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G.R. No. 152642               November 13, 2012

HON. PATRICIA A. STO.TOMAS, ROSALINDA BALDOZ and LUCITA LAZO, Petitioners, vs.REY SALAC, WILLIE D. ESPIRITU, MARIO MONTENEGRO, DODGIE BELONIO, LOLIT SALINEL and BUDDY BONNEVIE, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 152710

HON. PATRICIA A. STO. TOMAS, in her capacity as Secretary of Department of Labor and Employment (DOLE), HON. ROSALINDA D. BALDOZ, in her capacity as Administrator, Philippine Overseas Employment Administration (POEA), and the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION GOVERNING BOARD, Petitioners, vs.HON. JOSE G. PANEDA, in his capacity as the Presiding Judge of Branch 220, Quezon City, ASIAN RECRUITMENT COUNCIL PHILIPPINE CHAPTER, INC. (ARCOPHIL), for itself and in behalf of its members: WORLDCARE PHILIPPINES SERVIZO INTERNATIONALE, INC., STEADFAST INTERNATIONAL RECRUITMENT CORP., VERDANT MANPOWER MOBILIZATION CORP., BRENT OVERSEAS PERSONNEL, INC., ARL MANPOWER SERVICES, INC., DAHLZEN INTERNATIONAL SERVICES, INC., INTERWORLD PLACEMENT CENTER, INC., LAKAS TAO CONTRACT SERVICES LTD. CO., SSC MULTI-SERVICES, DMJ INTERNATIONAL, and MIP INTERNATIONAL MANPOWER SERVICES, represented by its proprietress, MARCELINA I. PAGSIBIGAN, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 167590

REPUBLIC OF THE PHILIPPINES, represented by the HONORABLE EXECUTIVE SECRETARY, the HONORABLE SECRETARY OF LABOR AND EMPLOYMENT (DOLE), the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), the OVERSEAS WORKERS WELFARE ADMINISTRATION (OWWA), the LABOR ARBITERS OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), the HONORABLE SECRETARY OF JUSTICE, the HONORABLE SECRETARY OF FOREIGN AFFAIRS and the COMMISSION ON AUDIT (COA), Petitioners, vs.PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. (P ASEI), Respondent.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. Nos. 182978-79

BECMEN SERVICE EXPORTER AND PROMOTION, INC., Petitioner, vs.SPOUSES SIMPLICIO AND MILA CUARESMA (for and in behalf of daughter, Jasmin G. Cuaresma), WHITE FALCON SERVICES, INC., and JAIME ORTIZ (President of White Falcon Services, Inc.), Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. Nos. 184298-99

SPOUSES SIMPLICIO AND MILA CUARESMA (for and in behalf of deceased daughter, Jasmin G. Cuaresma), Petitioners, vs.WHITE FALCON SERVICES, INC. and BECMEN SERVICES EXPORTER AND PROMOTION, INC.,Respondents.

D E C I S I O N

ABAD, J.:

These consolidated cases pertain to the constitutionality of certain provisions of Republic Act 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995.

The Facts and the Case

On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 that, for among other purposes, sets the Government’s policies on overseas employment and establishes a higher standard of protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in distress.

G.R. 152642 and G.R. 152710

(Constitutionality of Sections 29 and 30, R.A. 8042)

Sections 29 and 30 of the Act 1   commanded the Department of Labor and Employment (DOLE) to begin deregulating within one year of its passage the business of handling the recruitment and migration of overseas Filipino workers and phase out within five years the regulatory functions of the Philippine Overseas Employment Administration (POEA).

On January 8, 2002 respondents Rey Salac, Willie D. Espiritu, Mario Montenegro, Dodgie Belonio, Lolit Salinel, and Buddy Bonnevie (Salac, et al.) filed a petition for certiorari, prohibition and mandamus with application for temporary restraining order (TRO) and preliminary injunction against petitioners, the DOLE Secretary, the POEA Administrator, and the Technical Education and Skills Development Authority (TESDA) Secretary-General before the Regional Trial Court (RTC) of Quezon City, Branch 96. 2

Salac, et al. sought to: 1) nullify DOLE Department Order 10 (DOLE DO 10) and POEA Memorandum Circular 15 (POEA MC 15); 2) prohibit the DOLE, POEA, and TESDA from implementing the same and from further issuing rules and regulations that would regulate the recruitment and placement of overseas Filipino workers (OFWs); and 3) also enjoin them to comply with the policy of deregulation mandated under Sections 29 and 30 of Republic Act 8042.

On March 20, 2002 the Quezon City RTC granted Salac, et al.’s petition and ordered the government agencies mentioned to deregulate the recruitment and placement of OFWs. 3   The RTC also annulled DOLE DO 10, POEA MC 15, and all other orders, circulars and issuances that are inconsistent with the policy of deregulation under R.A. 8042.

Prompted by the RTC’s above actions, the government officials concerned filed the present petition in G.R. 152642 seeking to annul the RTC’s decision and have the same enjoined pending action on the petition.

On April 17, 2002 the Philippine Association of Service Exporters, Inc. intervened in the case before the Court, claiming that the RTC March 20, 2002 Decision gravely affected them since it paralyzed the deployment abroad of OFWs and performing artists. The Confederated Association of Licensed Entertainment Agencies, Incorporated (CALEA) intervened for the same purpose.4

On May 23, 2002 the Court5 issued a TRO in the case, enjoining the Quezon City RTC, Branch 96, from enforcing its decision.

In a parallel case, on February 12, 2002 respondents Asian Recruitment Council Philippine Chapter, Inc. and others (Arcophil, et al.) filed a petition for certiorari and prohibition with application for TRO and preliminary injunction against the DOLE Secretary, the POEA Administrator, and the TESDA Director-General,6 before the RTC of Quezon City, Branch 220, to enjoin the latter from implementing the 2002 Rules and Regulations Governing the Recruitment and Employment of Overseas Workers and to cease and desist from issuing other orders, circulars, and policies that tend to regulate the recruitment and placement of OFWs in violation of the policy of deregulation provided in Sections 29 and 30 of R.A. 8042.

On March 12, 2002 the Quezon City RTC rendered an Order, granting the petition and enjoining the government agencies involved from exercising regulatory functions over the recruitment and placement of OFWs. This prompted the DOLE Secretary, the POEA Administrator, and the TESDA Director-General to file the present action in G.R. 152710. As in G.R. 152642, the Court issued on May 23, 2002 a TRO enjoining the Quezon City RTC, Branch 220 from enforcing its decision.

On December 4, 2008, however, the Republic informed7 the Court that on April 10, 2007 former President Gloria Macapagal-Arroyo signed into law R.A. 94228 which expressly repealed Sections 29 and 30 of R.A. 8042 and adopted the policy of close government regulation of the recruitment and deployment of OFWs. R.A. 9422 pertinently provides:

x x x x

SEC. 1. Section 23, paragraph (b.1) of Republic Act No. 8042, otherwise known as the "Migrant Workers and Overseas Filipinos Act of 1995" is hereby amended to read as follows:

(b.1) Philippine Overseas Employment Administration – The Administration shall regulate private sector participation in the recruitment and overseas placement of workers by setting up a licensing and registration system. It shall also formulate and implement, in coordination with appropriate entities concerned, when necessary, a system for promoting and monitoring the overseas employment of Filipino workers taking into consideration their welfare and the domestic manpower requirements.

In addition to its powers and functions, the administration shall inform migrant workers not only of their rights as workers but also of their rights as human beings, instruct and guide the workers how to assert their rights and provide the available mechanism to redress violation of their rights.

In the recruitment and placement of workers to service the requirements for trained and competent Filipino workers of foreign governments and their instrumentalities, and such other employers as public interests may require, the administration shall deploy only to countries where the Philippines

has concluded bilateral labor agreements or arrangements: Provided, That such countries shall guarantee to protect the rights of Filipino migrant workers; and: Provided, further, That such countries shall observe and/or comply with the international laws and standards for migrant workers.

SEC. 2. Section 29 of the same law is hereby repealed.

SEC. 3. Section 30 of the same law is also hereby repealed.

x x x x

On August 20, 2009 respondents Salac, et al. told the Court in G.R. 152642 that they agree9 with the Republic’s view that the repeal of Sections 29 and 30 of R.A. 8042 renders the issues they raised by their action moot and academic. The Court has no reason to disagree. Consequently, the two cases, G.R. 152642 and 152710, should be dismissed for being moot and academic.

G.R. 167590

(Constitutionality of Sections 6, 7, and 9 of R.A. 8042)

On August 21, 1995 respondent Philippine Association of Service Exporters, Inc. (PASEI) filed a petition for declaratory relief and prohibition with prayer for issuance of TRO and writ of preliminary injunction before the RTC of Manila, seeking to annul Sections 6, 7, and 9 of R.A. 8042 for being unconstitutional. (PASEI also sought to annul a portion of Section 10 but the Court will take up this point later together with a related case.)

Section 6 defines the crime of "illegal recruitment" and enumerates the acts constituting the same. Section 7 provides the penalties for prohibited acts. Thus:

SEC. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-license or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That such non-license or non-holder, who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:

x x x x

SEC. 7. Penalties. –

(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine not less than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand pesos (P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than five hundred thousand pesos (P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein.

Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority.10

Finally, Section 9 of R.A. 8042 allowed the filing of criminal actions arising from "illegal recruitment" before the RTC of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense.

The RTC of Manila declared Section 6 unconstitutional after hearing on the ground that its definition of "illegal recruitment" is vague as it fails to distinguish between licensed and non-licensed recruiters11 and for that reason gives undue advantage to the non-licensed recruiters in violation of the right to equal protection of those that operate with government licenses or authorities.

But "illegal recruitment" as defined in Section 6 is clear and unambiguous and, contrary to the RTC’s finding, actually makes a distinction between licensed and non-licensed recruiters. By its terms, persons who engage in "canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers" without the appropriate government license or authority are guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in that section. On the other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate government license or authority, are guilty of illegal recruitment only if they commit any of the wrongful acts enumerated in Section 6.

The Manila RTC also declared Section 7 unconstitutional on the ground that its sweeping application of the penalties failed to make any distinction as to the seriousness of the act committed for the application of the penalty imposed on such violation. As an example, said the trial court, the mere failure to render a report under Section 6(h) or obstructing the inspection by the Labor Department under Section 6(g) are penalized by imprisonment for six years and one day and a minimum fine of P200,000.00 but which could unreasonably go even as high as life imprisonment if committed by at least three persons.

Apparently, the Manila RTC did not agree that the law can impose such grave penalties upon what it believed were specific acts that were not as condemnable as the others in the lists. But, in fixing uniform penalties for each of the enumerated acts under Section 6, Congress was within its prerogative to determine what individual acts are equally reprehensible, consistent with the State policy of according full protection to labor, and deserving of the same penalties. It is not within the power of the Court to question the wisdom of this kind of choice. Notably, this legislative policy has been further stressed in July 2010 with the enactment of R.A. 1002212 which increased even more the duration of the penalties of imprisonment and the amounts of fine for the commission of the acts listed under Section 7.

Obviously, in fixing such tough penalties, the law considered the unsettling fact that OFWs must work outside the country’s borders and beyond its immediate protection. The law must, therefore, make an effort to somehow protect them from conscienceless individuals within its jurisdiction who, fueled by greed, are willing to ship them out without clear assurance that their contracted principals would treat such OFWs fairly and humanely.

As the Court held in People v. Ventura,13 the State under its police power "may prescribe such regulations as in its judgment will secure or tend to secure the general welfare of the people, to protect them against the consequence of ignorance and incapacity as well as of deception and fraud." Police power is "that inherent and plenary power of the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society."14

The Manila RTC also invalidated Section 9 of R.A. 8042 on the ground that allowing the offended parties to file the criminal case in their place of residence would negate the general rule on venue of criminal cases which is the place where the crime or any of its essential elements were committed. Venue, said the RTC, is jurisdictional in penal laws and, allowing the filing of criminal actions at the place of residence of the offended parties violates their right to due process. Section 9 provides:

SEC. 9. Venue. – A criminal action arising from illegal recruitment as defined herein shall be filed with the Regional Trial Court of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense: Provided, That the court where the criminal action is first filed shall acquire jurisdiction to the exclusion of other courts: Provided, however, That the aforestated provisions shall also apply to those criminal actions that have already been filed in court at the time of the effectivity of this Act.

But there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6 of R.A. 8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed, Section 15(a), Rule 110 of the latter Rules allows exceptions provided by laws. Thus:

SEC. 15. Place where action is to be instituted.— (a) Subject to existing laws, the criminal action shall be instituted and tried in the court of the municipality or territory where the offense was committed or where any of its essential ingredients occurred. (Emphasis supplied)

x x x x

Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with that law’s declared policy15 of providing a criminal justice system that protects and serves the best interests of the victims of illegal recruitment.

G.R. 167590, G.R. 182978-79,16 and G.R. 184298-9917

(Constitutionality of Section 10, last sentence of 2nd paragraph)

G.R. 182978-79 and G.R. 184298-99 are consolidated cases. Respondent spouses Simplicio and Mila Cuaresma (the Cuaresmas) filed a claim for death and insurance benefits and damages against petitioners Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon Services, Inc. (White Falcon) for the death of their daughter Jasmin Cuaresma while working as staff nurse in Riyadh, Saudi Arabia.

The Labor Arbiter (LA) dismissed the claim on the ground that the Cuaresmas had already received insurance benefits arising from their daughter’s death from the Overseas Workers Welfare Administration (OWWA). The LA also gave due credence to the findings of the Saudi Arabian authorities that Jasmin committed suicide.

On appeal, however, the National Labor Relations Commission (NLRC) found Becmen and White Falcon jointly and severally liable for Jasmin’s death and ordered them to pay the Cuaresmas the amount of US$113,000.00 as actual damages. The NLRC relied on the Cabanatuan City Health Office’s autopsy finding that Jasmin died of criminal violence and rape.

Becmen and White Falcon appealed the NLRC Decision to the Court of Appeals (CA).18 On June 28, 2006 the CA held Becmen and White Falcon jointly and severally liable with their Saudi Arabian

employer for actual damages, with Becmen having a right of reimbursement from White Falcon. Becmen and White Falcon appealed the CA Decision to this Court.

On April 7, 2009 the Court found Jasmin’s death not work-related or work-connected since her rape and death did not occur while she was on duty at the hospital or doing acts incidental to her employment. The Court deleted the award of actual damages but ruled that Becmen’s corporate directors and officers are solidarily liable with their company for its failure to investigate the true nature of her death. Becmen and White Falcon abandoned their legal, moral, and social duty to assist the Cuaresmas in obtaining justice for their daughter. Consequently, the Court held the foreign employer Rajab and Silsilah, White Falcon, Becmen, and the latter’s corporate directors and officers jointly and severally liable to the Cuaresmas for: 1) P2,500,000.00 as moral damages; 2) P2,500,000.00 as exemplary damages; 3) attorney’s fees of 10% of the total monetary award; and 4) cost of suit.

On July 16, 2009 the corporate directors and officers of Becmen, namely, Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio and Eddie De Guzman (Gumabay, et al.) filed a motion for leave to Intervene. They questioned the constitutionality of the last sentence of the second paragraph of Section 10, R.A. 8042 which holds the corporate directors, officers and partners jointly and solidarily liable with their company for money claims filed by OFWs against their employers and the recruitment firms. On September 9, 2009 the Court allowed the intervention and admitted Gumabay, et al.’s motion for reconsideration.

The key issue that Gumabay, et al. present is whether or not the 2nd paragraph of Section 10, R.A. 8042, which holds the corporate directors, officers, and partners of recruitment and placement agencies jointly and solidarily liable for money claims and damages that may be adjudged against the latter agencies, is unconstitutional.

In G.R. 167590 (the PASEI case), the Quezon City RTC held as unconstitutional the last sentence of the 2nd paragraph of Section 10 of R.A. 8042. It pointed out that, absent sufficient proof that the corporate officers and directors of the erring company had knowledge of and allowed the illegal recruitment, making them automatically liable would violate their right to due process of law.

The pertinent portion of Section 10 provides:

SEC. 10. Money Claims. – x x x

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 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. (Emphasis supplied)

But the Court has already held, pending adjudication of this case, that the liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal activities.19 In the case of Becmen and White Falcon,20 while there is evidence that these companies were at fault in not investigating the cause of Jasmin’s death, there is no mention of any evidence in the case against them that intervenors

Gumabay, et al., Becmen’s corporate officers and directors, were personally involved in their company’s particular actions or omissions in Jasmin’s case.

As a final note, R.A. 8042 is a police power measure intended to regulate the recruitment and deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered by numerous OFWs seeking to work abroad. The rule is settled that every statute has in its favor the presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of the laws enacted by the Legislative Department. Hence, in the absence of a clear and unmistakable case that the statute is unconstitutional, the Court must uphold its validity.

WHEREFORE, in G.R. 152642 and 152710, the Court DISMISSES the petitions for having become moot and academic.1âwphi1

In G.R. 167590, the Court SETS ASIDE the Decision of the Regional Trial Court ofManila dated December 8, 2004 and DECLARES Sections 6, 7, and 9 of Republic Act 8042 valid and constitutional.

In G.R. 182978-79 and G.R. 184298-99 as well as in G.R. 167590, the Court HOLDS the last sentence of the second paragraph of Section 10 of Republic Act 8042 valid and constitutional. The Court, however, RECONSIDERS and SETS ASIDE the portion of its Decision in G.R. 182978-79 and G.R. 184298-99 that held intervenors Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio, and Eddie De Guzman jointly and solidarily liable with respondent Becmen Services Exporter and Promotion, Inc. to spouses Simplicia and Mila Cuaresma for lack of a finding in those cases that such intervenors had a part in the act or omission imputed to their corporation.

SO ORDERED.

G.R. No. 167614               March 24, 2009

ANTONIO M. SERRANO, Petitioner, vs.Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their earnings have built houses, provided health care, equipped schools and planted the seeds of businesses. They have woven together the world by transmitting ideas and knowledge from country to country. They have provided the dynamic human link between cultures, societies and economies. Yet, only recently have we begun to understand not only how much international migration impacts development, but how smart public policies can magnify this effect.

United Nations Secretary-General Ban Ki-MoonGlobal Forum on Migration and DevelopmentBrussels, July 10, 20071

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit:

Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired portion of their employment contract "or for three months for every year of the unexpired term, whichever is less" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of equal protection and denies them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which applied the subject clause, entreating this Court to declare the subject clause unconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following terms and conditions:

Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer by the end of April 1998.6

Respondents did not deliver on their promise to make petitioner Chief Officer.7 Hence, petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.8

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73, broken down as follows:

May 27/31, 1998 (5 days) incl. Leave pay

US$ 413.90

June 01/30, 1998

2,590.00

July 01/31, 1998

2,590.00

August 01/31, 1998

2,590.00

Sept. 01/30, 1998

2,590.00

Oct. 01/31, 1998

2,590.00

Nov. 2,590.00

01/30, 1998

Dec. 01/31, 1998

2,590.00

Jan. 01/31, 1999

2,590.00

Feb. 01/28, 1999

2,590.00

Mar. 1/19, 1999 (19 days) incl. leave pay

1,640.00

--------------------------------------------------------------------------------

25,382.23

Amount adjusted to chief mate's salary

(March 19/31, 1998 to April 1/30, 1998) +

1,060.5010

----------------------------------------------------------------------------------------------

TOTAL CLAIM

US$ 26,442.7311

as well as moral and exemplary damages and attorney's fees.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding him monetary benefits, to wit:

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

The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange prevailing at the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing the complainant’s claim for a salary differential. In addition, the respondents are hereby ordered to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate prevailing at the time of payment, the complainant’s (petitioner's) claim for attorney’s fees equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under this Decision.

