decision13 dated August 31, 2012, the LA held that respondents were illegally dismissed, and accordingly, ordered AICI and Al Mamoun to pay the former ₱69,300.00 each, representing their salaries for the unexpired portion of their contract. The LA explained that AICI and Al Mamoun failed to overcome their burden to prove that the dismissal was for a just or authorized cause. They likewise failed to show that respondents abandoned their duties.

x x x

[DECISION/RESOLUTION BY THE SUPREME COURT]

The Issues Before the Court

The issues before the Court are whether or not: (a) the LA correctly took cognizance of this case; and (b) AICI is liable for respondents’ illegal dismissal.

The Court’s Ruling

Preliminarily, it bears stressing that AICI does not assail the CA’s ruling of illegal dismissal but instead, argues that the LA incorrectly took cognizance of the case at the onset. It insists that based on the dispute settlement provision in respondents’ employment contracts, the “primary jurisdiction” to decide this case is with the “[Labor] Attache or any [authorized] representative of the Philippine[] Embassy nearest the site of employment” (designated person).

After a judicious review of the case, the Court denies the petition.

Section 10 of Republic Act No. (RA) 8042,31 as amended by RA 10022,32 explicitly provides that LAs have original and exclusive 33 jurisdiction over claims arising out of employer-employee relations or by virtue of any law or contract involving Filipino workers for overseas deployment, as in this case. The relevant portion of the provision reads:

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

Settled is the rule that jurisdiction over the subject matter is conferred by law and cannot be acquired or waived by agreement of the parties. As herein applied, the dispute settlement provision in respondents’ employment contracts cannot divest the LA of its jurisdiction over the illegal dismissal case. Hence, it correctly took cognizance of the complaint filed by respondents before it.

Moreover, issues not raised in the previous proceedings cannot be raised for the first time at a late stage. In this case, the Court observes that AICI failed to raise the issue of respondents’ supposed non-compliance with the dispute settlement provision before the LA, as well as before the NLRC. In fact, AICI only mentioned this issue for the first time before the CA in its motion for reconsideration. Therefore, such argument or defense is deemed waived and can no longer be considered on appeal.36 Hence, the Court rules that the LA properly took cognizance of this case.

However, the Court deems it essential to point out that in resolving whether the LA had jurisdiction over this case, the CA erroneously assumed that the designated person in the dispute settlement provision is a Voluntary Arbitrator under the auspices of the Labor Code, to wit:

It is true that the Voluntary Arbitrator or a panel of Voluntary Arbitrators can hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks upon agreement of the parties. But if the parties wish to submit termination disputes to voluntary arbitration, such an agreement must be stated “in unequivocal language.” In the present case, the agreement of the parties was written in this manner:

x x x x

It is, however, not sufficient to merely say that the parties agree on the principle that “all disputes” should first be submitted to a Voluntary Arbitrator. There is a need for an express stipulation that illegal termination disputes should be resolved by a Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same fall within a special class of disputes that are generally within the exclusive [and] original jurisdiction of the Labor Arbiters by express provision of law.

To clarify, the Voluntary Arbitrator under the Labor Code is one agreed upon by the parties to resolve certain disputes and is tasked to render an award or decision within twenty (20) calendar days pursuant to Article 276 of the Labor Code. This decision shall be final and executory after ten (10) calendar days from receipt thereof.

In this case, the dispute settlement provision reads:

14. Settlement of disputes: All claims and complaints relative to the employment contract of the employee shall be settled in accordance with Company policies, rules[,] and regulations. In case the Employee contests the decision of the employer, the matter shall be settled amicably with [the] participation of the Labour Attache or any authorised representative of the Philippines Embassy nearest the site of employment. x x x

Clearly, the mechanism contemplated herein is an amicable settlement whereby the parties can negotiate with each other; it is not a voluntary arbitration under the Labor Code wherein a third party renders a decision to resolve the dispute. The text of the contractual provision shows that the designated person is tasked merely to participate in the amicable settlement and not to decide the dispute. This participation is in line with the mandate of Filipinos Resource Centers, in which labor attaches are members, to engage in the “conciliation of disputes arising from employer-employee relationship.” Hence, the “[Labor] Attache or any [authorized] representative of the Philippine[] Embassy nearest the site of employment” was not called upon to act as a Voluntary Arbitrator as contemplated under the Labor Code. It was therefore erroneous for the CA to assume that the contractual provision triggered the voluntary arbitration mechanism under the Labor Code and, on that premise, venture into an inquiry as to whether or not there was an “express stipulation” submitting the termination dispute to such process, which thereby puts the case beyond the ambit of the LA’s jurisdiction.

Considering that the parties did not submit the present illegal termination case to the voluntary arbitration mechanism, the dispute remained under the exclusive and original jurisdiction of the LA, which therefore correctly took cognizance of the case. Hence, the Court modifies the CA’s ruling on this matter accordingly.

On the second issue, AICI argues in its petition that it cannot be held liable for illegal dismissal because it only recruits employees for foreign employers, and as such, it does not have an employee-employer relationship with the overseas workers.

This argument does not hold water. Section 10 of RA 8042, as amended; expressly provides that a recruitment agency, such as AICI, is solidarily liable with the foreign employer for money claims arising out of the employee-employer relationship between the latter and the overseas Filipino worker. Jurisprudence explains that this solidary liability is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him,46 as well as to afford overseas workers an additional layer of protection against foreign employers that tend to violate labor laws. In view of the express provision of law, AICI’s lack of an employee-employer relationship with respondents cannot exculpate it from its liability to pay the latter’s money claims.

Nevertheless, AICI is not left without a remedy. The law does not preclude AICI from going after the foreign employer for reimbursement of any payment it has made to respondents to answer for the money claims against the foreign employer.

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