740 PHIL.

403 ← click for PDF copy

EN BANC
[ G.R. No. 170139. August 05, 2014 ]
SAMEER OVERSEAS PLACEMENT AGENCY, INC.,
PETITIONER, VS. JOY C. CABILES, RESPONDENT.
DECISION

LEONEN, J.:

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

We are asked to decide a petition for review[1] on certiorari assailing the Court of
Appeals’ decision[2] dated June 27, 2005. This decision partially affirmed the
National Labor Relations Commission’s resolution dated March 31, 2004,[3]
declaring respondent’s dismissal illegal, directing petitioner to pay respondent’s
three-month salary equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering
it to reimburse the NT$3,000.00 withheld from respondent, and pay her NT$300.00
attorney’s fees.[4]

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement

agency.[5] Responding to an ad it published, respondent, Joy C. Cabiles, submitted
her application for a quality control job in Taiwan.[6]

Joy’s application was accepted.[7] Joy was later asked to sign a one-year employment
contract for a monthly salary of NT$15,360.00.[8] She alleged that Sameer Overseas
Agency required her to pay a placement fee of P70,000.00 when she signed the
employment contract.[9]

Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997.
[10] She alleged that in her employment contract, she agreed to work as quality

control for one year.[11] In Taiwan, she was asked to work as a cutter.[12]
Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr.
Huwang from Wacoal informed Joy, without prior notice, that she was terminated
and that “she should immediately report to their office to get her salary and
passport.”[13] She was asked to “prepare for immediate repatriation.”[14]

Joy claims that she was told that from June 26 to July 14, 1997, she only earned a
total of NT$9,000.[15] According to her, Wacoal deducted NT$3,000 to cover her
plane ticket to Manila.[16]

On October 15, 1997, Joy filed a complaint[17] with the National Labor Relations
Commission against petitioner and Wacoal. She claimed that she was illegally
dismissed.[18] She asked for the return of her placement fee, the withheld amount for
repatriation costs, payment of her salary for 23 months as well as moral and
exemplary damages.[19] She identified Wacoal as Sameer Overseas Placement
Agency’s foreign principal.[20]

Sameer Overseas Placement Agency alleged that respondent's termination was due
to her inefficiency, negligence in her duties, and her “failure to comply with the work
requirements [of] her foreign [employer].”[21] The agency also claimed that it did
not ask for a placement fee of ?70,000.00.[22] As evidence, it showed Official
Receipt No. 14860 dated June 10, 1997, bearing the amount of ?20,360.00.[23]
Petitioner added that Wacoal's accreditation with petitioner had already been
transferred to the Pacific Manpower & Management Services, Inc. (Pacific) as of
August 6, 1997.[24] Thus, petitioner asserts that it was already substituted by Pacific
Manpower.[25]

Pacific Manpower moved for the dismissal of petitioner’s claims against it.[26] It
alleged that there was no employer-employee relationship between them.[27]
Therefore, the claims against it were outside the jurisdiction of the Labor Arbiter.[28]
Pacific Manpower argued that the employment contract should first be presented so
that the employer’s contractual obligations might be identified.[29] It further denied
that it assumed liability for petitioner’s illegal acts.[30]

On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint.[31] Acting Executive
Labor Arbiter Pedro C. Ramos ruled that her complaint was based on mere
allegations.[32] The Labor Arbiter found that there was no excess payment of
placement fees, based on the official receipt presented by petitioner.[33] The Labor
Arbiter found unnecessary a discussion on petitioner’s transfer of obligations to
Pacific[34] and considered the matter immaterial in view of the dismissal of
respondent’s complaint.[35]

Joy appealed[36] to the National Labor Relations Commission.