The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.

All other claims are hereby DISMISSED.

SO ORDERED.13 (Emphasis supplied)

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire unexpired portion of nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month."14

Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed.

Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts.18

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered to pay complainant, jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following:

1. Three (3) months salary

$1,400 x 3 US$4,200.00

2. Salary differential 45.00

US$4,245.00

3. 10% Attorney’s fees 424.50

TOTAL US$4,669.50

The other findings are affirmed.

SO ORDERED.19

The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 "does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay."20

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause.21 The NLRC denied the motion.22

Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge against the subject clause.24 After initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.

In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.25

His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to this Court on the following grounds:

I

The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the Supreme Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired portion of his contract of employment instead of limiting it to three (3) months

II

In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals gravely erred in law when it failed to discharge its judicial duty to decide questions of substance not theretofore determined by the Honorable Supreme Court, particularly, the constitutional issues raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas workers to three (3) months.

III

Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals gravely erred in law in excluding from petitioner’s award the overtime pay and vacation pay provided in his contract since under the contract they form part of his salary.28

On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he intends to make use of the monetary award for his medical treatment and medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to allow partial execution of the undisputed monetary award and, at the same time, praying that the constitutional question be resolved.30

Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional question raised therein.

On the first and second issues

The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.

Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1,400.00 covering the period of three months out of the unexpired portion of nine months and 23 days of his employment contract or a total of US$4,200.00.

Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment contract, computed at the monthly rate of US$2,590.00.31

The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a determinate employment period and a fixed salary package.32 It also impinges on the equal protection clause, for it treats OFWs differently from local Filipino workers (local workers) by putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary award for local workers when their dismissal is declared illegal; that the disparate treatment is not reasonable as there is no substantial distinction between the two groups;33and that it defeats Section 18,34 Article II of the Constitution which guarantees the protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas.35

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected OFWs.36

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to benefit local placement agencies. He marks the statement made by the Solicitor General in his Memorandum,viz.:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect

them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)

Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better off than local employers because in cases involving the illegal dismissal of employees, foreign employers are liable for salaries covering a maximum of only three months of the unexpired employment contract while local employers are liable for the full lump-sum salaries of their employees. As petitioner puts it:

In terms of practical application, the local employers are not limited to the amount of backwages they have to give their employees they have illegally dismissed, following well-entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be limited to giving the illegally dismissed migrant workers the maximum of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that can be more than three (3) months.38

Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the salaries and other emoluments he is entitled to under his fixed-period employment contract.39

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the constitutional issue should not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA, and not at the earliest opportunity, which was when he filed an appeal before the NLRC.40

The Arguments of the Solicitor General

The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms of petitioner's employment, especially on the matter of money claims, as this was not stipulated upon by the parties.42

Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such that their rights to monetary benefits must necessarily be treated differently. The OSG enumerates the essential elements that distinguish OFWs from local workers: first, while local workers perform their jobs within Philippine territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost impossible to enforce judgment; and second, as held in Coyoca v. National Labor Relations Commission43 and Millares v. National Labor Relations Commission,44 OFWs are contractual employees who can never acquire regular employment status, unlike local workers who are or can become regular employees. Hence, the OSG posits that there are rights and privileges exclusive to local workers, but not available to OFWs; that these peculiarities make for a reasonable and valid basis for the differentiated treatment under the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the provision does not violate the equal protection clause nor Section 18, Article II of the Constitution.45

Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the solidary liability of placement agencies for this "redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions."46

The Court's Ruling

The Court sustains petitioner on the first and second issues.

When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the Congress, it does so only when these conditions obtain: (1) that there is an actual case or controversy involving a conflict of rights susceptible of judicial determination;47 (2) that the constitutional question is raised by a proper party48 and at the earliest opportunity;49 and (3) that the constitutional question is the very lis mota of the case,50otherwise the Court will dismiss the case or decide the same on some other ground.51

Without a doubt, there exists in this case an actual controversy directly involving petitioner who is personally aggrieved that the labor tribunals and the CA computed his monetary award based on the salary period of three months only as provided under the subject clause.

The constitutional challenge is also timely. It should be borne in mind that the requirement that a constitutional issue be raised at the earliest opportunity entails the interposition of the issue in the pleadings before a competent court, such that, if the issue is not raised in the pleadings before that competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot be considered on appeal.52 Records disclose that the issue on the constitutionality of the subject clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration with said labor tribunal,53 and reiterated in his Petition for Certiorari before the CA.54Nonetheless, the issue is deemed seasonably raised because it is not the NLRC but the CA which has the competence to resolve the constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial function – its function in the present case is limited to determining questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in accordance with the standards laid down by the law itself;55 thus, its foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with the power of judicial review or the power to declare unconstitutional a law or a provision thereof, such as the subject clause.56 Petitioner's interposition of the constitutional issue before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in its decision.

The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because the monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-month employment contract, and not just for a period of three months, strikes at the very core of the subject clause.

Thus, the stage is all set for the determination of the constitutionality of the subject clause.

Does the subject clause violate Section 10,Article III of the Constitution on non-impairmentof contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will receive57 is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation,58and cannot affect acts or contracts already perfected;59 however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A. No. 8042.

But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed.61Police power legislations adopted by the State to promote the health, morals, peace, education, good order, safety, and general welfare of the people are generally applicable not only to future contracts but even to those already in existence, for all private contracts must yield to the superior and legitimate measures taken by the State to promote public welfare.62

Does the subject clause violate Section 1,Article III of the Constitution, and Section 18,Article II and Section 3, Article XIII on laboras a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal protection of the law.

Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without distinction as to place of deployment, full protection of their rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances.65

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its legislation; however, to be valid, the classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class.66

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification needs only be shown to be rationally related to serving a legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the government must show that the challenged classification serves an important state interest and that the classification is at least substantially related to serving that interest;68 and c) strict judicial scrutiny69 in which a legislative classification which impermissibly interferes with the exercise of a fundamental right70 or operates to the peculiar disadvantage of a suspect class71 is presumed unconstitutional, and the burden is upon the government to prove that the classification is necessary to achieve a compelling state interest and that it is the least restrictive means to protect such interest.72

Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications73 based on race74 or gender75 but not when the classification is drawn along income categories.76

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas(BSP), a government financial institution (GFI), was challenged for maintaining its rank-and-file employees under the Salary Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been exempted from the SSL by their respective charters. Finding that the disputed provision contained a suspect classification based on salary grade, the Court deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said provision. More significantly, it was in this case that the Court revealed the broad outlines of its judicial philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and respect by the courts of justice except when they run afoul of the Constitution. The deference stops where the classification violates a fundamental right, or prejudices persons accorded special protection by the Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of constitutional guaranties, and require a stricter and more exacting adherence to constitutional limitations. Rational basis should not suffice.

Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter judicial scrutiny finds no support in American or English jurisprudence. Nevertheless, these foreign decisions and authorities are not per se controlling in this jurisdiction. At best, they are persuasive and have been used to support many of our decisions. We should not place undue and fawning reliance upon them and regard them as indispensable mental crutches without which we cannot come to our own decisions through the employment of our own endowments. We live in a different ambience and must decide our own problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and always with our own concept of law and justice. Our laws must be construed in accordance with the intention of our own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related thereto. More importantly, they must be construed to serve our own public interest which is the be-all and the end-all of all our laws. And it need not be stressed that our public interest is distinct and different from others.

x x x x

Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of effective judicial intervention.

Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in Philippine society. The command to promote social justice in Article II, Section 10, in "all phases of national development," further explicitated in Article XIII, are clear commands to the State to take affirmative action in the direction of greater equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal support for a more vigorous state effort towards achieving a reasonable measure of equality.

Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law. And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches but also on the judiciary to translate this pledge into a living reality. Social justice calls for the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated.

x x x x

Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be based on the "rational basis" test, and the legislative discretion would be given deferential treatment.

But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice against persons favored by the Constitution with special protection, judicial scrutiny ought to be more strict. A weak and watered down view would call for the abdication of this Court’s solemn duty to strike down any law repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a private person or the government itself or one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of the actor.

x x x x

In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin to a distinction based on economic class and status, with the higher grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP now receive higher compensation packages that are competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank - possessing higher and better education and opportunities for career advancement - are given higher compensation packages to entice them to stay. Considering that majority, if not all, the rank-and-file employees consist of people whose status and rank in life are less and limited, especially in terms of job marketability, it is they - and not the officers - who have the real economic and financial need for the adjustment . This is in accord with the policy of the Constitution "to free the people from poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of life for all." Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass muster. (Emphasis supplied)

Imbued with the same sense of "obligation to afford protection to labor," the Court in the present case also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a suspect classification prejudicial to OFWs.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:

First, OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts ofone year or more;

Second, among OFWs with employment contracts of more than one year; and

Third, OFWs vis-à-vis local workers with fixed-period employment;

OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts of one year or more

As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations Commission79(Second Division, 1999) that the Court laid down the following rules on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months’ salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the words "for every year of the unexpired term" which follows the words "salaries x x x for three months." To follow petitioners’ thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect since the law-making body is presumed to know the meaning of the words employed in the statue and to have used them advisedly. Ut res magis valeat quam pereat.80 (Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract.

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on Section 10(5). One was Asian Center for Career and Employment System and Services v. National Labor Relations Commission(Second Division, October 1998),81 which involved an OFW who was awarded a two-year employment contract, but was dismissed after working for one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary covering eight months, the unexpired portion of his contract. On appeal, the Court reduced the award to SR3,600.00 equivalent to his three months’ salary, this being the lesser value, to wit:

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just, valid or authorized cause is entitled to his salary for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondent’s employment contract is eight (8) months. Private respondent should therefore be paid his basic salary corresponding to three (3) months or a total of SR3,600.82

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division, December 1998),83 which involved an OFW (therein respondent Erlinda Osdana) who was originally granted a 12-month contract, which was deemed renewed for another 12 months. After serving for one year and seven-and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired portion of four and one-half months of her contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

Case Title Contract Period

Period of Service

Unexpired Period

Period Applied in the Computation

of the Monetary

Award

Skippers v. Maguad84

6 months 2 months 4 months 4 months

Bahia Shipping v. Reynaldo Chua 85

9 months 8 months 4 months 4 months

Centennial Transmarine v. dela Cruz

l86

9 months 4 months 5 months 5 months

Talidano v. Falcon87

12 months

3 months 9 months 3 months

Univan v. CA88

12 months

3 months 9 months 3 months

Oriental v. CA89

12 months

more than 2 months

10 months 3 months

PCL v. NLRC90

12 months

more than 2 months

more or less 9 months

3 months

Olarte v. Nayona91

12 months

21 days 11 months and 9 days

3 months

JSS v.Ferrer92

12 months

16 days 11 months and 24 days

3 months

Pentagon v. Adelantar93

12 months

9 months and 7 days

2 months and 23 days

2 months and 23 days

Phil. Employ v. Paramio,

12 months

10 months 2 months Unexpired portion

et al.94

Flourish Maritime v. Almanzor 95

2 years 26 days 23 months and 4 days

6 months or 3 months for

each year of contract

Athenna Manpower v.

Villanos 96

1 year, 10

months and 28 days

1 month 1 year, 9 months and

28 days

6 months or 3 months for

each year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first category includes OFWs with fixed-period employment contracts of less than one year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired portion of their contracts.

The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for about 2 months out of their 12-month contracts were awarded their salaries for only 3 months of the unexpired portion of their contracts. Even the OFWs involved inTalidano and Univan who had worked for a longer period of 3 months out of their 12-month contracts before being illegally dismissed were awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced work on the same day and under the same employer, and were illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the Court takes into account jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14, 1995,97 illegally dismissed OFWs, no matter how long the period of their employment contracts, were entitled to their salaries for the entire unexpired portions of their contracts. The matrix below speaks for itself:

Case Title Contract Period

Period of Service

Unexpired Period

Period Applied in the Computation of the Monetary

Award

ATCI v. CA, et al.98

2 years 2 months 22 months 22 months

Phil. 2 years 7 days 23 months 23 months and 23

Integrated v. NLRC99

and 23 days

days

JGB v. NLC100

2 years 9 months 15 months 15 months

Agoy v. NLRC101

2 years 2 months 22 months 22 months

EDI v. NLRC, et

al.102

2 years 5 months 19 months 19 months

Barros v. NLRC, et

al.103

12 months 4 months 8 months 8 months

Philippine Transmarine v. Carilla104

12 months 6 months and 22 days

5 months and 18 days

5 months and 18 days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were treated alike in terms of the computation of their monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of their employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed OFWs based on their employment periods, in the process singling out one category whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while sparing the other category from such prejudice, simply because the latter's unexpired contracts fall short of one year.

Among OFWs With Employment Contracts of More Than One Year

Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on the accuracy of the Marsaman interpretation.

The Court notes that the subject clause "or for three (3) months for every year of the unexpired term, whichever is less" contains the qualifying phrases "every year" and "unexpired term." By its ordinary meaning, the word "term" means a limited or definite extent of time.105 Corollarily, that "every year" is but part of an "unexpired term" is significant in many ways: first, the unexpired term must be at least one year, for if it were any shorter, there would be no occasion for such unexpired term to be measured by every year; and second, the original term must be more than one year, for otherwise, whatever would be the unexpired term thereof will not reach even a year. Consequently, the more decisive factor in the determination of when the subject clause "for three (3) months forevery year of the unexpired term, whichever is less" shall apply is not the length of the original contract period as held in Marsaman,106 but the length of the unexpired portion of the contract period -- the subject clause applies in cases when the unexpired portion of the contract period is at least one year, which arithmetically requires that the original contract period be more than one year.

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

To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the contract period of OFW-C, the subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired portion.

OFWs vis-à-vis Local WorkersWith Fixed-Period Employment

As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in place. This uniform system was applicable even to local workers with fixed-term employment.107

The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce (1888),108 to wit:

Article 299. If the contracts between the merchants and their shop clerks and employees should have been made of a fixed period, none of the contracting parties, without the consent of the other, may withdraw from the fulfillment of said contract until the termination of the period agreed upon.

Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the provisions contained in the following articles.

In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to determine the liability of a shipping company for the illegal discharge of its managers prior to the expiration of their fixed-term employment. The Court therein held the shipping company liable for the salaries of its managers for the remainder of their fixed-term employment.

There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which provides:

Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they cannot be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence.

Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in

which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally dismissed employees for the entire unexpired portion of their employment contracts.

While Article 605 has remained good law up to the present,111 Article 299 of the Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:

Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain work cannot leave or be dismissed without sufficient cause, before the fulfillment of the contract. (Emphasis supplied.)

Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a conjunctive "and" so as to apply the provision to local workers who are employed for a time certain although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company.113 And in both Lemoine and Palomar, the Court adopted the general principle that in actions for wrongful discharge founded on Article 1586, local workers are entitled to recover damages to the extent of the amount stipulated to be paid to them by the terms of their contract. On the computation of the amount of such damages, the Court in Aldaz v. Gay114held:

The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the contrary under Spanish jurisprudence, that when an employee is wrongfully discharged it is his duty to seek other employment of the same kind in the same community, for the purpose of reducing the damages resulting from such wrongful discharge. However, while this is the general rule, the burden of showing that he failed to make an effort to secure other employment of a like nature, and that other employment of a like nature was obtainable, is upon the defendant. When an employee is wrongfully discharged under a contract of employment his prima facie damage is the amount which he would be entitled to had he continued in such employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.)115(Emphasis supplied)

On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do not expressly provide for the remedies available to a fixed-term worker who is illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich,117 the Court carried over the principles on the payment of damages underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving the illegal discharge of a local worker whose fixed-period employment contract was entered into in 1952, when the new Civil Code was already in effect.118

More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-term employment contracts were illegally terminated, such as in First Asian Trans & Shipping Agency, Inc. v. Ople,119involving seafarers who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period employment contract as a baby sitter, was awarded salaries corresponding to the unexpired portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor Relations Commission,121 which involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally dismissed after only nine months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired portion of his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission,122 a Filipino working as a security officer in 1989 in Angola was awarded his salaries for the remaining period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor Relations Commission,123 an OFW whose 12-month contract was illegally cut

short in the second month was declared entitled to his salaries for the remaining 10 months of his contract.

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment.

The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest through the least restrictive means.

What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by history.124 It is akin to the paramount interest of the state125 for which some individual liberties must give way, such as the public interest in safeguarding health or maintaining medical standards,126 or in maintaining access to information on matters of public concern.127

In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve.

The OSG defends the subject clause as a police power measure "designed to protect the employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic], Filipino seafarers have better chance of getting hired by foreign employers." The limitation also protects the interest of local placement agencies, which otherwise may be made to shoulder millions of pesos in "termination pay."128

The OSG explained further:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money are reduced under Section 10 of RA 8042.

This measure redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions.129 (Emphasis supplied)

However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception of the state interest sought to be served by the subject clause.

The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;130 but the speech makes no reference to the underlying reason for the adoption of the subject clause. That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause.

On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:

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

The liability of the principal and the recruitment/placement agency or any and all claims under this Section shall be joint and several.

Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of damages under this Section shall not be less than fifty percent (50%) of such money claims: Provided, That any installment payments, if applicable, to satisfy any such compromise or voluntary settlement shall not be more than two (2) months. Any compromise/voluntary agreement in violation of this paragraph shall be null and void.

Non-compliance with the mandatory period for resolutions of cases provided under this Section shall subject the responsible officials to any or all of the following penalties:

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

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

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

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

But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money claims.

A rule on the computation of money claims containing the subject clause was inserted and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee (Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state interest, let alone a compelling one, that is sought to be protected or advanced by the adoption of the subject clause.

In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest that would justify the perpetuation of the discrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier rationale will have to be rejected. There can never be a justification for any form of government action that alleviates the burden of one sector, but imposes the same burden on another sector, especially when the favored sector is composed of private businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands. The idea that private business interest can be elevated to the level of a compelling state interest is odious.

Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vistheir foreign principals, there are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs.

The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring foreign employers who default on their contractual obligations to migrant workers and/or their Philippine agents. These disciplinary measures range from temporary disqualification to preventive suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring foreign employers.

Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement agencies in enforcing the solidary liability of their foreign principals.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal protection. 1avvphi1

Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the subject clause from the lone perspective that the clause directly violates state policy on labor under Section 3,131Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are presumed self-executing,132 there are some which this Court has declared not judicially enforceable, Article XIII being one,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor Relations Commission,134 has described to be not self-actuating:

Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the sense that these are automatically acknowledged and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the full exercise of the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal regardless of circumstance. This interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers. Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure the protection and promotion, not only the rights of the labor sector, but of the employers' as well.

Without specific and pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable rightto stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing. As manifested by several framers of the 1987 Constitution, the provisions on social justice require legislative enactments for their enforceability.135 (Emphasis added)

Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of which the questioned clause may be declared unconstitutional. It may unwittingly risk opening the floodgates of litigation to every worker or union over every conceivable violation of so broad a concept as social justice for labor.

It must be stressed that Section 3, Article XIII does not directly bestow on the working class any actual enforceable right, but merely clothes it with the status of a sector for whom the Constitution urges protection through executive or legislative action and judicial recognition. Its utility is best limited to being an impetus not just for the executive and legislative departments, but for the judiciary as well, to protect the welfare of the working class. And it was in fact consistent with that constitutional agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated the judicial precept that when the challenge to a statute is premised on the perpetuation of prejudice against persons favored by the Constitution with special protection -- such as the working class or a section thereof -- the Court may recognize the existence of a suspect classification and subject the same to strict judicial scrutiny.

The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee Association exaggerate the significance of Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause. Article XIII, by itself, without the application of the equal protection clause, has no life or force of its own as elucidated in Agabon.

Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's right to substantive due process, for it deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose.136

The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them a better chance of getting hired by foreign employers. This is plain speculation. As earlier discussed, there is nothing in the text of the law or the records of the deliberations leading to its enactment or the pleadings of respondent that would indicate that there is an existing governmental purpose for the subject clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause violates not just petitioner's right to equal protection, but also her right to substantive due process under Section 1,137 Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

On the Third Issue

Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary award, because these are fixed benefits that have been stipulated into his contract.

Petitioner is mistaken.

The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's monetary award, unless there is evidence that he performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,138

However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. National Labor Relations Commission, to wit:

The rendition of overtime work and the submission of sufficient proof that said was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established.

In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted since the same is given during the actual service of the seamen.

WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.

No costs.

SO ORDERED.

G.R. No. 196036               October 23, 2013

ELIZABETH M. GAGUI, Petitioner, vs.SIMEON DEJERO and TEODORO R. PERMEJO, Respondents.

D E C I S I O N

SERENO, CJ:

This is a Rule 45 Petition1 dated 30 March 2011 assailing the Decision2 and Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 104292, which affirmed the Decision4 of the National Labor Relations Commission (NLRC) in NLRC Case No. OCW-RAB-IV-4-392-96-RI, finding petitioner Elizabeth M. Gagui solidarily liable with the placement agency, PRO Agency Manila, Inc., to pay respondents all the money claims awarded by virtue of their illegal dismissal.

The antecedent facts are as follows:

On 14 December 1993, respondents Simeon Dejero and Teodoro Permejo filed separate Complaints5 for illegal dismissal, nonpayment of salaries and overtime pay, refund of transportation expenses, damages, and attorney’s fees against PRO Agency Manila, Inc., and Abdul Rahman Al Mahwes.

After due proceedings, on 7 May 1997, Labor Arbiter Pedro Ramos rendered a Decision,6 the dispositive portion of which reads:

WHEREFORE, ALL FOREGOING CONSIDERED, judgment is hereby rendered ordering respondents Pro Agency Manila, Inc., and Abdul Rahman Al Mahwes to jointly and severally pay complainants, as follows:

a) US$4,130.00 each complainant or a total of US$8,260.00, their unpaid salaries from July 31, 1992 up to September 1993, less cash advances of total of SR11,000.00, or its Peso equivalent at the time of payment;

b) US$1,032.00 each complainant for two (2) hours overtime pay for fourteen (14) months of services rendered or a total of US$2,065.00 or its Peso equivalent at the time of payment;

c) US$2,950.00 each complainant or a total of US$5,900.00 or its Peso equivalent at the time of payment, representing the unexpired portion of their contract;

d) Refund of plane ticket of complainants Teodoro Parejo and Simeon Dejero from Saudi Arabia to the Philippines, in the amount of P15,642.90 and P16,932.00 respectively;

e) Refund of excessive collection of placement fees in the amount of P4,000.00 each complainant, or a total of P8,000.00;

f) Moral and exemplary damages in the amount of P10,000.00 each complainant, or a total of P20,000.00;

g) Attorney’s fees in the amount of P48,750.00.

SO ORDERED.

Pursuant to this Decision, Labor Arbiter Ramos issued a Writ of Execution7 on 10 October 1997. When the writ was returned unsatisfied,8 an Alias Writ of Execution was issued, but was also returned unsatisfied.9

On 30 October 2002, respondents filed a Motion to Implead Respondent Pro Agency Manila, Inc.’s Corporate Officers and Directors as Judgment Debtors.10 It included petitioner as the Vice-President/Stockholder/Director of PRO Agency, Manila, Inc.

After due hearing, Executive Labor Arbiter Voltaire A. Balitaan issued an Order11 on 25 April 2003 granting respondents’ motion, to wit:

WHEREFORE, the motion to implead is hereby granted insofar as Merlita G. Lapuz and Elizabeth M. Gagui as parties-respondents and accordingly held liable to complainant jointly and solidarily with the original party-respondent adjudged liable under the Decision of May 7, 1998. Let 2nd Alias Writ of Execution be issued for the enforcement of the Decision consistent with the foregoing tenor.

SO ORDERED.

On 10 June 2003, a 2nd Alias Writ of Execution was issued,12 which resulted in the garnishment of petitioner’s bank deposit in the amount of P85,430.48.13 However, since the judgment remained unsatisfied, respondents sought the issuance of a third alias writ of execution on 26 February 2004.14

On 15 December 2004, Executive Labor Arbiter Lita V. Aglibut issued an Order15 granting respondents’ motion for a third alias writ. Accordingly, the 3rd Alias Writ of Execution16 was issued on 6 June 2005, resulting in the levying of two parcels of lot owned by petitioner located in San Fernando, Pampanga.17

On 14 September 2005, petitioner filed a Motion to Quash 3rd Alias Writ of Execution;18 and on 29 June 2006, a Supplemental Motion to Quash Alias Writ of Execution.19 In these motions, petitioner alleged that apart from not being made aware that she was impleaded as one of the parties to the case,20 the dispositive portion of the 7 May 1997 Decision (1997 Decision) did not hold her liable in any form whatsoever.21 More importantly, impleading her for the purpose of execution was tantamount to modifying a decision that had long become final and executory.22

On 26 June 2006, Executive Labor Arbiter Lita V. Aglibut issued an Order23 denying petitioner’s motions on the following grounds: (1) records disclosed that despite having been given sufficient notices to be able to register an opposition, petitioner refused to do so, effectively waiving her right to be heard;24 and (2) under Section 10 of Republic Act No. 8042 (R.A. 8042) or the Migrant Workers and Overseas Filipinos Act of 1995, corporate officers may be held jointly and severally liable with the placement agency for the judgment award.25

Aggrieved, petitioner appealed to the NLRC, which rendered a Decision26 in the following wise:

WHEREFORE, premises considered, the appeal of the respondent Elizabeth M. Gagui is hereby DENIED for lack of merit. Accordingly, the Order of Labor Arbiter Lita V. Aglibut dated June 26, 2006 is AFFIRMED.

SO ORDERED.

The NLRC ruled that "in so far as overseas migrant workers are concerned, it is R.A. 8042 itself that describes the nature of the liability of the corporation and its officers and directors. x x x [I]t is not essential that the individual officers and directors be impleaded as party respondents to the case instituted by the worker. A finding of liability on the part of the corporation will necessarily mean the liability of the corporate officers or directors."27

Upon appellate review, the CA affirmed the NLRC in a Decision28 promulgated on 15 November 2010:

From the foregoing, the Court finds no reason to hold the NLRC guilty of grave abuse of discretion amounting to lack or excess of jurisdiction in affirming the Order of Executive Labor Arbiter Aglibut which held petitioner solidarily liable with PRO Agency Manila, Inc. and Abdul Rahman Al Mahwes as adjudged in the May 7, 1997 Decision of Labor Arbiter Pedro Ramos.

WHEREFORE, the Petition is DENIED.

SO ORDERED. (Emphasis in the original)

The CA stated that there was "no need for petitioner to be impleaded x x x because by express provision of the law, she is made solidarily liable with PRO Agency Manila, Inc., for any and all money claims filed by private respondents."29 The CA further said that this is not a case in which the liability of the corporate officer must be established because an allegation of malice must be proven. The general rule is that corporate officers, directors and stockholders are not liable, except when they are made liable for their corporate act by a specific provision of law, such as R.A. 8042.30

On 8 and 15 December 2010, petitioner filed two Motions for Reconsideration, but both were denied in a Resolution31 issued by the CA on 25 February 2011.

Hence, this Petition for Review filed on 30 March 2011.

On 1 August 2011, respondents filed their Comment,32 alleging that the petition had been filed 15 days after the prescriptive period of appeal under Section 2, Rule 45 of the Rules of Court.

On 14 February 2012, petitioner filed a Reply,33 countering that she has a fresh period of 15 days from 16 March 2011 (the date she received the Resolution of the CA) or up to 31 March 2011 to file the Petition.

ISSUES

From the foregoing, we reduce the issues to the following:

1. Whether or not this petition was filed on time; and

2. Whether or not petitioner may be held jointly and severally liable with PRO Agency Manila, Inc. in accordance with Section 10 of R.A. 8042, despite not having been impleaded in the Complaint and named in the Decision.

THE COURT’S RULING

Petitioner has a fresh period of 15 days within which to file this petition, in accordance with the Neypes rule.

We first address the procedural issue of this case.

In a misleading attempt to discredit this petition, respondents insist that by opting to file a Motion for Reconsideration instead of directly appealing the CA Decision, petitioner effectively lost her right to appeal. Hence, she should have sought an extension of time to file her appeal from the denial of her motion.

This contention, however, deserves scant consideration. We agree with petitioner that starting from the date she received the Resolution denying her Motion for Reconsideration, she had a "fresh period" of 15 days within which to appeal to this Court. The matter has already been settled in Neypes v. Court of Appeals,34 as follows:

To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration.

Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies to the Court of Appeals and Rule 45 governing appeals by certiorari to the Supreme Court. The new rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any final order or resolution.

Since petitioner received the CA Resolution denying her two Motions for Reconsideration only on 16 March 2011, she had another 15 days within which to file her Petition, or until 31 March 2011. This Petition, filed on 30 March 2011, fell within the prescribed 15-day period.

Petitioner may not be held jointly and severally liable, absent a finding that she was remiss in directing the affairs of the agency.

As to the merits of the case, petitioner argues that while it is true that R.A. 8042 and the Corporation Code provide for solidary liability, this liability must be so stated in the decision sought to be implemented.35 Absent this express statement, a corporate officer may not be impleaded and made to personally answer for the liability of the corporation.36 Moreover, the 1997 Decision had already been final and executory for five years and, as such, can no longer be modified.37 If at all, respondents are clearly guilty of laches for waiting for five years before taking action against petitioner.38

In disposing the issue, the CA cited Section 10 of R.A. 8042, stating that there was "no need for petitioner to be impleaded x x x because by express provision of the law, she is made solidarily liable with PRO Agency Manila, Inc., for any and all money claims filed by private respondents."39

We reverse the CA.

At the outset, we have declared that "R.A. 8042 is a police power measure intended to regulate the recruitment and deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered by numerous OFWs seeking to work abroad."40

The pertinent portion of Section 10, R.A. 8042 reads 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 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 provision 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. (Emphasis supplied)

In Sto. Tomas v. Salac,41 we had the opportunity to pass upon the constitutionality of this provision. We have thus maintained:

The key issue that Gumabay, et al. present is whether or not the 2nd paragraph of Section 10, R.A. 8042, which holds the corporate directors, officers, and partners of recruitment and placement agencies jointly and solidarily liable for money claims and damages that may be adjudged against the latter agencies, is unconstitutional.

x x x x

But the Court has already held, pending adjudication of this case, that the liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal activities. In the case of Becmen and White Falcon, while there is evidence that these companies were at fault in not investigating the cause of Jasmin’s death, there is no mention of any evidence in the case against them that intervenors Gumabay, et al., Becmen’s corporate officers and directors, were personally involved in their company’s particular actions or omissions in Jasmin’s case. (Emphasis supplied)

Hence, for petitioner to be found jointly and solidarily liable, there must be a separate finding that she was remiss in directing the affairs of the agency, resulting in the illegal dismissal of respondents. Examination of the records would reveal that there was no finding of neglect on the part of the petitioner in directing the affairs of the agency. In fact, respondents made no mention of any instance when petitioner allegedly failed to manage the agency in accordance with law, thereby contributing to their illegal dismissal.

Moreover, petitioner is correct in saying that impleading her for the purpose of execution is tantamount to modifying a decision that had long become final and executory.42 The fallo of the 1997 Decision by the NLRC only held "respondents Pro Agency Manila Inc., and Abdul Rahman Al Mahwes to jointly and severally pay complainants x x x."43 By holding her liable despite not being ordained as such by the decision, both the CA and NLRC violated the doctrine on immutability of judgments.

In PH Credit Corporation v. Court of Appeals,44 we stressed that "respondent's petitioner’s obligation is based on the judgment rendered by the trial court. The dispositive portion or the fallo is its decisive resolution and is thus the subject of execution. x x x. Hence the execution must conform with that which is ordained or decreed in the dispositive portion of the decision."

In JNIMACO v. NLRC,45 we a]so held thus:

None of the parties in the case before the Labor Arbiter appealed the Decision dated March 10, 1987, hence the same became final and executory. It was, therefore, removed from the jurisdiction of the Labor Arbiter or the NLRC to further alter or amend it. Thus, the proceedings held for the

purpose of amending or altering the dispositive portion of the said decision are null and void for lack of jurisdiction. Also, the Alias Writ of Execution is null and void because it varied the tenor of the judgment in that it sought to enforce the final judgment against ''Antonio Gonzales/Industrial Management Development Corp. (INIMACO) and/or Filipinas Carbon and Mining Corp. and Gerardo Sicat, which makes the liability solidary.

In other words, "once a decision or order becomes final and executory, it is removed from. the power or jurisdiction of the court which rendered it to further alter or amend it. It thereby becomes immutable and unalterable and any amendment or alteration which substantially affects a final and executory judgment is null and void for lack of jurisdiction, including the entire proceedings held for that purpose. An order of exen1tion which varies the tenor of the judgment or exceeds the terms thereof is a nullity."46

While labor laws should be construed liberally in favor of labor, we must be able to balance this with the equally important right of petitioner to due process. Because the 1997 Decision of Labor Arbiter Ramos was not appealed, it became final and executory and was therefore removed from his jurisdiction. Modifying the tenor of the judgment via a motion impleading petitioner and filed only in 2002 runs contrary to settled jurisprudence, rendering such action a nullity. WHEREFORE, the Petition for Review on Certiorari is hereby GRANTED The assailed Decision dated 5 November 2010 and Resolution dated 25 February 2011 of the Court of Appeals in CA-G.R. SP No. 104292 are hereby REVERSED.

SO ORDERED.

G.R. No. 180636               March 13, 2013

LORENZO T. TANGGA-AN,* Petitioner, vs.PIDLIPPINE TRANSMARINE CARRIERS, INC., UNIVERSE TANKSHIP DELAWARE LLC, and CARLOS C. SALINAS, Respondents.

D E C I S I O N

DEL CASTILLO, J.:

This Court's labor pronouncements must be read and applied with utmost care and caution, taking to mind that in the very heart of the judicial system, labor cases occupy a special place. More than the State guarantees of protection of labor and security of tenure, labor disputes involve the fundamental survival of the employees and their families, who depend -upon the former for all the basic necessities in life.

This Petition for Review on Certiorari1 seeks a modification of the November 30, 2006 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 00806. Also assailed is the November 15, 2007 Resolution3 denying petitioner's Motion for Reconsideration.

Factual Antecedents

The facts, as found by the CA, are as follows:

This is a case for illegal dismissal with a claim for the payment of salaries corresponding to the unexpired term of the contract, damages and attorney’s fees filed by private respondent Lorenzo T. Tangga-an against the petitioners Philippine Transmarine Carriers, Inc., Universe Tankship Delaware LLC, and Carlos C. Salinas4 or herein respondents.

In his position paper, Tangga-an alleged that on January 31, 2002, he entered into an overseas employment contract with Philippine Transmarine Carriers, Inc. (PTC) for and in behalf of its foreign employer, Universe Tankship Delaware, LLC. Under the employment contract, he was to be employed for a period of six months as chief engineer of the vessel the S.S. "Kure". He was to be paid a basic salary of US$5,000.00; vacation leave pay equivalent to 15 days a months [sic] or US$2,500.00 per month and tonnage bonus in the amount of US$700.00 a month.

On February 11, 2002, Tangga-an was deployed. While performing his assigned task, he noticed that while they were loading liquid cargo at Cedros, Mexico, the vessel suddenly listed too much at the bow. At that particular time both the master and the chief mate went on shore leave together, which under maritime standard was prohibited. To avoid any conflict, he chose to ignore the unbecoming conduct of the senior officers of the vessel.

On or about March 13, 2002, the vessel berthed at a port in Japan to discharge its cargo. Thereafter, it sailed to the U.S.A. While the vessel was still at sea, the master required Tangga-an and the rest of the Filipino Engineer Officers to report to his office where they were informed that they would be repatriated on account of the delay in the cargo discharging in Japan, which was principally a duty belonging to the deck officers. He imputed the delay to the non-readiness of the turbo generator and the inoperation of the boom, since the turbo generator had been prepared and synchronized for 3.5

hours or even before the vessel arrived in Japan. Moreover, upon checking the boom, they found the same [sic] operational. Upon verification, they found out that when the vessel berthed in Japan, the cargo hold was not immediately opened and the deck officers concerned did not prepare the stock. Moreover, while cargo discharging was ongoing, both the master and the chief mate again went on shore leave together at 4:00 in the afternoon and returned to the vessel only after midnight. To save face, they harped on the Engine Department for their mistake. Tangga-an and the other Engineering Officers were ordered to disembark from the vessel on April 2, 2002 and thereafter repatriated. Thence, the complaint.

Philippine Transmarine Carriers, Inc., Universe Tankship Delaware LLC, and Carlos C. Salinas on the other hand, contended that sometime on [sic] March 2002, during a test of the cargo discharging conveyor system, Tangga-an and his assistant engineers failed to start the generator that supplied power to the conveyor. They spent 3 hours trying to start the generator but failed. It was only the third assistant engineer who previously served in the same vessel who was able to turn on the generator. When the master tried to call the engine room to find out the problem, Tangga-an did not answer and merely hang [sic] up. The master proceeded to the engine room to find out the problem by [sic] Tangga-an and his assistant engineers were running around trying to appear busy.

At another time, during a cargo discharging operation requiring the use of a generator system and the conveyor boom, Tangga-an was nowhere to be found. Apparently, he went on shore leave resulting in a delay of 2 hours because the machine could not be operated well. Both incidents were recorded in the official logbook. Due to the delay, protests were filed by the charter [sic].

The master required Tangga-an to submit a written explanation to which he did but blamed the captain and the chief officer. He failed to explain why he did not personally supervise the operation of the generator system and the conveyor boom during the cargo discharging operations. His explanation not having been found satisfactory, respondents decided to terminate Tangga-an’s services. Thus, a notice of dismissal was issued against Tangga-an. He arrived in the Philippines on April 4, 2002.5

Tangga-an filed a Complaint6 for illegal dismissal with prayer for payment of salaries for the unexpired portion of his contract, leave pay, exemplary and moral damages, attorney’s fees and interest.