In a resolution[37] dated March 31, 2004, the National Labor Relations Commission
declared that Joy was illegally dismissed.[38] It reiterated the doctrine that the burden
of proof to show that the dismissal was based on a just or valid cause belongs to the
employer.[39] It found that Sameer Overseas Placement Agency failed to prove that
there were just causes for termination.[40] There was no sufficient proof to show that
respondent was inefficient in her work and that she failed to comply with company
requirements.[41] Furthermore, procedural due process was not observed in
terminating respondent.[42]

The National Labor Relations Commission did not rule on the issue of
reimbursement of placement fees for lack of jurisdiction.[43] It refused to entertain
the issue of the alleged transfer of obligations to Pacific.[44] It did not acquire
jurisdiction over that issue because Sameer Overseas Placement Agency failed to
appeal the Labor Arbiter’s decision not to rule on the matter.[45]

The National Labor Relations Commission awarded respondent only three (3)
months worth of salary in the amount of NT$46,080, the reimbursement of the
NT$3,000 withheld from her, and attorney’s fees of NT$300.[46]

The Commission denied the agency’s motion for reconsideration[47] dated May 12,
2004 through a resolution[48] dated July 2, 2004.

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a
petition[49] for certiorari with the Court of Appeals assailing the National Labor
Relations Commission’s resolutions dated March 31, 2004 and July 2, 2004.

The Court of Appeals[50] affirmed the decision of the National Labor Relations
Commission with respect to the finding of illegal dismissal, Joy’s entitlement to the
equivalent of three months worth of salary, reimbursement of withheld repatriation
expense, and attorney’s fees.[51] The Court of Appeals remanded the case to the
National Labor Relations Commission to address the validity of petitioner's
allegations against Pacific.[52] The Court of Appeals held, thus:

Although the public respondent found the dismissal of the complainant-

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

But we do find it necessary to remand the instant case to the public

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

WHEREFORE, premises considered, the assailed Resolutions are

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

SO ORDERED.[53]

Dissatisfied, Sameer Overseas Placement Agency filed this petition.[54]

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

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

Petitioner also reiterates that since Wacoal’s accreditation was validly transferred to
Pacific at the time respondent filed her complaint, it should be Pacific that should
now assume responsibility for Wacoal’s contractual obligations to the workers
originally recruited by petitioner.[57]

Sameer Overseas Placement Agency’s petition is without merit. We find for

respondent.

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

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

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

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

Employees are not stripped of their security of tenure when they move to work in a
different jurisdiction. With respect to the rights of overseas Filipino workers, we
follow the principle of lex loci contractus.
Thus, in Triple Eight Integrated Services, Inc. v. NLRC,[65] this court noted:

Petitioner likewise attempts to sidestep the medical certificate

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

Again, petitioner’s argument is without merit.

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

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 pre-termination of employment
contracts.[66] (Emphasis supplied, citation omitted)

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

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

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

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

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

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 duties[69] may, therefore, constitute a just cause for termination under Article
282(b), but only if petitioner was able to prove it.

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

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

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

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

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

Assessing an employee’s work performance does not stop after regularization. The
employer, on a regular basis, determines if an employee is still qualified and
efficient, based on work standards. Based on that determination, and after complying
with the due process requirements of notice and hearing, the employer may exercise
its management prerogative of terminating the employee found unqualified.

The regular employee must constantly attempt to prove to his or her employer that he
or she meets all the standards for employment. This time, however, the standards to
be met are set for the purpose of retaining employment or promotion. The employee
cannot be expected to meet any standard of character or workmanship if such
standards were not communicated to him or her. Courts should remain vigilant on
allegations of the employer’s failure to communicate work standards that would
govern one’s employment “if [these are] to discharge in good faith [their] duty to
adjudicate.”[73]

In this case, petitioner merely alleged that respondent failed to comply with her
foreign employer’s work requirements and was inefficient in her work.[74] 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.

Petitioner failed to comply with

the due process requirements

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

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

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

II

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

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

Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of law to

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

The liability of the principal/employer and the recruitment/placement

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

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

Any compromise/amicable settlement or voluntary agreement on money

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

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

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

....

(Emphasis supplied)

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

....

The Labor Code[81] also entitles the employee to 10% of the amount of withheld
wages as attorney’s fees when the withholding is unlawful.

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

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

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

A statute or provision which was declared unconstitutional is not a law. It “confers

no rights; it imposes no duties; it affords no protection; it creates no office; it is
inoperative as if it has not been passed at all.”[85]

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 provided under 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 respondent’s termination from work in 1997.[86] Republic Act No. 8042 before it
was amended by Republic Act No. 10022 governs this case.
When a law is passed, this court awaits an actual case that clearly raises adversarial
positions in their proper context before considering a prayer to declare it as
unconstitutional.