On January 27, 2004, Labor Arbiter Jose G. Gutierrez rendered a Decision7 finding petitioner to have been illegally dismissed. The Labor Arbiter noted that in petitioner’s letter to respondent Universe Tankship Delaware, LLC dated April 1, 20028 he categorically denied any negligence on his part relative to the delay in the discharge of the cargo while the vessel was berthed in Japan. In view thereof, the Labor Arbiter opined that an investigation should have been conducted in order to ferret out the truth instead of dismissing petitioner outright. Consequently, petitioner’s dismissal was illegal for lack of just cause and for failure to comply with the twin requirements of notice and hearing.9

As regards petitioner’s claim for back salaries, the Labor Arbiter found petitioner entitled not to four months which is equivalent to the unexpired portion of his contract, but only to three months, inclusive of vacation leave pay and tonnage bonus (or US$8,200 x 3 months = US$24,600) pursuant to Section 10 of Republic Act (RA) No. 8042 or The Migrant Workers and Overseas Filipinos Act of 2005.

Regarding petitioner’s claim for damages, the same was denied for failure to prove bad faith on the part of the respondents. However, attorney’s fees equivalent to 10% of the total back salaries was awarded because petitioner was constrained to litigate.

The dispositive portion of the Labor Arbiter’s Decision, reads:

WHEREFORE, the foregoing premises considered, judgment is hereby rendered finding Tangga-an illegally dismissed from his employment and directing the respondent Phil. Transmarine Carriers, Inc. to pay Tangga-an the amount of US$24,600.00 PLUS US$2,460.00 attorney’s fees or a total aggregate amount of US Dollars: TWENTY SEVEN THOUSAND SIXTY (US$27,060.00) or its peso equivalent at the exchange rate prevailing at the time of payment.

SO ORDERED.10

Ruling of the National Labor Relations Commission

Respondents appealed to the National Labor Relations Commission (NLRC). They claimed that the Labor Arbiter committed grave abuse of discretion in finding that petitioner was illegally dismissed; in awarding unearned vacation leave pay and tonnage bonus when the law and jurisprudence limit recovery to the employee’s basic salary; and in awarding attorney’s fees despite the absence of proof of bad faith on their part.

On August 25, 2004, the NLRC issued its Decision,11 the dispositive portion of which reads:

WHEREFORE, the Decision dated January 27, 2004 of the Labor Arbiter is AFFIRMED.

Respondents-appellants’ Memorandum of Appeal, dated 23 March 2004 is DISMISSED for lack of merit.

SO ORDERED.12

The NLRC affirmed the finding of illegal dismissal. It held that no notice of hearing was served upon petitioner, and no hearing whatsoever was conducted on the charges against him. It ruled that respondents could not dispense with the twin requirements of notice and hearing, which are essential elements of procedural due process. For this reason, no valid cause for termination has been shown. The NLRC likewise found respondents guilty of bad faith in illegally dismissing petitioner’s services.

On the issue covering the award of unearned vacation leave pay and tonnage bonus, the NLRC struck down respondents’ arguments and held that in illegal dismissal cases, the employee is entitled to all the salaries, allowances and other benefits or their monetary equivalents from the time his compensation is withheld from him until he is actually reinstated, in effect citing Article 27913 of the Labor Code. It held that vacation leave pay and tonnage bonus are provided in petitioner’s employment contract, which thus entitles the latter to the same in the event of illegal dismissal.

Finally, on the issue of attorney’s fees, the NLRC held that since respondents were found to be in bad faith for the illegal dismissal and petitioner was constrained to litigate with counsel, the award of attorney’s fees is proper.

Respondents moved for reconsideration which was denied by the NLRC in its March 18, 2005 Resolution.14

Ruling of the Court of Appeals

Respondents went up to the CA by Petition for Certiorari,15 seeking to annul the Decision of the NLRC, raising essentially the same issues taken up in the NLRC.

On November 30, 2006, the CA rendered the assailed Decision, the dispositive portion of which reads, as follows:

WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The Decision of public respondent is MODIFIED in the following manner:

a. Tangga-an is entitled to three (3) months salary representing the unexpired portion of his contract in the total amount of US$15,000.00 or its peso equivalent at the exchange rate prevailing at the time of payment;

b. Tangga-an’s placement fee should be reimbursed with 12% interest per annum;

c. The award of attorney’s fees is deleted.

SO ORDERED.16

The CA adhered to the finding of illegal dismissal. But on the subject of monetary awards, the CA considered only petitioner’s monthly US$5,000.00 basic salary and disregarded his monthly US$2,500.00 vacation leave pay and US$700.00 tonnage bonus. It likewise held that petitioner’s "unexpired portion of contract" for which he is entitled to back salaries should only be three months pursuant to Section 1017 of RA 8042. In addition, petitioner should be paid back his placement fee with interest at the rate of twelve per cent (12%) per annum.

As to attorney’s fees, the CA did not agree with the NLRC’s finding that bad faith on the part of respondents was present to justify the award of attorney’s fees. It held that there is nothing from the facts and proceedings to suggest that respondents acted with dishonesty, moral obliquity or conscious doing of wrong in terminating petitioner’s services.

Petitioner filed a Motion for (Partial) Reconsideration,18 which was denied in the assailed November 15, 2007 Resolution. Thus, he filed the instant Petition.

Issues

In this Petition, Tangga-an seeks a modification of the CA Decision and the reinstatement of the monetary awards as decreed in the Labor Arbiter’s January 27, 2004 Decision, or in the alternative, the grant of back salaries equivalent to four months which corresponds to the unexpired portion of the contract, inclusive of vacation leave pay and tonnage bonus, plus 10% thereof as attorney’s fees.19

Petitioner submits the following issues for resolution:

I. Whether x x x the CA’s issuance of the writ of certiorari reversing the NLRC decision is in accordance with law;

II. Whether x x x the indemnity provided in Section 10, R. A. 8042 x x x be limited only to the seafarer’s basic monthly salary or x x x include, based on civil law concept of damages as well as Labor Code concept of backwages, allowances/benefits or their monetary equivalent

as a further relief to restore the seafarer’s income that was lost by reason of his unlawful dismissal;

III. Whether x x x the indemnity awarded by the CA in petitioner’s favor consisting only of 3 months’ basic salaries conform with the proper interpretation of Section 10 R. A. 8042 and with the ruling in Skippers Pacific, Inc. v. Mira, et al., G.R. No. 144314, November 21, 2002 and related cases or is petitioner entitled to at least 4 months salaries being the unexpired portion of his contract; and

IV. Whether x x x the CA’s disallowance of the award of attorney’s fees, based on the alleged absence of bad faith on the part of respondent, is in accordance with law or is the attorney’s fees awarded by the NLRC to petitioner, who was forced to litigate to enforce his rights, justified x x x.20

Petitioner’s Arguments

Petitioner essentially contends that respondents’ resort to an original Petition for Certiorari in the CA is erroneous because the issues they raised did not involve questions of jurisdiction but of fact and law. He adds that the CA Decision went against the factual findings of the labor tribunals which ought to be binding, given their expertise in matters falling within their jurisdiction.

Petitioner likewise contends that the CA erred in excluding his vacation leave pay and tonnage bonus in the computation of his back salaries as they form part of his salaries and benefits under his employment contract with the respondents, a covenant which is deemed to be the law governing their relations. He adds that under Article 279 of the Labor Code, he is entitled to full backwages inclusive of allowances and other benefits or their monetary equivalent from the time his compensation was withheld up to the time he is actually reinstated.

Petitioner accuses the CA of misapplying the doctrine laid down in Skippers Pacific, Inc. v. Skippers Maritime Services, Ltd.21 He points out that the CA wrongly interpreted and applied what the Court said in the case, and that the pronouncement therein should have benefited him rather than the respondents.

Petitioner would have the Court reinstate the award of attorney’s fees, on the argument that the presence of bad faith is not necessary to justify such award. He maintains that the grant of attorney’s fees in labor cases constitutes an exception to the general requirement that bad faith or malice on the part of the adverse party must first be proved.

Finally, petitioner prays that this Court reinstate the Labor Arbiter’s monetary awards in his January 27, 2004 Decision or, in the alternative, to grant him full back salaries equivalent to the unexpired portion of his contract, or four months, plus 10% thereof as attorney’s fees.

Respondents’ Arguments

In seeking affirmance of the assailed CA issuances, respondents basically submit that the CA committed no reversible error in excluding petitioner’s claims for vacation leave pay, tonnage bonus, and attorney’s fees. They support and agree with the CA’s reliance upon Skippers Pacific, Inc. v. Skippers Maritime Services, Ltd.,22 and emphasize that in the absence of bad faith on their part, petitioner may not recover attorney’s fees.

Our Ruling

The Court grants the Petition.

There remains no issue regarding illegal dismissal. In spite of the consistent finding below that petitioner was illegally dismissed, respondents did not take issue, which thus renders all pronouncements on the matter final.

In resolving petitioner’s monetary claims, the CA utterly misinterpreted the Court’s ruling in Skippers Pacific, Inc. v. Skippers Maritime Services, Ltd.,23 using it to support a view which the latter case precisely ventured to strike down. In that case, the employee was hired as the vessel’s Master on a six-months employment contract, but was able to work for only two months, as he was later on illegally dismissed. The Labor Arbiter, NLRC, and the CA all took the view that the complaining employee was entitled to his salary for the unexpired portion of his contract, but limited to only three months pursuant to Section 1024 of RA 8042. The Court did not agree and hence modified the judgment in said case. It held that, following the wording of Section 10 and its ruling in Marsaman Manning Agency, Inc. v. National Labor Relations Commission,25 when the illegally dismissed employee’s employment contract has a term of less than one year, he/she shall be entitled to recovery of salaries representing the unexpired portion of his/her employment contract. Indeed, there was nothing even vaguely confusing in the Court’s citation therein of Marsaman:

In Marsaman Manning Agency, Inc. vs. NLRC, involving Section 10 of Republic Act No. 8042, we held:

We cannot subscribe to the view that private respondent is entitled to three (3) months salary only.1âwphi1 A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the wording "for every year of the unexpired term" which follows the wording "salaries x x x for three months." To follow petitioners’ thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect since the lawmaking body is presumed to know the meaning of the words employed in the statute and to have used them advisedly. Ut res magis valeat quam pereat.

It is not disputed that private respondent’s employment contract in the instant case was for six (6) months. Hence, we see no reason to disregard the ruling in Marsaman that private respondent should be paid his salaries for the unexpired portion of his employment contract.26 (Emphases supplied)

At this juncture, the courts, especially the CA, should be reminded to read and apply this Court’s labor pronouncements with utmost care and caution, taking to mind that in the very heart of the judicial system, labor cases occupy a special place. More than the State guarantees of protection of labor and security of tenure, labor disputes involve the fundamental survival of the employees and their families, who depend upon the former for all the basic necessities in life.

Thus, petitioner must be awarded his salaries corresponding to the unexpired portion of his six-months employment contract, or equivalent to four months. This includes all his corresponding monthly vacation leave pay and tonnage bonuses which are expressly provided and guaranteed in his employment contract as part of his monthly salary and benefit package. These benefits were guaranteed to be paid on a monthly basis, and were not made contingent. In fact, their monetary

equivalent was fixed under the contract: US$2,500.00 for vacation leave pay and US$700.00 for tonnage bonus each month. Thus, petitioner is entitled to back salaries of US$32,800 (or US$5,000 + US$2,500 + US$700 = US$8,200 x 4 months). "Article 279 of the Labor Code mandates that an employee’s full backwages shall be inclusive of allowances and other benefits or their monetary equivalent."27 As we have time and again held, "it is the obligation of the employer to pay an illegally dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits and bonuses and general increases, to which he would have been normally entitled had he not been dismissed and had not stopped working."28 This well-defined principle has likewise been lost on the CA in the consideration of the case.

The CA likewise erred in deleting the award of attorney’s fees on the ground that bad faith may not readily be attributed to the respondents given the circumstances. The Court’s discussion on the award of attorney’s fees in Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union v. Manila Water Company, Inc.,29 speaking through Justice Brion, is instructive, viz:

Article 111 of the Labor Code, as amended, governs the grant of attorney’s fees in labor cases:

‘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.

(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.’

Section 8, Rule VIII, Book III of its Implementing Rules also provides, viz.:

‘Section 8. Attorney’s fees. – Attorney’s fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.’

We explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission that there are two commonly accepted concepts of attorney’s fees – the ordinary and extraordinary. In its ordinary concept, an attorney’s fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be assessed. In its extraordinary concept, attorney’s fees are deemed indemnity for damages ordered by the court to be paid by the losing party to the winning party. The instances when these may be awarded are enumerated in Article 2208 of the Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of compensation.

We also held in PCL Shipping that Article 111 of the Labor Code, as amended, contemplates the extraordinary concept of attorney’s fees and that Article 111 is an exception to the declared policy of strict construction in the award of attorney’s fees. Although 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 the wages. x x x

We similarly so ruled in RTG Construction, Inc. v. Facto and in Ortiz v. San Miguel Corporation. In RTG Construction, we specifically stated:

'Settled is the rule that in actions for recovery of wages, or where an employee was forced to litigate and, thus, incur expenses to protect his rights and interests, a monetary award by way of attorney's fees is justifiable under Article Ill of the Labor Code; Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article 208 of the Civil Code. The award of attorney's fees is proper, and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly.'

In PCL Shipping, we found the award of attorney's fees due and appropriate since the respondent therein incurred legal expenses after he was forced to file an action for recovery of his lawful wages and other benefits to protect his rights. From this perspective and the above precedents, we conclude that the CA erred in ruling that a finding of the employer's malice or bad faith in withholding wages must precede an award of attorney's fees under Article Ill of the Labor Code. To reiterate, a plain showing that the lawful wages were not paid without justification is sufficient.30

In this case, it is already settled that petitioner's employment was illegally terminated. As a result, his wages as well as allowances were withheld without valid and legal basis. Otherwise stated, he was not paid his lawful wages without any valid justification. Consequently, he was impelled to litigate to protect his interests. Thus, pursuant to the above ruling, he is entitled to receive attorney’s fees. An award of attorney's fees in petitioner’s favor is in order in the amount of US$3, 280 (or US$32, 800 x 10%).

WHEREFORE, the Petition is GRANTED. Petitioner Lorenzo T. Tangga-an is hereby declared ENTITLED to back salaries for the unexpired portion of his contract, inclusive of vacation leave pay and tonnage bonus which is equivalent to US$32,800 plus US$3,280 as attorney's fees or a total of US$36,080 or its peso equivalent at the exchange rate prevailing at the time of payment.

SO ORDERED.

G.R. No. 154213               August 23, 2012

EASTERN MEDITERRANEAN MARITIME LTD. AND AGEMAR MANNING AGENCY, INC., Petitioners, vs.EST ANISLAO SURIO, FREDDIE PALGUIRAN, GRACIANO MORALES, HENRY CASTILLO, ARISTOTLE ARREOLA, ALEXANDER YGOT, ANRIQUE BA TTUNG, GREGORIO ALDOVINO, NARCISO FRIAS, VICTOR FLORES, SAMUEL MARCIAL, CARLITO PALGUIRAN, DUQUE VINLUAN, .JESUS MENDEGORIN, NEIL FLORES, ROMEO MANGALIAG, JOE GARFIN and SALESTINO SUSA, Respondents.

*PEREZ

D E C I S I O N

BERSAMIN, J.:

On appeal is the decision the Court of Appeals (CA) promulgated on December 21, 2001 affirming the resolution of the National Labor Relations Commission (NLRC) declaring itself to be without appellate jurisdiction to review the decision of the Philippine Overseas Employment Administration (POEA) involving petitioners’ complaint for disciplinary action against respondents.1

Respondents were former crewmembers of MT Seadance, a vessel owned by petitioner Eastern Mediterranean Maritime Ltd. and manned and operated by petitioner Agemar Manning Agency, Inc. While respondents were still on board the vessel, they experienced delays in the payment of their wages and in the remittance of allotments, and were not paid for extra work and extra overtime work. They complained about the vessel’s inadequate equipment, and about the failure of the petitioners to heed their repeated requests for the improvement of their working conditions. On December 19, 1993, when MT Seadance docked at the port of Brofjorden, Sweden to discharge oil, representatives of the International Transport Federation (ITF) boarded the vessel and found the wages of the respondents to be below the prevailing rates. The ensuing negotiations between the ITF and the vessel owner on the increase in respondents’ wages resulted in the payment by the vessel owner of wage differentials and the immediate repatriation of respondents to the Philippines.

Subsequently, on December 23, 1993, the petitioners filed against the newly-repatriated respondents a complaint for disciplinary action based on breach of discipline and for the reimbursement of the wage increases in the Workers Assistance and Adjudication Office of the POEA.

During the pendency of the administrative complaint in the POEA, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) took effect on July 15, 1995. Section 10 of Republic Act No. 8042 vested original and exclusive jurisdiction over all money claims arising out of employer-employee relationships involving overseas Filipino workers in the Labor Arbiters, to wit:

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 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 damages.

The jurisdiction over such claims was previously exercised by the POEA under the POEA Rules and Regulations of 1991 (1991 POEA Rules).

On May 23, 1996, the POEA dismissed the complaint for disciplinary action. Petitioners received the order of dismissal on July 24, 1996.2

Relying on Section 1, Rule V, Book VII of the 1991 POEA Rules, petitioners filed a partial appeal on August 2, 1996 in the NLRC, still maintaining that respondents should be administratively sanctioned for their conduct while they were on board MT Seadance.

On March 21, 1997, the NLRC dismissed petitioners’ appeal for lack of jurisdiction,3 thus:

We dismiss the partial appeal.

The Commission has no jurisdiction to review cases decided by the POEA Administrator involving disciplinary actions. Under the Migrant Workers and Overseas Filipinos Act of 1995, the Labor Arbiter shall have jurisdiction over money claims involving employer-employee relationship (sec. 10, R.A. 8042). Said law does not provide that appeals from decisions arising from complaint for disciplinary action rest in the Commission.

PREMISES CONSIDERED, instant appeal from the Order of May 23, 1996 is hereby DISMISSED for lack of jurisdiction.

SO ORDERED.

Not satisfied, petitioners moved for reconsideration, but the NLRC denied their motion. They received the denial on July 8, 1997.4

Petitioners then commenced in this Court a special civil action for certiorari and mandamus. Citing St. Martin Funeral Homes v. National Labor Relations Commission,5 however, the Court referred the petition to the CA on November 25, 1998.

Petitioners contended in their petition that:

THE NLRC GRAVELY ABUSED ITS DISCRETION AND/OR GRAVELY ERRED IN DISMISSING PETITIONERS’ APPEAL AND MOTION FOR RECONSIDERATION WHEN IT REFUSED TO TAKE COGNIZANCE OF PETITIONERS’ APPEAL DESPITE BEING EMPOWERED TO DO SO UNDER THE LAW.6

On December 21, 2001, the CA dismissed the petition for certiorari and mandamus, holding that the inclusion and deletion of overseas contract workers from the POEA blacklist/watchlist were within the exclusive jurisdiction of the POEA to the exclusion of the NLRC, and that the NLRC had no appellate jurisdiction to review the matter, viz:

Section 10 of RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, provides that:

"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 damages.

xxxx

Likewise, the Rules and Regulations implementing RA 8042 reiterate the jurisdiction of POEA, thus:

"Section 28. Jurisdiction of the POEA. – The POEA shall exercise original and exclusive jurisdiction to hear and decide:

a) All cases, which are administrative in character, involving or arising out of violations of rules and regulations relating to licensing and registration of recruitment and employment agencies or entities; and

b) Disciplinary action cases and other special cases, which are administrative in character, involving employers, principals, contracting partners and Filipino migrant workers."

Further, Sections 6 and 7 Rule VII, Book VII of the POEA Rules & Regulations (1991) provide:

"Sec. 6. Disqualification of Contract Workers. Contract workers, including seamen, against whom have been imposed or with pending obligations imposed upon them through an order, decision or resolution shall be included in the POEA Blacklist Workers shall be disqualified from overseas employment unless properly cleared by the Administration or until their suspension is served or lifted.

Sec. 7. Delisting of the Contract Worker’s Name from the POEA Watchlist. The name of an overseas worker may be excluded, deleted and removed from the POEA Watchlist only after disposition of the case by the Administration."

Thus, it can be concluded from the afore-quoted law and rules that, public respondent has no jurisdiction to review disciplinary cases decided by the POEA involving contract workers. Clearly, the matter of inclusion and deletion of overseas contract workers in the POEA Blacklist/Watchlist is within the exclusive jurisdiction of the POEA to the exclusion of the public respondent. Nor has the latter appellate jurisdiction to review the findings of the POEA involving such cases.

xxx

In fine, we find and so hold, that, no grave abuse of discretion can be imputed to the public respondent when it issued the assailed Decision and Order, dated March 21, 1997 and June 13, 1997, respectively, dismissing petitioners’ appeal from the decision of the POEA.

WHEREFORE, finding the instant petition not impressed with merit, the same is hereby DENIED DUE COURSE. Costs against petitioners.

SO ORDERED.7

Issue

Petitioners still appeal, submitting to the Court the sole issue of:

WHETHER OR NOT THE NLRC HAS JURISDICTION TO REVIEW ON APPEAL CASES DECIDED BY THE POEA ON MATTERS PERTAINING TO DISCIPLINARY ACTIONS AGAINST PRIVATE RESPONDENTS.

They contend that both the CA and the NLRC had no basis to rule that the NLRC had no jurisdiction to entertain the appeal only because Republic Act No. 8042 had not provided for its retroactive application.

Respondents counter that the appeal should have been filed with the Secretary of Labor who had exclusive jurisdiction to review cases involving administrative matters decided by the POEA.

Ruling

The petition for review lacks merit.

Petitioners’ adamant insistence that the NLRC should have appellate authority over the POEA’s decision in the disciplinary action because their complaint against respondents was filed in 1993 was unwarranted. Although Republic Act No. 8042, through its Section 10, transferred the original and exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and decide all disciplinary action cases and other special cases administrative in character involving such workers. The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all administrative matters affecting and involving such workers. This intent was even expressly recognized in the Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995 promulgated on February 29, 1996, viz:

Section 28. Jurisdiction of the POEA. – The POEA shall exercise original and exclusive jurisdiction to hear and decide:

(a) all cases, which are administrative in character, involving or arising out of violations or rules and regulations relating to licensing and registration of recruitment and employment agencies or entities; and

(b) disciplinary action cases and other special cases, which are administrative in character, involving employers, principals, contracting partners and Filipino migrant workers.

Section 29. Venue – The cases mentioned in Section 28(a) of this Rule, may be filed with the POEA Adjudication Office or the DOLE/POEA regional office of the place where the complainant applied or was recruited, at the option of the complainant. The office with which the complaint was first filed shall take cognizance of the case.

Disciplinary action cases and other special cases, as mentioned in the preceding Section, shall be filed with the POEA Adjudication Office.

It is clear to us, therefore, that the NLRC had no appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract workers.

Petitioners’ position that Republic Act No. 8042 should not be applied retroactively to the review of the POEA’s decision dismissing their complaint against respondents has no support in jurisprudence. Although, as a rule, all laws are prospective in application unless the contrary is expressly provided,8 or unless the law is procedural or curative in nature,9 there is no serious

question about the retroactive applicability of Republic Act No. 8042 to the appeal of the POEA’s decision on petitioners’ disciplinary action against respondents. In a way, Republic Act No. 8042 was a procedural law due to its providing or omitting guidelines on appeal. A law is procedural, according to De Los Santos v. Vda. De Mangubat,10 when it –

Refers to the adjective law which prescribes rules and forms of procedure in order that courts may be able to administer justice. Procedural laws do not come within the legal conception of a retroactive law, or the general rule against the retroactive operation of statues ― they may be given retroactive effect on actions pending and undetermined at the time of their passage and this will not violate any right of a person who may feel that he is adversely affected, insomuch as there are no vested rights in rules of procedure.

Republic Act No. 8042 applies to petitioners’ complaint by virtue of the case being then still pending or undetermined at the time of the law’s passage, there being no vested rights in rules of procedure.11 They could not validly insist that the reckoning period to ascertain which law or rule should apply was the time when the disciplinary complaint was originally filed in the POEA in 1993. Moreover, Republic Act No. 8042 and its implementing rules and regulations were already in effect when petitioners took their appeal. A statute that eliminates the right to appeal and considers the judgment rendered final and unappealable only destroys the right to appeal, but not the right to prosecute an appeal that has been perfected prior to its passage, for, at that stage, the right to appeal has already vested and cannot be impaired.12 Conversely and by analogy, an appeal that is perfected when a new statute affecting appellate jurisdiction comes into effect should comply with the provisions of the new law, unless otherwise provided by the new law. Relevantly, petitioners need to be reminded that the right to appeal from a decision is a privilege established by positive laws, which, upon authorizing the taking of the appeal, point out the cases in which it is proper to present the appeal, the procedure to be observed, and the courts by which the appeal is to be proceeded with and resolved.13 This is why we consistently hold that the right to appeal is statutory in character, and is available only if granted by law or statute.14

When Republic Act No. 8042 withheld the appellate jurisdiction of the NLRC in respect of cases decided by the POEA, the appellate jurisdiction was vested in the Secretary of Labor in accordance with his power of supervision and control under Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code of 1987, to wit:

Section 38. Definition of Administrative Relationship. – Unless otherwise expressly stated in the Code or in other laws defining the special relationships of particular agencies, administrative relationships shall be categorized and defined as follows:

Supervision and Control. – Supervision and control shall include authority to act directly whenever a specific function is entrusted by law or regulation to a subordinate; direct the performance of duty; restrain the commission of acts; review, approve, reverse or modify acts and decisions of subordinate officials or units; determine priorities in the execution of plans and programs. Unless a different meaning is explicitly provided in the specific law governing the relationship of particular agencies, the word "control" shall encompass supervision and control as defined in this paragraph. xxx.

Thus, Section 1, Part VII, Rule V of the 2003 POEA Rules and Regulations specifically provides, as follows:

Section 1. Jurisdiction. – The Secretary shall have the exclusive and original jurisdiction to act on appeals or petition for review of disciplinary action cases decided by the Administration.

In conclusion, we hold that petitioners should have appealed the adverse decision of the POEA to the Secretary of Labor instead of to the NLRC. Consequently, the CA, being correct on its conclusions, committed no error in upholding the NLRC.

WHEREFORE, we AFFIRM the decision promulgated on December 21, 2001 by the Court of Appeals; and ORDERthe petitioners to pay the costs of suit.

SO ORDERED.

G.R. No. 181919               July 20, 2011

JONES INTERNATIONAL MANPOWER SERVICES, INC., represented by its President, EDWARD G. CUE,Petitioner, vs.BELLA AGCAOILI-BARIT, Respondent.

D E C I S I O N

BRION, J.:

We pass upon the present petition for review on certiorari1 seeking the reversal of the January 23, 2008 Decision2and the February 27, 2008 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 101069.4

The Antecedents

Summarized below are the relevant facts on record.

On November 21, 2003, respondent Bella Agcaoili-Barit filed a complaint5 for non-payment of salaries and refund of transportation fare against the petitioner Jones International Manpower Services, Inc. (agency), owned and managed by Edward G. Cue.

Barit alleged that she entered into a two-year employment contract (July 23, 1999 to July 23, 2001) with the agency, for its foreign principal in the Kingdom of Saudi Arabia, Mohamad Hameed Al-Naimi (Hameed), as a domestic helper with a salary of US$200.00 a month. She did her job diligently and with dedication, but was paid only US$100.00 a month and, starting January 2001, was not paid any salary at all. She extended her employment for another 10 months upon Hameed's request as her replacement had not yet been deployed by the agency. Hameed refused to pay her salaries even during the extension.

Fed up with her situation, she left Hameed on May 29, 2002 and had a live-in relationship with another Filipino overseas worker, Thomas Ambrosio, allegedly her boyfriend. As the law of Saudi Arabia prohibits such a relationship, she was arrested and imprisoned for more than a year. She claimed that she embraced the Islam religion and was exonerated of the charges against her. She was released from prison on October 14, 2003 and immediately left for home, arriving in the Philippines on October 15, 2003. She demanded payment of her salaries for one year and four months, payment of wage differentials from July 1999 to December 2000, and the refund of her airfare to the Philippines.

In defense, the agency argued that Barit's contract of employment expired on July 23, 2001, without any complaint from her. Her contract was extended for another two years with her consent. It alleged that Barit left her employer without permission. She was then reported missing to the Saudi police who found her staying with Ambrosio. She was subsequently arrested and imprisoned. Hameed was helpless in providing Barit assistance because she violated marital law and the offense was non-employment related. Her passport, air ticket and the balance of her unpaid salaries were turned over to the Saudi authorities pursuant to Saudi law.

The agency denied liability for Barit's alleged unpaid salaries beginning July 2001 as her employment contract, which it facilitated, was only for two years. The contract expired on July 23,

2001. It maintained it had no involvement or participation in the alleged extension of Barit's employment with Hameed. It also argued that it had no liability for the refund of her airfare to the Philippines.

The agency argued further that it was not also liable for Barit's alleged wage differentials from July 1999 to December 2000 and unpaid wages from January 2001 to July 23, 2001. It pointed out that all wages due her were paid in full, while the final wages due her before she left her employment were turned over to the Saudi government. It stressed that it was highly illogical for Barit to agree to an extension of her employment contract with the same employer who, she claimed, had not paid her salaries and underpaid her wages in the past two years of her contract.

The Compulsory Arbitration Rulings

On March 31, 2004, Labor Arbiter Nieves Vivar-de Castro found Barit's money claims meritorious.6 She directed the agency and its foreign principal to pay Barit salary differentials from July 23, 1999 to December 31, 2000 and her unpaid salaries from January 2001 to July 23, 2001. The labor arbiter, however, absolved the agency of liability for Barit's alleged unpaid benefits during her second or extended employment as it did not participate or intervene in securing this extended posting.

The agency appealed to the National Labor Relations Commission (NLRC). In its decision dated August 28, 2006,7the NLRC granted the appeal. It set aside the labor arbiter's ruling and dismissed the complaint, but awarded Barit financial assistance of P10,000.00 "for reasons of equity." In the main, the labor arbitration body rejected Barit's submission that she was compelled to leave Hameed because he had been underpaying and was not paying her salaries. The NLRC did not believe that she would agree to continue working for the same employer for another ten (10) months, when the employer had not been paying her salaries before and during her extended employment.

Barit moved for reconsideration, but the NLRC denied the motion in a resolution dated March 30, 2007.8 She then sought relief from the CA through a petition for certiorari, charging the NLRC with grave abuse of discretion in setting aside the labor arbiter's decision, and in holding that the agency is not solidarily liable with her employer for the underpayment and non-payment of her wages.

The CA Decision

In its decision of January 23, 2008,9 the CA found that the NLRC committed grave abuse of discretion in setting aside the labor arbiter's decision. It upheld the labor arbiter's award to Barit of salary differentials from July 23, 1999 to December 31, 2000 and unpaid salaries from January 2001 to July 23, 2001, to be paid solidarily by the agency and its foreign principal. It brushed aside Hameed's defense, through his letters dated November 15, 2003,10January 21, 200411 and February 28, 2004,12 that he had fully paid Barit's salaries since day one of her employment. It declared that absent any evidence, such as payrolls, payslips or acknowledgment receipts, Hameed is deemed to have failed to discharge the onus probandi of payment.

Its motion for reconsideration turned down by the CA,13 the agency now appeals to the Court by way of the present petition for review on certiorari.

The Petitioner's Case

Aside from the petition itself,14 the agency submitted a memorandum,15 as required by the Court,16 and a reply17 to Barit's comment.

Through these submissions, the agency asks for a reversal of the CA decision on the ground that the appellate court erred in (1) affirming the labor arbiter's award to Barit of salary differentials from July 23, 1999 to December 31, 2000 despite the non-inclusion of the claim for underpayment of wages in the complaint, in violation of the NLRC Rules of Procedure; and (2) disregarding the "other similar documents" the agency submitted to the labor arbiter to prove that Barit was fully paid of her wages.

On the first issue, the agency cites Section 7(b) and (d), Rule V of the 2005 Revised Rules of Procedure of the NLRC, as follows:

b) The position papers of the parties shall cover only those claims and causes of action raised in the complaint or amended complaint excluding those that may have been amicably settled, and accompanied by all supporting documents, including the affidavits of witnesses, which shall take the place of their direct testimony.

d) In their position papers and replies, the parties shall not be allowed to allege facts, or present evidence to prove facts and any cause or causes of action not referred to or included in the original or amended complaint or petition.

The agency argues that the labor arbiter ignored these rules when she took cognizance of Barit's claim for wage underpayment which was mentioned only in the latter's position paper. It points out that in the complaint18 Barit filed with the NLRC, she underlined only (1) non-payment of wages and (2) refund of transportation fare as her only causes of action. It posits that the labor arbiter and the CA both erred in ignoring the rules.

On a different plane, the agency contends that the award of salary differentials to Barit has no legal basis as she herself admitted that she received a monthly salary of SR600 that, if converted to US dollars in 1999-2000, was equivalent to US$200.00, thus negating the claim of underpayment of wages.

The agency insists that Barit's wages had been paid in full as evidenced by the letters19 of Hameed which show that all the salaries and other benefits due Barit, including her passport and other belongings, were paid and given to her before she was released from jail and repatriated to the Philippines, in accordance with the laws of Saudi Arabia. The agency bewails the CA's failure to give due consideration to what took place after Barit left her employer in May 2002. Barit was then apprehended by the authorities of Saudi Arabia for living-in with a man who was not her husband. She was imprisoned for having committed a marital offense and was discharged only after she served out her sentence, not exonerated by the court as she claimed. It further contends that the CA failed to give consideration to the policy of the government of Saudi Arabia not to allow the release of foreign workers from prison without their employers paying all their salaries and other benefits, as well as releasing all their personal belongings.

The Case for Respondent Barit

Through her comment20 and memorandum,21 filed on June 27, 2008 and October 22, 2008, respectively, Barit prays that the petition be denied for lack of merit.

On the first issue, she argues that the agency resorted to hairsplitting or pure semantics in denying liability for her claim of underpayment of wages. She refers particularly to the agency's contention that wage differentials should not have been awarded to her because she did not include underpayment of wages as a cause of action in her complaint. She insists that the complaint form that she accomplished shows that her cause of action was for non-payment and underpayment of

wages as the two terms appear in only one box. In any event, she explains that "to underpay,"22 means "to pay less than what is normal or required." Since she was paid only half of her wages, there was an amount that was not paid and this was the other half of her wages. There is, therefore, non-payment of this other half. She posits that in this context, she was correct in pursuing her claim of underpayment of wages.

On the issue of non-payment of wages, Barit maintains that the CA committed no error in ruling that the agency failed to present substantial evidence to prove due payment of her wages while she was under the employ of Hameed. She takes offense at the agency's submission that the issuance of monthly payslips or the keeping of payrolls is seldom or rarely done in the case of domestic helpers. She argues that with this reasoning, the agency would be placing domestic helpers in a different category of workers, a distinction which is repugnant to the Constitution.

Barit further argues that the burden of proving payment of what is due the employee is upon the employer and, since she is an overseas worker, also upon the employer's recruitment agency. She contends that her employer's letters,23 purporting to show that her salaries and other benefits had all been paid, are self-serving unofficial statements that have dubious evidentiary value. She reasons out that such letters, which were mentioned in the case cited by the agency in its submissions,24 cannot be considered as "other documents" for nowhere in that case was the term "other documents" discussed and neither did the ruling give an example of "other similar documents that have the same force and effect as payrolls, employment records and remittances."25 In the absence of evidence proving payment, Barit submits that her employer and the agency are solidarily liable for the award, pursuant to the law and the rules.

Finally, Barit takes exception to the agency's argument faulting the CA for disregarding other relevant circumstances in the case, such as the completion of her contract without the filing of any claim for unpaid or underpaid salaries on her part, and her supposedly voluntary act of renewing her contract and living-in with another Filipino worker which led to her imprisonment. She maintains that these circumstances, even if considered, do not change the fact that there has been gross violation of Philippine laws by her employer and by the agency, for which they should be made solidarily liable. She explains that she was forced to act because of the long suffering inflicted on her by her employer who refused to pay her salaries in full and compelled her to extend her contract for another year.

The Court's Ruling

The Court, as a rule,26 is bound by the factual findings of the CA, but has the discretion to reexamine the evidence in a case when a basic conflict exists between the CA's findings of fact and those of the NLRC.27 In this case, such conflict exists and we need to reexamine their findings to determine: (1) whether Barit had been underpaid and/or had not been paid her wages during her employment in Saudi Arabia; and (2) whether the agency is solidarily liable with the foreign employer if Barit is indeed entitled to her money claims.

We find merit in the petition.

Under the circumstances of Barit's employment in Saudi Arabia, we wonder how she could have and why she remained in the service of the same employer for a considerable period of time if she had been underpaid her salaries or had not been paid at all, and why she had kept silent about her salary situation. Nowhere in the records does it appear that Barit complained about the alleged underpayment and non-payment of her wages with the Philippine labor or consular representatives in Saudi Arabia, or even with the Saudi authorities themselves. Neither is there any showing too that she ever objected to or protested her iniquitous work situation directly with Hameed, if that had really

been the case, nor that Barit identified or spoke of any problem that could have prevented her from seeking relief in Saudi Arabia, as the NLRC noted.28 Barit abruptly left her employer, not because she was being exploited with respect to her wages, but for a personal reason - she left in order to live with her boyfriend Ambrosio. As a consequence of what she did, she ran afoul of the law of Saudi Arabia.

This analysis leads us to conclude that the NLRC's conclusion is not without basis; substantial basis exists to believe that Barit received her full salaries for the entire duration of her original contract, or from July 23, 1999 to July 23, 2001. The NLRC further opined that to make the agency liable for Barit's alleged unpaid and underpaid wages on the sole ground that it failed to submit copies of payslips and payrolls is unfair as the agency appears to have taken all available means to secure the necessary documents from Barit's employer to dispute her claims. The NLRC stressed that the labor arbiter should have considered other factors in resolving the case.

The records support the NLRC's appreciation of the merits of Barit's claim. As early as September 28, 2002, the agency inquired with Barit's employer how she was faring in Saudi Arabia, in relation particularly to the case brought against her by the Saudi authorities and to her unpaid salaries.29 The inquiry was prompted by Barit's mother's inquiry about her situation in Saudi Arabia. On October 3, 2002, the agency received an answer from Hameed30advising the agency's President, Edward G. Cue, that Barit had left his residence and was discovered by the Saudi police to be living with Ambrosio and that Hameed could not intervene as she committed "a crime related to martial (sic) affair."31 Hameed also informed Cue that Barit's passport and air ticket, and the balance of the money due her were handed over to the authorities, pursuant to the law of Saudi Arabia. Additionally, Hameed intimated that if necessary, the agency could seek verification from the Philippine Embassy in Saudi Arabia about what he reported to Cue.