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

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

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

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

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

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

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

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

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

Thus, in a resolution[88] dated October 22, 2013, we ordered the parties and the
Office of the Solicitor General to comment on the constitutionality of the reinstated
clause in Republic Act No. 10022.

In its comment,[89] petitioner argued that the clause was constitutional.[90] The
legislators intended a balance between the employers’ and the employees’ rights by
not unduly burdening the local recruitment agency.[91] Petitioner is also of the view
that the clause was already declared as constitutional in Serrano.[92]

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

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

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

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that
should be recovered by an illegally dismissed overseas worker to three months is
both a violation of due process and the equal protection clauses of the
Constitution.

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

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

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

A reasonable classification “(1) must rest on substantial distinctions; (2) must be

germane to the purposes of the law; (3) must not be limited to existing conditions
only; and (4) must apply equally to all members of the same class.”[105]

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

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

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

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

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

Under the Constitution, labor is afforded special protection.[110] Thus, this court in
Serrano, “[i]mbued with the same sense of ‘obligation to afford protection to labor,’ .
. . employ[ed] the standard of strict judicial scrutiny, for it perceive[d] in the subject
clause a suspect classification prejudicial to OFWs.”[111]

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

We observed that illegally dismissed overseas workers whose employment contracts

had a term of less than one year were granted the amount equivalent to the unexpired
portion of their employment contracts.[116] Meanwhile, illegally dismissed overseas
workers with employment terms of at least a year were granted a cap equivalent to
three months of their salary for the unexpired portions of their contracts.[117]

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

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

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

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

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

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

Likewise, the jurisdictional and enforcement issues on overseas workers’ money

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

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

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

As Justice Brion said in his concurring opinion in Serrano:

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

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

The so-called incentive is rendered particularly odious by its effect on the

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

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

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.[128]

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

III

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

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:

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

Section 2. In view of the above, Subsection X305.1 of the Manual of

Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the
Manual of Regulations for Non-Bank Financial Institutions are hereby
amended accordingly.

This Circular shall take effect on 1 July 2013.

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

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.[131]

Circular No. 799 is applicable only in loans and forbearance of money, goods, or
credits, and in judgments when there is no stipulation on the applicable interest rate.
Further, it is only applicable if the judgment did not become final and executory
before July 1, 2013.[132]

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

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

Moreover, laws are deemed incorporated in contracts. “The contracting parties need
not repeat them. They do not even have to be referred to. Every contract, thus,
contains not only what has been explicitly stipulated, but the statutory provisions that
have any bearing on the matter.”[135] There is, therefore, an implied stipulation in
contracts between the placement agency and the overseas worker that in case the
overseas worker is adjudged as entitled to reimbursement of his or her placement
fees, the amount shall be subject to a 12% interest per annum. This implied
stipulation has the effect of removing awards for reimbursement of placement fees
from Circular No. 799’s coverage.
The same cannot be said for awards of salary for the unexpired portion of the
employment contract under Republic Act No. 8042. These awards are covered by
Circular No. 799 because the law does not provide for a specific interest rate that
should apply.

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

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

IV

Finally, we clarify the liabilities of Wacoal as principal and petitioner as the

employment agency that facilitated respondent’s overseas employment.

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

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

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

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

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

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

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

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

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

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

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

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

But it seems that we have not said enough.

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

Unknown to them, they keep our economy afloat through the ebb and flow of
political and economic crises. They are our true diplomats, they who show the world
the resilience, patience, and creativity of our people. Indeed, we are a people who
contribute much to the provision of material creations of this world.

This government loses its soul if we fail to ensure decent treatment for all Filipinos.
We default by limiting the contractual wages that should be paid to our workers
when their contracts are breached by the foreign employers. While we sit, this court
will ensure that our laws will reward our overseas workers with what they deserve:
their dignity.

Inevitably, their dignity is ours as well.

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

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

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

SO ORDERED.

Carpio, Acting C.J., Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del
Castillo, Villarama, Jr., Perez, Mendoza, Reyes, and Perlas-Bernabe, JJ., concur.
Sereno, C.J., on Leave.
Brion, J., see dissenting opinion.

[1] Rollo, pp. 3–29.

[2] Id. at 32–44.

[3] Id. at 125–131.

[4] Id. at 131.

[5] Id. at 3.

[6] Id. at 126.

[7] Id. at 102.