On November 15, 2003, the agency received another letter32 from Hameed in response to Cue's overseas call regarding Barit's unpaid salary. Hameed again informed Cue that "[t]here is no more pending salary with us, all her personal belongings were turned over to the police as this is the law here in Saudi Arabia." Hameed also told Cue that Barit finished her two-year contract and she could not have signed another contract with him if she had not been paid her past salaries.

On November 21, 2004, Hameed again wrote Cue33 informing the agency official that as he said in his previous letters, "everything has been paid to her" and that the Saudi authorities will not release her from jail unless everything is settled, for the Saudi government is very strict when it comes to unpaid salaries.

In light of this exchange between the agency and Hameed, and the real reason why Barit left Hameed's employ, we are as convinced as the NLRC that she had been paid her salaries in full for her first employment contract (which the agency facilitated), from July 23, 1999 to July 23, 2001.

The argument that absent the payslips or payrolls, the agency failed to present proof of payment of Barit's claim should be viewed in the context of the realities of domestic service. The relationship between Hameed and his family, on the one hand, and Barit, on the other hand, was largely confined within Hameed's household. It was not as structured as the relationship obtaining in an office or in an industrial plant. There was very little or no paperwork at all, even on wage payments. As the NLRC opined:

Just like our local domestic house helpers who receive their wages directly from their employers without any payslip or voucher to acknowledge payment and receipt, we do not expect the case of herein complainant x x x to be any different. It is, therefore, understandable that no payslip or payroll could be presented by respondent agency.34

We find this NLRC view to be a fair and credible assessment of the employment relationship between Barit and her Saudi employer, at least, in relation to the payment of Barit's wages.

In sum, we hold that the NLRC committed no grave abuse of discretion in dismissing the complaint.1avvphi1 The CA thus erred in granting the petition for certiorari.

WHEREFORE, premises considered, the assailed Decision and Resolution of the Court of Appeals are set aside, and the Decision of the NLRC dated August 28, 2006 is REINSTATED.

SO ORDERED.

G.R. No. 177498               January 18, 2012

STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP MANAGEMENT, Petitioners, vs.SULPECIO MEDEQUILLO, JR., Respondent.

D E C I S I O N

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari1 of the Decision2 of the First Division of the Court of Appeals in CA-G.R. SP No. 91632 dated 31 January 2007, denying the petition for certiorari filed by Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship Management (petitioners) and affirming the Resolution of the National Labor Relations Commission (NLRC). The dispositive portion of the assailed decision reads:

WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed Decision promulgated on February 28, 2003 and the Resolution dated July 27, 2005 are AFFIRMED.3

The facts as gathered by this Court follow:

On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the Adjudication Office of the Philippine Overseas Employment Administration (POEA) against the petitioners for illegal dismissal under a first contract and for failure to deploy under a second contract. In his complaint-affidavit,4 respondent alleged that:

1. On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama as Third Assistant Engineer on board the vessel "Stolt Aspiration" for a period of nine (9) months;

2. He would be paid with a monthly basic salary of $808.00 and a fixed overtime pay of $404.00 or a total of $1,212.00 per month during the employment period commencing on 6 November 1991;

3. On 8 November 1991, he joined the vessel MV "Stolt Aspiration";4. On February 1992 or for nearly three (3) months of rendering service and while the vessel

was at Batangas, he was ordered by the ship’s master to disembark the vessel and repatriated back to Manila for no reason or explanation;

5. Upon his return to Manila, he immediately proceeded to the petitioner’s office where he was transferred employment with another vessel named MV "Stolt Pride" under the same terms and conditions of the First Contract;

6. On 23 April 1992, the Second Contract was noted and approved by the POEA;7. The POEA, without knowledge that he was not deployed with the vessel, certified the

Second Employment Contract on 18 September 1992.8. Despite the commencement of the Second Contract on 21 April 1992, petitioners failed to

deploy him with the vessel MV "Stolt Pride";9. He made a follow-up with the petitioner but the same refused to comply with the Second

Employment Contract.10. On 22 December 1994, he demanded for his passport, seaman’s book and other

employment documents. However, he was only allowed to claim the said documents in exchange of his signing a document;

11. He was constrained to sign the document involuntarily because without these documents, he could not seek employment from other agencies.

He prayed for actual, moral and exemplary damages as well as attorney’s fees for his illegal dismissal and in view of the Petitioners’ bad faith in not complying with the Second Contract.

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

The parties were required to submit their respective position papers before the Labor Arbiter. However, petitioners failed to submit their respective pleadings despite the opportunity given to them.5

On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a judgment6 finding that the respondent was constructively dismissed by the petitioners. The dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered, declaring the respondents guilty of constructively dismissing the complainant by not honoring the employment contract. Accordingly, respondents are hereby ordered jointly and solidarily to pay complainant the following:

1. $12,537.00 or its peso equivalent at the time of payment.7

The Labor Arbiter found the first contract entered into by and between the complainant and the respondents to have been novated by the execution of the second contract. In other words, respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract.8 However, he ruled that there was no substantial evidence to grant the prayer for moral and exemplary damages.9

The petitioners appealed the adverse decision before the National Labor Relations Commission assailing that they were denied due process, that the respondent cannot be considered as dismissed from employment because he was not even deployed yet and the monetary award in favor of the respondent was exorbitant and not in accordance with law.10

On 28 February 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter. The dispositive portion reads:

WHEREFORE, premises considered, the decision under review is hereby, MODIFIED BY DELETING the award of overtime pay in the total amount of Three Thousand Six Hundred Thirty Six US Dollars (US $3,636.00).

In all other respects, the assailed decision so stands as, AFFIRMED.11

Before the NLRC, the petitioners assailed that they were not properly notified of the hearings that were conducted before the Labor Arbiter. They further alleged that after the suspension of proceedings before the POEA, the only notice they received was a copy of the decision of the Labor Arbiter.12

The NLRC ruled that records showed that attempts to serve the various notices of hearing were made on petitioners’ counsel on record but these failed on account of their failure to furnish the Office of the Labor Arbiter a copy of any notice of change of address. There was also no evidence that a service of notice of change of address was served on the POEA.13

The NLRC upheld the finding of unjustified termination of contract for failure on the part of the petitioners to present evidence that would justify their non-deployment of the respondent.14 It denied the claim of the petitioners that the monetary award should be limited only to three (3) months for every year of the unexpired term of the contract. It ruled that the factual incidents material to the case transpired within 1991-1992 or before the effectivity of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 which provides for such limitation.15

However, the NLRC upheld the reduction of the monetary award with respect to the deletion of the overtime pay due to the non-deployment of the respondent.16

The Partial Motion for Reconsideration filed by the petitioners was denied by the NLRC in its Resolution dated 27 July 2005.17

The petitioners filed a Petition for Certiorari before the Court of Appeals alleging grave abuse of discretion on the part of NLRC when it affirmed with modification the ruling of the Labor Arbiter. They prayed that the Decision and Resolution promulgated by the NLRC be vacated and another one be issued dismissing the complaint of the respondent.

Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of the labor tribunal.

The Court’s Ruling

The following are the assignment of errors presented before this Court:

I.

THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED THE FIRST CONTRACT.

1. THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT MUST BE RESOLVED SEPARATELY FROM THE ALLEGATION OF FAILURE TO DEPLOY UNDER THE SECOND CONTRACT.

2. THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS FILED AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED FOR BEING BARRED BY PRESCRIPTION.

II.

THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.

1. IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL WHEN THE EMPLOYMENT HAS NOT YET COMMENCED.

2. ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT, PETITIONERS CAN ONLY BE FOUND AS HAVING FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH VALID REASON.

III.

THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING THERE WAS BASIS FOR HOLDING PETITIONER LIABLE FOR "FAILURE TO DEPLOY" RESPONDENT, THE POEA RULES PENALIZES SUCH OMISSION WITH A MERE "REPRIMAND."18

The petitioners contend that the first employment contract between them and the private respondent is different from and independent of the second contract subsequently executed upon repatriation of respondent to Manila.

We do not agree.

Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order for novation to take place, the concurrence of the following requisites is indispensable:

1. There must be a previous valid obligation,

2. There must be an agreement of the parties concerned to a new contract,

3. There must be the extinguishment of the old contract, and

4. There must be the validity of the new contract.19

In its ruling, the Labor Arbiter clarified that novation had set in between the first and second contract. To quote:

xxx [T]his office would like to make it clear that the first contract entered into by and between the complainant and the respondents is deemed to have been novated by the execution of the second contract. In other words, respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract.20

This ruling was later affirmed by the Court of Appeals in its decision ruling that:

Guided by the foregoing legal precepts, it is evident that novation took place in this particular case. The parties impliedly extinguished the first contract by agreeing to enter into the second contract to placate Medequillo, Jr. who was unexpectedly dismissed and repatriated to Manila. The second contract would not have been necessary if the petitioners abided by the terms and conditions of Madequillo, Jr.’s employment under the first contract. The records also reveal that the 2nd contract extinguished the first contract by changing its object or principal. These contracts were for overseas employment aboard different vessels. The first contract was for employment aboard the MV "Stolt Aspiration" while the second contract involved working in another vessel, the MV "Stolt Pride." Petitioners and Madequillo, Jr. accepted the terms and conditions of the second contract. Contrary to petitioners’ assertion, the first contract was a "previous valid contract" since it had not yet been terminated at the time of Medequillo, Jr.’s repatriation to Manila. The legality of his dismissal had not yet been resolved with finality. Undoubtedly, he was still employed under the first contract when he negotiated with petitioners on the second contract. As such, the NLRC correctly ruled that petitioners could only be held liable under the second contract.21

We concur with the finding that there was a novation of the first employment contract.

We reiterate once more and emphasize the ruling in Reyes v. National Labor Relations Commission,22 to wit:

x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the Court of Appeals in due course, are conclusive on this Court, which is not a trier of facts.

x x x x

x x x Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals. Such findings deserve full respect and, without justifiable reason, ought not to be altered, modified or reversed.(Emphasis supplied)23

With the finding that respondent "was still employed under the first contract when he negotiated with petitioners on the second contract",24 novation became an unavoidable conclusion.

Equally settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.25 But these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts.26 In this case, there was no showing of any arbitrariness on the part of the lower courts in their findings of facts. Hence, we follow the settled rule.

We need not dwell on the issue of prescription. It was settled by the Court of Appeals with its ruling that recovery of damages under the first contract was already time-barred. Thus:

Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may initiate money claims under the 1st contract commenced on the date of his repatriation. xxx The start of the three (3) year prescriptive period must therefore be reckoned on February 1992, which by Medequillo Jr.’s own admission was the date of his repatriation to Manila. It was at this point in time that Medequillo Jr.’s cause of action already accrued under the first contract. He had until February 1995 to pursue a case for illegal dismissal and damages arising from the 1st contract. With the filing of his Complaint-Affidavit on March 6, 1995, which was clearly beyond the prescriptive period, the cause of action under the 1st contract was already time-barred.27

The issue that proceeds from the fact of novation is the consequence of the non-deployment of respondent.

The petitioners argue that under the POEA Contract, actual deployment of the seafarer is a suspensive condition for the commencement of the employment.28 We agree with petitioners on such point. However, even without actual deployment, the perfected contract gives rise to obligations on the part of petitioners.

A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.29 The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.30

The POEA Standard Employment Contract provides that employment shall commence "upon the actual departure of the seafarer from the airport or seaport in the port of hire."31 We adhere to the terms and conditions of the contract so as to credit the valid prior stipulations of the parties before the controversy started. Else, the obligatory force of every contract will be useless. Parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.32

Thus, even if by the standard contract employment commences only "upon actual departure of the seafarer", this does not mean that the seafarer has no remedy in case of non-deployment without any valid reason. Parenthetically, the contention of the petitioners of the alleged poor performance of respondent while on board the first ship MV "Stolt Aspiration" cannot be sustained to justify the non-deployment, for no evidence to prove the same was presented.33

We rule that distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.34

Further, we do not agree with the contention of the petitioners that the penalty is a mere reprimand.

The POEA Rules and Regulations Governing Overseas Employment35 dated 31 May 1991 provides for the consequence and penalty against in case of non-deployment of the seafarer without any valid reason. It reads:

Section 4. Worker’s Deployment. — An agency shall deploy its recruits within the deployment period as indicated below:

xxx

b. Thirty (30) calendar days from the date of processing by the administration of the employment contracts of seafarers.

Failure of the agency to deploy a worker within the prescribed period without valid reasons shall be a cause for suspension or cancellation of license or fine. In addition, the agency shall return all documents at no cost to the worker.(Emphasis and underscoring supplied)

The appellate court correctly ruled that the penalty of reprimand36 provided under Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers is not applicable in this case. The breach of contract happened on February 1992 and the law applicable at that time was the 1991 POEA Rules and Regulations Governing Overseas Employment. The penalty for non-deployment as discussed is suspension or cancellation of license or fine.

Now, the question to be dealt with is how will the seafarer be compensated by reason of the unreasonable non-deployment of the petitioners?

The POEA Rules Governing the Recruitment and Employment of Seafarers do not provide for the award of damages to be given in favor of the employees. The claim provided by the same law refers to a valid contractual claim for compensation or benefits arising from employer-employee relationship or for any personal injury, illness or death at levels provided for within the terms and conditions of employment of seafarers. However, the absence of the POEA Rules with regard to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. As earlier discussed, they do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him.37

We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment.lavvphil The law provides:

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 damages. x x x (Underscoring supplied)

Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of the provision.

Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months’ worth of salary as provided in the contract.38 This is but proper because of the non-deployment of respondent without just cause.

WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court of Appeals in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby ordered to pay Sulpecio Medequillo, Jr., the award of actual damages equivalent to his salary for nine (9) months as provided by the Second Employment Contract.

SO ORDERED.

G.R. No. 169247               June 2, 2014

MA. CONSOLACION M. NAHAS, doing business under the name and style PERSONNEL EMPLOYMENT AND TECHNICAL RECRUITMENT AGENCY, Petitioner, vs.JUANITA L. OLARTE, Respondent.

D E C I S I O N

DEL CASTILLO, J.:

"A party will not be allowed to make a mockery of justice by taking inconsistent positions which, if allowed, would result in brazen deception."1

Assailed in this Petition for Review on Certiorari is the April 29, 2005 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 79028 which denied the Petition for Certiorari filed therewith and affirmed the February 28, 2003 Decision3 and June 30, 2003 Resolution4 of the National Labor Relations Commission (NLRC) in NLRC CA No. 032482-02. The NLRC dismissed the appeal from the Labor Arbiter's March 20, 2002 Decision5 in NLRC-NCR OFW Case No. (L) 01-07-1411-00 which held Personnel Employment and Technical Recruitment Agency (PETRA), Royal Dream International Agency (Royal Dream) and petitioner Ma. Consolacion M. Nahas (Nahas) jointly and severally liable for the unpaid salaries, compensation for the unexpired portion of employment contract, moral and exemplary damages and attorney’s fees of respondent Juanita L. Olarte (Olarte).

Factual Antecedents

On August 27, 1999, Olarte was deployed as a domestic helper to Hail, Saudi Arabia for a contract term of two years. Per her employment contract,6 she was to serve her employer, Fahad Abdulaziz Mohammed Al-Mijary (Fahad) for a basic monthly salary of US$200.00. Fajad’s information sheet, on the other hand, provides that there are two adults and three children living in his household and that no disabled or sick person is to be put under Olarte’s care.

Upon arriving in Fahad’s home, Olarte was surprised that there were four children with one suffering from serious disability. This notwithstanding, Olarte served Fahad’s family diligently. However, she was not paid her salaries. It was only in December 1999 that she was given US$200.00 which was the only pay she received for the whole duration that she worked for Fahad.

In the succeeding months, Olarte started feeling intense pain in her legs. Since she was not given immediate medical attention, her condition became critical such that in February 2000 she had to be operated on due to water retention in her leg bones. She was later diagnosed to be suffering from ostro-arthritis. Because of her condition, Olarte requested Fahad to just allow her go home to the Philippines. But her pleas fell on deaf ears. At that point, Fahad was already frequently maltreating her since she could no longer accomplish all the household chores due to her illness.

Olarte finally saw an opportunity to escape from the abusive hands of her employer when she was allowed to go to Riyadh, Saudi Arabia on June 16, 2000 and there sought refuge at the Philippine Embassy. Notwithstanding her worsening condition, she could not be repatriated immediately because her passport was being withheld by Fahad and had to stay for a while in the office of the Overseas Workers Welfare Administration (OWWA). When at last she was able to return to the

Philippines on August 21, 2000, Olarte had to be brought home from the airport by an emergency ambulance.

Several months later, Olarte filed a Complaint7 for illegal dismissal, damages, attorney’s fees and refund of placement fees against her foreign employer Fahad and Nahas/PETRA/Royal Dream.

Ruling of the Labor Arbiter

In her pleadings,8 Olarte alleged that she went to the office of PETRA/Royal Dream at Room 401, Gochangco Building, T.M. Kalaw, Ermita, Manila to apply for work abroad as a domestic helper. She was met and interviewed by Nahas, the manager and owner of the said agencies, who instructed her to sign what appeared to be a contract of employment for work as a domestic helper. Subsequently and upon completion of all the necessary papers, she was deployed to Hail, Saudi Arabia in August 1999 and there experienced her horrible ordeal. As the ones responsible for her deployment abroad, Olarte sought that Nahas, PETRA and Royal Dream be held jointly and severally liablewith her foreign employer for all her claims.

In the Position Paper9 she filed for PETRA, Nahas acknowledged that she is the President/Manager of the said agency. Nevertheless, she denied having a hand in Olarte’s deployment abroad. While she admitted that Olarte indeed went to PETRA’s office as a walk-in applicant sometime in May 1999, the latter allegedly withdrew her application on the pretext that she would just go home to the province. To support this, Nahas purportedly attached to the said pleading the alleged withdrawal request of Olarte as Annex "A." However, the said Annex "A" turned out to be a filled-up bio-data form of Olarte bearing the letterhead of Royal Dream,10the local agency which according to Nahas was the one responsible for Olarte’s deployment.

In a Decision11 dated March 20,2002, the Labor Arbiter ruled that PETRA/Royal Dream/Nahas failed to discharge the burden of proving that Olarte’s termination and repatriation were for just cause; and also rejected their claim against liability after giving weight to the fact that Nahas admitted to have interviewed Olarte but failed to substantiate the claim that the latter withdrew her application. The dispositive portion of the said Decision reads:

WHEREFORE, prescinding from the foregoing considerations, respondents Petra Agency/Royal [Dream] International Services/Consolacion "Marla" Nahas are hereby jointly and severally ordered to pay the complainant her unpaid salaries for eight (8) months in the amount of US$1,600.00; three (3) months salary of the unexpired portion of the contract in the amount [of] US$600.00; moral damages in the amount of P100,000.00 and exemplary damages amounting to P50,000.00 and attorney’s fees equivalent to ten (10%) percent of the total monetary awards.

SO ORDERED.12

Nahas appealed to the NLRC.

Ruling of the National Labor Relations Commission

In her Memorandum of Appeal,13 Nahas recanted her earlier admission that Olarte went to PETRA as a walk-in applicant sometime in May 1999, claiming that the same was a mistake. She asserted that Olarte could not have possibly applied with PETRA during that time as the latter was issued a license by the POEA only on July 16, 1999. Moreover, Fahad was not one of PETRA’s accredited foreign employers.

To further avoid personal liability, Nahas denied involvement in Olarte’s deployment. She made a new allegation, though, i.e., that if at all, her only involvement was that she interviewed Olarte when she was still connected with Royal Dream as a mere employee. Even with this participation, she averred that she could not be made liable for Olarte’s claims because she was neither the owner nor an officer of Royal Dream. Lastly, while Nahas was quick in passing the buck to Royal Dream she nevertheless stressed that no summons was served upon the latter. Thus, the Labor Arbiter’s Decision is not binding on it.

The NLRC, however, was not persuaded and disposed of the case in its Decision14 of February 28, 2003 as follows:

The facts of this case are never disputed by herein appellants, and as such they are now the law of the case. Records will disclose, as admitted by the herein parties that it was with respondent PETRA that complainant applied for overseas employment as domestic helper. It was respondent Nahas herself who interviewed complainant and in all probability furnished her all the requisite[s] for her deployment. All along she (Nahas) represented [to be the owner of] and [was connected] with both PETRA and Royal Dream to facilitate her deployment. In fact complainant was successfully deployed by Royal Dream as represented to by Nahas. Obviously, complainant’s overseas employment was made possible by respondent[’]s agencies, thru the efforts of [respondent] Nahas.

While it was claimed by PETRA that the application of complainant was withdrawn, no evidence on [record] appear to support it.

The same holds true with appellants[’] claim that respondent Nahas was no longer connected with respondent Royal Dream when complainant was deployed abroad.

The fact that complainant was finally deployed thru the intercession of [respondent] Nahas with the aid of both respondent agencies, convinces us, as the Labor Arbiter ruled, that both agencies, indeed did so in recognition of the former’s authority.

Suffice it to [state] therefore that We find no cogent reason to deviate from the findings of the Labor Arbiter a quo, and finding the same in order, [affirm] it en toto.

WHEREFORE, the instant appeal should be, as it is hereby dismissed for lack of merit.

SO ORDERED.15

Nahas filed a Motion for Reconsideration16 which was denied in a Resolution17 dated June 30, 2003.Hence, the recourse to the CA via a Petition for Certiorari.

Ruling of the Court of Appeals

Nahas advanced the same arguments she raised before the labor tribunals, but failed to convince the CA as in its Decision18 dated April 29, 2005 it ruled in this wise:

Private respondent Olarte unequivocally declared at the [outset] that it was Nahas who interviewed her and facilitated her application for work abroad as a domestic helper by instructing the former to sign the Contract of Employment. Nahas, in her Position Paper, her Reply to Olarte’s Position Paper and her Rejoinder, admitted to having interviewed Olarte for her application to work abroad. Though she quickly added that she did so only because Olarte applied with PETRA first and that the latter eventually withdrew the same, Nahas subsequently recanted this and instead admitted that her

agency PETRA was only granted a license by the POEA on 16 July1999 or after Olarte accomplished and filed her application form with ROYAL on 18 May 1999. In the same vein, Nahas likewise admitted being connected with ROYAL before and that she was the one who met and entertained Olarte when the latter applied with ROYAL. While Nahas claim[s] that she is neither the proprietress nor one of the officers of ROYAL at that time, her role or position with ROYAL was undeniably significant considering that she took charge [of] interviewing Olarte and eventually made her sign the Contract of Employment. Clearly, Nahas exercised discretion in determining who among the applicants of ROYAL should be accepted and deployed. It is also worthy to point out that the accomplished bio-data of Olarte with the letterhead of ROYAL referred to earlier was attached by no less than Nahas herself in her earlier pleading before the Labor Arbiter supposedly to show that Olarte withdrew her application with PETRA. It would be uncanny for Nahas to have in her possession and custody such document, if indeed she was but a mere staff of ROYAL or that she is no longer connected in any way with ROYAL, unless there remains an intimate relationship between her and ROYALor that she once held an important position in the same.

With the foregoing, We find nothing capricious or whimsical with the NLRC’s finding and thus affirm Nahas’ liability in accordance with Section 64 of the Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of1995 (RA 8024), to wit:

‘Section 64. Solidary Liability – The liability of the principal/employer and the recruitment placement agency on any and all claims under this Rule shall be [joint] and solidary. x x x.

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.

x x x x

WHEREFORE, the instant petition is DENIED and the assailed Decision of the NLRC dated 28 February2003 and its Resolution of 30 June 2003 are hereby AFFIRMED.

SO ORDERED.19

The Motion for Reconsideration20 thereto having been denied in the CA Resolution21 dated July 8, 2005, Nahas now comes to this Court via the present Petition for Review on Certiorari.

The Parties’ Arguments

Nahas insists that it is Royal Dream which is solely responsible for Olarte’s deployment and thus should be the one to answer for her claims. Be that as it may, she contends that Royal Dream was not served with summons; hence, the proceedings in this case is not binding upon it. Nahas also refutes the CA’s conclusion that since she interviewed and caused Olarte to sign an employment contract, she held an important position in Royal Dream. She maintains that she is a mere employee of Royal Dream and that interviewing and entertaining applicants per se do not establish that she is a corporate officer, director or partner in said company who could be held solidarily liable. Lastly, she avers that Olarte’s Complaint is bereft of allegations of attendant circumstances which warrant the grant of moral and exemplary damages.

On the other hand, Olarte asserts that the argument that PETRA is different from Royal Dream is clearly an attempt on the part of Nahas, PETRA and Royal Dream to evade liability. She stresses that it was Nahas, for and in behalf of PETRA/Royal Dream, who performed the acts of recruitment

which led to her deployment abroad; hence, all of them should be held jointly and solidarily liable with their foreign principal.

Our Ruling

The Petition has no merit.

The Court is not a trier of facts; factual findings of the labor tribunals when affirmed by the CA are generally accorded not only respect, but even finality, and are binding on this Court.

It must be stressed, at the outset, that the resolution of the issue of whether Nahas acted for and in behalf of PETRA and/or Royal Dream in deploying Olarte abroad is a question of fact. "Well-settled is the rule that this Court is not a trier of facts and this doctrine applies with greater force in labor cases. Questions of fact are for the labor tribunals to resolve. Only errors of law are generally reviewed in petitions for review on certiorari criticizing decisions of the CA."22 Also "[s]ettled is the rule that the findings of the [Labor Arbiter], when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous."23 In this case, the Labor Arbiter, the NLRC, and the CA are one in their factual conclusion that Nahas, acting for and in behalf of PETRA and Royal Dream, interviewed Olarte, caused her to sign an employment contract, and facilitated and made possible her deployment abroad. The Court is, therefore, not duty-bound to inquire into the accuracy of this factual finding, particularly in this case where there is no showing that it was arbitrary and bereft of any rational basis.24

Nahas’ inconsistent positions militate against her case; her claim of lack of service of summonsupon Royal Dream is likewise untenable.

The Court notes that in her quest to evade liability, Nahas introduced several conflicting assertions. Before the Labor Arbiter, she admitted that Olarte indeed applied with PETRA and was interviewed by her but later withdrew the application. While Nahas intended to support this position with a document showing that Olarte requested for the withdrawal of her application, the same was, however, never submitted. What was instead unwittingly attached to her Position Paper was Olarte’s accomplished bio-data bearing the letterhead of Royal Dream. This did not escape the Labor Arbiter’s attention such that her March 20, 2002 Decision states:

x x x While [PETRA/Nahas] admits that complainant was a [walk]-in applicant, respondent [PETRA] Agency’s claim that[Olarte] subsequently withdrew her application has not been satisfactorily established by concrete evidence. x x x [I]t is incumbent upon the party who asserts a fact [to prove the same].

More significantly, respondent Consolacion "Marla" Nahas never denied [Olarte’s claim] that it was [Nahas] who interviewed her.

It is basic that mere [allegation]is neither equivalent to proof nor evidence.25

Later in her Memorandum of Appeal with the NLRC, Nahas repudiated her earlier admission and averred that Olarte did not at all apply with PETRA. While still maintaining that she interviewed Olarte, she now claimed to have done so when she was still connected with Royal Dream as a mere employee.1âwphi1

It is quite obvious that Nahas started singing a different song, so to speak, after the Labor Arbiter did not buy her claim that Olarte withdrew her application with PETRA due to her utter failure to support

the same. And with her still seeming inability to produce the alleged withdrawal request before the NLRC, the most convenient way out is for her to claim that Olarte did not at all apply with PETRA. While Nahas attempted to bolster this new allegation by averring that PETRA was issued a license only on July16, 1999 thereby making it impossible for Olarte to apply in May 1999, the same, however, hardly convinces. Aside from the lack of any evidence showing the date of the POEA’s issuance of license to PETRA, the fact that it was yet to be issued a license does not preclude the possibility that it was already accepting applicants on behalf of Royal Dream which at that time already possesses the required license. This explains why the accomplished bio-data of Olarte dated May 18, 1999 bears the letterhead of Royal Dream and also why the pertinent documents from POEA and OWWA26 reflect the said agency as Olarte’s local agency.

Neither does the unsupported averment of Nahas before the NLRC that she was previously connected with Royal Dream as a former employee help her cause. For one, she could have easily submitted a certificate of employment from Royal Dream showing that she was a mere employee of the latter during the time material to this case. But she failed to do so. It must be stressed "that he who alleges must prove."27

Clearly, Nahas’ vacillating from one story to another and not being able to support them is nothing but a mere ruse to evade the lawful claims of Olarte. This cannot be tolerated. It has been held that "[a] party will not be allowed to make a mockery of justice by taking inconsistent positions which, if allowed, would result in brazen deception."28Inconsistent and unsupported as they are, the labor tribunals and the CA correctly rejected the contentions of Nahas.

Anent the assertion that Royal Dream was not served with summons, it must be stressed that Olarte had categorically declared at the outset that it was in the office of PETRA/Royal Dream at Room 401, Gochangco Building, T.M. Kalaw, Ermita, Manila where she applied for work as domestic helper, was interviewed, and made to sign an employment contract. This was effectively corroborated by Nahas herself when she admitted before the Labor Arbiter that Olarte was a walk-in applicant in the said office. When finally deployed, the local agency appearing in Olarte’s papers was Royal Dream. Hence, when Olarte was repatriated and later filed a Complaint, she lodged it against Nahas and PETRA/Royal Dream and summons was served upon them at Room 401, Gochangco Building, T.M., Kalaw, Ermita, Manila.29 Besides, to concede to this claim of Nahas would in effect allow her, PETRA and Royal Dream to hide behind the cloak of corporate fiction in order to evade the rightful claims of Olarte. It bears emphasizing that "the statutorily granted privilege of a corporate veil may be used only for legitimate purposes."30 "[T]he corporate vehicle cannot be used as a shield to protect fraud or justify wrong,"31 which clearly in this case is what Nahas, PETRA and Royal Dream are attempting to achieve but which the Court cannot allow.

The propriety of the grant of moral and exemplary damages in favor of Olarte is being raised for the first time with this Court.

Notably, Nahas did not question before the NLRC and the CA the Labor Arbiter’s grant of moral and exemplary damages in favor of Olarte; hence, the Court need not belabor upon the same. "[P]oints of law, theories, issues, and arguments not adequately brought to the attention of the lower court (or in this case, the appropriate quasi-judicial administrative body) need not be considered by the reviewing court as they cannot be raised for the first time on appeal x x x because this would be offensive to the basic rules of fair play, justice and due process."32

As a final note, it is worth stating that recruitment agencies, as part of their bounden duty to protect the welfare of the Filipino workers sent abroad from whom they take their profit,33 should in conscience not add to the misery of maltreated and abused Filipino workers by denying them the reparation to which they are entitled. Instead, they must "faithfully comply with their government

prescribed responsibilities"34 and be the first to ensure the welfare of the very people upon whose patronage their industry thrives.35

WHEREFORE, the Petition is DENIED. The assailed Decision dated April 29, 2005 and Resolution dated July 8, 2005 of the Court of Appeals in CAG.R. SP No. 79028 are AFFIRMED.

SO ORDERED.

G.R. No. 197528               September 5, 2012

PERT/CPM MANPOWER EXPONENT CO., INC., Petitioner, vs.ARMANDO A. VINUY A, LOUIE M. ORDOVEZ, ARSENIO S. LUMANTA,. JR., ROBELITO S. ANIPAN, VIRGILIO R. ALCANTARA, MARINO M. ERA, SANDY 0. ENJAMBRE and NOEL T. LADEA, Respondents.

D E C I S I O N

BRION, J.:

We resolve the present petition for review on certiorari1 assailing the decision2 dated May 9, 2011 and the resolution3dated June 23, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 114353.

The Antecedents

On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez, Arsenio S. Lumanta, Jr., Robelito S. Anipan, Virgilio R. Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T. Ladea (respondents) filed a complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co., Inc. (agency), and its President Romeo P. Nacino.

The respondents alleged that the agency deployed them between March 29, 2007 and May 12, 2007 to work as aluminum fabricator/installer for the agency’s principal, Modern Metal Solution LLC/MMS Modern Metal Solution LLC (Modern Metal) in Dubai, United Arab Emirates.

The respondents’ employment contracts,4 which were approved by the Philippine Overseas Employment Administration (POEA), provided for a two-year employment, nine hours a day, salary of 1,350 AED with overtime pay, food allowance, free and suitable housing (four to a room), free transportation, free laundry, and free medical and dental services. They each paid a P 15,000.00 processing fee.5

On April 2, 2007, Modern Metal gave the respondents, except Era, appointment letters6 with terms different from those in the employment contracts which they signed at the agency’s office in the Philippines. Under the letters of appointment, their employment was increased to three years at 1,000 to 1,200 AED and food allowance of 200 AED.

The respondents claimed that they were shocked to find out what their working and living conditions were in Dubai. They were required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half hours. When they rendered overtime work, they were most of the time either underpaid or not paid at all. Their housing accommodations were cramped and were shared with 27 other occupants. The lodging house was in Sharjah, which was far from their jobsite in Dubai, leaving them only three to four hours of sleep a day because of the long hours of travel to and from their place of work; there was no potable water and the air was polluted.

When the respondents received their first salaries (at the rates provided in their appointment letters and with deductions for placement fees) and because of their difficult living and working conditions, they called up the agency and complained about their predicament. The agency assured them that their concerns would be promptly addressed, but nothing happened.

On May 5, 2007, Modern Metal required the respondents to sign new employment contracts,7 except for Era who was made to sign later. The contracts reflected the terms of their appointment letters. Burdened by all the expenses and financial obligations they incurred for their deployment, they were left with no choice but to sign the contracts. They raised the matter with the agency, which again took no action.

On August 5, 2007, despondent over their unbearable living and working conditions and by the agency’s inaction, the respondents expressed to Modern Metal their desire to resign. Out of fear, as they put it, that Modern Metal would not give them their salaries and release papers, the respondents, except Era, cited personal/family problems for their resignation.8 Era mentioned the real reason – "because I dont (sic) want the company policy"9 – for his resignation.

It took the agency several weeks to repatriate the respondents to the Philippines. They all returned to Manila in September 2007. Except for Ordovez and Enjambre, all the respondents shouldered their own airfare.

For its part, the agency countered that the respondents were not illegally dismissed; they voluntarily resigned from their employment to seek a better paying job. It claimed that the respondents, while still working for Modern Metal, applied with another company which offered them a higher pay. Unfortunately, their supposed employment failed to materialize and they had to go home because they had already resigned from Modern Metal.

The agency further alleged that the respondents even voluntarily signed affidavits of quitclaim and release after they resigned. It thus argued that their claim for benefits, under Section 10 of Republic Act No. (R.A.) 8042, damages and attorney’s fees is unfounded.

The Compulsory Arbitration Rulings

On April 30, 2008, Labor Arbiter Ligerio V. Ancheta rendered a Decision10 dismissing the complaint, finding that the respondents voluntarily resigned from their jobs. He also found that four of them – Alcantara, Era, Anipan and Lumanta – even executed a compromise agreement (with quitclaim and release) before the POEA. He considered the POEA recourse a case of forum shopping.

The respondents appealed to the National Labor Relations Commission (NLRC). They argued that the labor arbiter committed serious errors in (1) admitting in evidence the quitclaims and releases they executed in Dubai, which were mere photocopies of the originals and which failed to explain the circumstances behind their execution; (2) failing to consider that the compromise agreements they signed before the POEA covered only the refund of their airfare and not all their money claims; and (3) ruling that they violated the rule on non-forum shopping.

On May 12, 2009, the NLRC granted the appeal.11 It ruled that the respondents had been illegally dismissed. It anchored its ruling on the new employment contracts they were made to sign in Dubai. It stressed that it is illegal for an employer to require its employees to execute new employment papers, especially those which provide benefits that are inferior to the POEA-approved contracts.

The NLRC rejected the quitclaim and release executed by the respondents in Dubai. It believed that the respondents executed the quitclaim documents under duress as they were afraid that they would not be allowed to return to the Philippines if they did not sign the documents. Further, the labor tribunal disagreed with the labor arbiter’s opinion that the compromise agreement they executed before the POEA had effectively foreclosed the illegal dismissal complaint before the NLRC and that the respondents had been guilty of forum shopping. It pointed out that the POEA case involved pre-

deployment issues; whereas, the complaint before the NLRC is one for illegal dismissal and money claims arising from employment.

Consequently, the NLRC ordered the agency, Nacino and Modern Metal to pay, jointly and severally, the respondents, as follows:

WHEREFORE, the Decision dated 30 April 2008 is hereby REVERSED and SET ASIDE, a new Decision is hereby issued ordering the respondents PERT/CPM MANPOWER EXPONENTS CO., INC., ROMEO NACINO, and MODERN METAL SOLUTIONS, INC. to jointly and severally, pay the complainants the following:

EmployeeUnderpaid

SalaryPlacement

fee

Salary forthe

unexpiredportion of

the contract(1350 x 6months)

ExemplaryDamages

Vinuya,ARMANDO

150 x 6 = 900 AED USD 400 8100 AED P 20,000.00

AlcantaraVIRGILIO

150 X 4 = 600 AED USD 400 8100 AED P 20,000.00

Era,MARINO

350 x 4 = 1400 AED USD 400 8100 AED P 20,000.00

Ladea,NOEL

150 x 5 = 750 AED USD 400 8100 AED P 20,000.00

Ordovez,LOUIE

250 X 3 = 750 AED USD 400 8100 AED P 20,000.00

Anipan,ROBELITO

150 x 4 = 600 AED USD 400 8100 AED P 20,000.00

Enjambre,SANDY

150 x 4 = 600 AED USD 400 8100 AED P 20,000.00

Lumanta,ARSENIO

250 x 5 = 1250 AED USD 400 8100 AED P 20,000.00

TOTAL: 6,850 AED US$3,200 64,800 AED P 400,000.00

or their peso equivalent at the time of actual payment plus attorney‘s fees equivalent to 10% of the judgment award.12

The agency moved for reconsideration, contending that the appeal was never perfected and that the NLRC gravely abused its discretion in reversing the labor arbiter’s decision.The respondents, on the other hand, moved for partial reconsideration, maintaining that their salaries should have covered the unexpired portion of their employment contracts, pursuant to the Court’s ruling in Serrano v. Gallant Maritime Services, Inc.13

The NLRC denied the agency’s motion for reconsideration, but granted the respondents’ motion.14 It sustained the respondents’ argument that the award needed to be adjusted, particularly in relation to the payment of their salaries, consistent with the Court’s ruling in Serrano. The ruling declared unconstitutional the clause, "or for three (3) months for every year of the unexpired term, whichever is less," in Section 10, paragraph 5, of R.A. 8042, limiting the entitlement of illegally dismissed overseas Filipino workers to their salaries for the unexpired term of their contract or three months, whichever is less. Accordingly, it modified its earlier decision and adjusted the respondents’ salary entitlement based on the following matrix:

EmployeeDuration of

ContractDeparture date Date dismissed

Unexpiredportion ofcontract

Vinuya,ARMANDO

2 years 29 March 2007 8 August 200719 monthsand 21 days

Alcantara,VIRGILIO

2 years 3 April 2007 8 August 200720 monthsand 5 days

Era,MARINO

2 years 12 May 2007 8 August 200721 monthsand 4 days

Ladea,NOEL

2 years 29 March 2007 8 August 200719 monthsand 21 days

Ordovez,LOUIE

2 years 3 April 2007 26 July 200721 monthsand 23 days

Anipan,ROBELITO

2 years 3 April 2007 8 August 200720 monthsand 5 days

Enjambre,SANDY

2 years 29 March 2007 26 July 200720 monthsand 3 days

Lumanta,ARSENIO

2 years 29 March 2007 8 August 200719 monthsand 21 days15

Again, the agency moved for reconsideration, reiterating its earlier arguments and, additionally, questioning the application of the Serrano ruling in the case because it was not yet final and executory. The NLRC denied the motion, prompting the agency to seek recourse from the CA through a petition for certiorari.

The CA Decision

The CA dismissed the petition for lack of merit.16 It upheld the NLRC ruling that the respondents were illegally dismissed. It found no grave abuse of discretion in the NLRC’s rejection of the

respondents’ resignation letters, and the accompanying quitclaim and release affidavits, as proof of their voluntary termination of employment.

The CA stressed that the filing of a complaint for illegal dismissal is inconsistent with resignation. Moreover, it found nothing in the records to substantiate the agency’s contention that the respondents’ resignation was of their own accord; on the contrary, it considered the resignation letters "dubious for having been lopsidedly-worded to ensure that the petitioners (employers) are free from any liability."17

The appellate court likewise refused to give credit to the compromise agreements that the respondents executed before the POEA. It agreed with the NLRC’s conclusion that the agreements pertain to the respondents’ charge of recruitment violations against the agency distinct from their illegal dismissal complaint, thus negating forum shopping by the respondents.

Lastly, the CA found nothing legally wrong in the NLRC correcting itself (upon being reminded by the respondents), by adjusting the respondents’ salary award on the basis of the unexpired portion of their contracts, as enunciated in the Serrano case.

The agency moved for, but failed to secure, a reconsideration of the CA decision.18

The Petition

The agency is now before the Court seeking a reversal of the CA dispositions, contending that the CA erred in:

1. affirming the NLRC’s finding that the respondents were illegally dismissed;

2. holding that the compromise agreements before the POEA pertain only to the respondents’ charge of recruitment violations against the agency; and

3. affirming the NLRC’s award to the respondents of their salaries for the unexpired portion of their employment contracts, pursuant to the Serrano ruling.

The agency insists that it is not liable for illegal dismissal, actual or constructive. It submits that as correctly found by the labor arbiter, the respondents voluntarily resigned from their jobs, and even executed affidavits of quitclaim and release; the respondents stated family concerns for their resignation. The agency posits that the letters were duly proven as they were written unconditionally by the respondents. It, therefore, assails the conclusion that the respondents resigned under duress or that the resignation letters were dubious.

The agency raises the same argument with respect to the compromise agreements, with quitclaim and release, it entered into with Vinuya, Era, Ladea, Enjambre, Ordovez, Alcantara, Anipan and Lumanta before the POEA, although it submitted evidence only for six of them. Anipan, Lumanta, Vinuya and Ladea signing one document;19Era20 and Alcantara21 signing a document each. It points out that the agreement was prepared with the assistance of POEA Conciliator Judy Santillan, and was duly and freely signed by the respondents; moreover, the agreement is not conditional as it pertains to all issues involved in the dispute between the parties.

On the third issue, the agency posits that the Serrano ruling has no application in the present case for three reasons. First, the respondents were not illegally dismissed and, therefore, were not entitled to their money claims. Second, the respondents filed the complaint in 2007, while the

Serrano ruling came out on March 24, 2009. The ruling cannot be given retroactive application. Third, R.A. 10022, which was enacted on March 8, 2010 and which amended R.A. 8042, restored the subject clause in Section 10 of R.A. 8042, declared unconstitutional by the Court.

The Respondents’ Position

In their Comment (to the Petition) dated September 28, 2011,22 the respondents ask the Court to deny the petition for lack of merit. They dispute the agency’s insistence that they resigned voluntarily. They stand firm on their submission that because of their unbearable living and working conditions in Dubai, they were left with no choice but to resign. Also, the agency never refuted their detailed narration of the reasons for giving up their employment.

The respondents maintain that the quitclaim and release affidavits,23 which the agency presented, betray its desperate attempt to escape its liability to them. They point out that, as found by the NLRC, the affidavits are ready-made documents; for instance, in Lumanta’s24 and Era’s25 affidavits, they mentioned a certain G & A International Manpower as the agency which recruited them — a fact totally inapplicable to all the respondents. They contend that they had no choice but to sign the documents; otherwise, their release papers and remaining salaries would not be given to them, a submission which the agency never refuted.

On the agency’s second line of defense, the compromise agreement (with quitclaim and release) between the respondents and the agency before the POEA, the respondents argue that the agreements pertain only to their charge of recruitment violations against the agency. They add that based on the agreements, read and considered entirely, the agency was discharged only with respect to the recruitment and pre-deployment issues such as excessive placement fees, non-issuance of receipts and placement misrepresentation, but not with respect to post-deployment issues such as illegal dismissal, breach of contract, underpayment of salaries and underpayment and nonpayment of overtime pay. The respondents stress that the agency failed to controvert their contention that the agreements came about only to settle their claim for refund of their airfare which they paid for when they were repatriated.

Lastly, the respondents maintain that since they were illegally dismissed, the CA was correct in upholding the NLRC’s award of their salaries for the unexpired portion of their employment contracts, as enunciated in Serrano. They point out that the Serrano ruling is curative and remedial in nature and, as such, should be given retroactive application as the Court declared in Yap v. Thenamaris Ship’s Management.26 Further, the respondents take exception to the agency’s contention that the Serrano ruling cannot, in any event, be applied in the present case in view of the enactment of R.A. 10022 on March 8, 2010, amending Section 10 of R.A. 8042. The amendment restored the subject clause in paragraph 5, Section 10 of R.A. 8042 which was struck down as unconstitutional in Serrano.

The respondents maintain that the agency cannot raise the issue for the first time before this Court when it could have raised it before the CA with its petition for certiorari which it filed on June 8, 2010;27 otherwise, their right to due process will be violated. The agency, on the other hand, would later claim that it is not barred by estoppel with respect to its reliance on R.A. 10022 as it raised it before the CA in CA-G.R. SP No. 114353.28 They further argue that RA 10022 cannot be applied in their case, as the law is an amendatory statute which is, as a rule, prospective in application, unless the contrary is provided.29 To put the issue to rest, the respondents ask the Court to also declare unconstitutional Section 7 of R.A. 10022.

Finally, the respondents submit that the petition should be dismissed outright for raising only questions of fact, rather than of law.

The Court’s Ruling

The procedural question

We deem it proper to examine the facts of the case on account of the divergence in the factual conclusions of the labor arbiter on the one hand, and, of the NLRC and the CA, on the other.30 The arbiter found no illegal dismissal in the respondents’ loss of employment in Dubai because they voluntarily resigned; whereas, the NLRC and the CA adjudged them to have been illegally dismissed because they were virtually forced to resign.

The merits of the case

We find no merit in the petition. The CA committed no reversible error and neither did it commit grave abuse of discretion in affirming the NLRC’s illegal dismissal ruling.

The agency and its principal, Modern Metal, committed flagrant violations of the law on overseas employment, as well as basic norms of decency and fair play in an employment relationship, pushing the respondents to look for a better employment and, ultimately, to resign from their jobs.

First. The agency and Modern Metal are guilty of contract substitution. The respondents entered into a POEA-approved two-year employment contract,31 with Modern Metal providing among others, as earlier discussed, for a monthly salary of 1350 AED. On April 2, 2007, Modern Metal issued to them appointment letters32 whereby the respondents were hired for a longer three-year period and a reduced salary, from 1,100 AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they were required to sign new employment contracts33 reflecting the same terms contained in their appointment letters, except that this time, they were hired as "ordinary laborer," no longer aluminum fabricator/installer. The respondents complained with the agency about the contract substitution, but the agency refused or failed to act on the matter.

The fact that the respondents’ contracts were altered or substituted at the workplace had never been denied by the agency.1âwphi1 On the contrary, it admitted that the contract substitution did happen when it argued, "as to their claim for underpayment of salary, their original contract mentioned 1350 AED monthly salary, which includes allowance while in their Appointment Letters, they were supposed to receive 1,300 AED. While there was a difference of 50 AED monthly, the same could no longer be claimed by virtue of their Affidavits of Quitclaims and Desistance."34

Clearly, the agency and Modern Metal committed a prohibited practice and engaged in illegal recruitment under the law. Article 34 of the Labor Code provides:

Art. 34. Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder of authority:

x x x x

(i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor.

Further, Article 38 of the Labor Code, as amended by R.A. 8042,35 defined "illegal recruitment" to include the following act:

(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment.

Second. The agency and Modern Metal committed breach of contract. Aggravating the contract substitution imposed upon them by their employer, the respondents were made to suffer substandard (shocking, as they put it) working and living arrangements. Both the original contracts the respondents signed in the Philippines and the appointment letters issued to them by Modern Metal in Dubai provided for free housing and transportation to and from the jobsite. The original contract mentioned free and suitable housing.36 Although no description of the housing was made in the letters of appointment except: "Accommodation: Provided by the company," it is but reasonable to think that the housing or accommodation would be "suitable."

As earlier pointed out, the respondents were made to work from 6:30 a.m. to 6:30 p.m., with a meal break of one to one and a half hours, and their overtime work was mostly not paid or underpaid. Their living quarters were cramped as they shared them with 27 other workers. The lodging house was in Sharjah, far from the jobsite in Dubai, leaving them only three to four hours of sleep every workday because of the long hours of travel to and from their place of work, not to mention that there was no potable water in the lodging house which was located in an area where the air was polluted. The respondents complained with the agency about the hardships that they were suffering, but the agency failed to act on their reports. Significantly, the agency failed to refute their claim, anchored on the ordeal that they went through while in Modern Metal’s employ.

Third. With their original contracts substituted and their oppressive working and living conditions unmitigated or unresolved, the respondents’ decision to resign is not surprising. They were compelled by the dismal state of their employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or discharge is "a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in pay."37

Without doubt, the respondents’ continued employment with Modern Metal had become unreasonable. A reasonable mind would not approve of a substituted contract that pays a diminished salary — from 1350 AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior terms, or a "free and suitable" housing which is hours away from the job site, cramped and crowded, without potable water and exposed to air pollution.

We thus cannot accept the agency’s insistence that the respondents voluntarily resigned since they personally prepared their resignation letters38 in their own handwriting, citing family problems as their common ground for resigning. As the CA did, we find the resignation letters "dubious,"39 not only for having been lopsidedly worded to ensure that the employer is rendered free from any liability, but also for the odd coincidence that all the respondents had, at the same time, been confronted with urgent family problems so that they had to give up their employment and go home. The truth, as the respondents maintain, is that they cited family problems as reason out of fear that Modern Metal would not give them their salaries and their release papers. Only Era was bold enough to say the real reason for his resignation — to protest company policy.

We likewise find the affidavits40of quitclaim and release which the respondents executed suspect. Obviously, the affidavits were prepared as a follow through of the respondents’ supposed voluntary resignation. Unlike the resignation letters, the respondents had no hand in the preparation of the

affidavits. They must have been prepared by a representative of Modern Metal as they appear to come from a standard form and were apparently introduced for only one purpose — to lend credence to the resignation letters. In Modern Metal’s haste, however, to secure the respondents’ affidavits, they did not check on the model they used. Thus, Lumanta’s affidavit41 mentioned a G & A International Manpower as his recruiting agency, an entity totally unknown to the respondents; the same thing is true for Era’s affidavit.42 This confusion is an indication of the employer’s hurried attempt to avoid liability to the respondents.

The respondents’ position is well-founded. The NLRC itself had the same impression, which we find in order and hereunder quote:

The acts of respondents of requiring the signing of new contracts upon reaching the place of work and requiring employees to sign quitclaims before they are paid and repatriated to the Philippines are all too familiar stories of despicable labor practices which our employees are subjected to abroad. While it is true that quitclaims are generally given weight, however, given the facts of the case, We are of the opinion that the complainants-appellants executed the same under duress and fear that they will not be allowed to return to the Philippines.43

Fourth. The compromise agreements (with quitclaim and release)44 between the respondents and the agency before the POEA did not foreclose their employer-employee relationship claims before the NLRC. The respondents, except Ordovez and Enjambre, aver in this respect that they all paid for their own airfare when they returned home45 and that the compromise agreements settled only their claim for refund of their airfare, but not their other claims.46 Again, this submission has not been refuted or denied by the agency.

On the surface, the compromise agreements appear to confirm the agency’s position, yet a closer examination of the documents would reveal their true nature. Copy of the compromise agreement is a standard POEA document, prepared in advance and readily made available to parties who are involved in disputes before the agency, such as what the respondents filed with the POEA ahead (filed in 2007) of the illegal dismissal complaint before the NLRC (filed on March 5, 2008).

Under the heading "Post-Deployment," the agency agreed to pay Era47 and Alcantara48 P 12,000.00 each, purportedly in satisfaction of the respondents’ claims arising from overseas employment, consisting of unpaid salaries, salary differentials and other benefits, including money claims with the NLRC. The last document was signed by (1) Anipan, (2) Lumanta, (3) Ladea, (4) Vinuya, (5) Jonathan Nangolinola, and (6) Zosimo Gatchalian (the last four signing on the left hand side of the document; the last two were not among those who filed the illegal dismissal complaint).49

The agency agreed to pay them a total of P 72,000.00. Although there was no breakdown of the entitlement for each of the six, but guided by the compromise agreement signed by Era and Alcantara, we believe that the agency paid them P 12,000.00 each, just like Era and Alcantara.

The uniform insubstantial amount for each of the signatories to the agreement lends credence to their contention that the settlement pertained only to their claim for refund of the airfare which they shouldered when they returned to the Philippines. The compromise agreement, apparently, was intended by the agency as a settlement with the respondents and others with similar claims, which explains the inclusion of the two (Nangolinola and Gatchalian) who were not involved in the case with the NLRC. Under the circumstances, we cannot see how the compromise agreements can be considered to have fully settled the respondents’ claims before the NLRC — illegal dismissal and monetary benefits arising from employment. We thus find no reversible error nor grave abuse of discretion in the rejection by the NLRC and the CA of said agreements.

Fifth. The agency’s objection to the application of the Serrano ruling in the present case is of no moment. Its argument that the ruling cannot be given retroactive effect, because it is curative and remedial, is untenable. It points out, in this respect, that the respondents filed the complaint in 2007, while the Serrano ruling was handed down in March 2009. The issue, as the respondents correctly argue, has been resolved in Yap v. Thenamaris Ship’s Management,50 where the Court sustained the retroactive application of the Serrano ruling which declared unconstitutional the subject clause in Section 10, paragraph 5 of R.A. 8042, limiting to three months the payment of salaries to illegally dismissed Overseas Filipino Workers.

Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022, entitled "An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act of 1995, As Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress, and For Other Purposes."51 It argues that R.A. 10022, which lapsed into law (without the Signature of the President) on March 8, 2010, restored the subject clause in the 5th paragraph, Section 10 of R.A. 8042. The amendment, contained in Section 7 of R.A. 10022, reads as follows:

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 "of" 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.52 (emphasis ours)

This argument fails to persuade us. Laws shall have no retroactive effect, unless the contrary is provided.53 By its very nature, the amendment introduced by R.A. 10022 — restoring a provision of R.A. 8042 declared unconstitutional — cannot be given retroactive effect, not only because there is no express declaration of retroactivity in the law, but because retroactive application will result in an impairment of a right that had accrued to the respondents by virtue of the Serrano ruling - entitlement to their salaries for the unexpired portion of their employment contracts.

All statutes are to be construed as having only a prospective application, unless the purpose and intention of the legislature to give them a retrospective effect are expressly declared or are necessarily implied from the language used.54 We thus see no reason to nullity the application of the Serrano ruling in the present case. Whether or not R.A. 1 0022 is constitutional is not for us to rule upon in the present case as this is an issue that is not squarely before us. In other words, this is an issue that awaits its proper day in court; in the meanwhile, we make no pronouncement on it.

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision dated May 9, 2011 and the Resolution dated June 23, 2011 of the Court of Appeals in CA-G.R. SP No. 114353 are AFFIRMED. Let this Decision be brought to the attention of the Honorable Secretary of Labor and Employment and the Administrator of the Philippine Overseas Employment Administration as a black mark in the deployment record of petitioner Pert/CPM Manpower Exponent Co., Inc., and as a record that should be considered in any similar future violations.

Costs against the petitioner.

SO ORDERED.

G.R. No. 195518               March 20, 2013

MAGSAYSAY MARITIME SERVICES and PRINCESS CRUISE LINES, LTD., Petitioners, vs.EARLWIN MEINRAD ANTERO F. LAUREL, Respondent.

D E C I S I O N

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the August 6, 2010 Decision1 and the February 4, 2011 Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 102130 entitled Magsaysay Maritime Services and Princess Cruise Lines, Ltd. v. National Labor Relations Commission and Ear/win Meinrad Antero F. Laurel, affirming the September 17, 2007 Decision3 of the National Labor Relations Commission (NLRC).

The Facts

Respondent Earlwin Meinrad Antero F. Laurel (Laurel) was employed by petitioner Princess Cruise Lines, Ltd., through its local manning agency, petitioner Magsaysay Maritime Corporation, as second pastryman on board the "M/V Star Princess." In June 2004, they executed a Philippine Overseas Employment Agency (POEA)-approved Contract of Employment4 embodying the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels and stating in particular the terms of his employment. Laurel underwent a pre-employment medical examination at the petitioner company’s accredited clinic in Makati and was declared fit for sea service. He was deployed in August 2004 to join the assigned vessel.5

In the course of the voyage, Laurel fell ill. He complained of fever with cough, and he was given paracetamol until reaching the shore. On April 3, 2005, he disembarked from the vessel and proceeded to a hospital in Florida, U.S.A. Due to the persistence of his illness, he was repatriated for further evaluation. He arrived in the Philippines on April 7, 2005.6

On April 8, 2005, Laurel was admitted to the Metropolitan Hospital in Manila, placed under the medical care of Dr. Robert Lim, and diagnosed with upper respiratory tract infection and hyperthyroidism. He was discharged on April 11, 2005 and was prescribed take-home medications.7

Dr. Mylene Cruz-Balbon, the hospital’s assistant medical coordinator, issued a medical report,8 dated April 11, 2005, confirming that Laurel was suffering from hyperthyroidism and that he was started on anti- thyroid medication. It was indicated in the said medical report that hyperthyroidism, an overactivity of the thyroid gland usually secondary to an immunologic reaction, was not work-related.

On April 25, 2005, during his last follow-up at the petitioner company’s medical facility, Laurel was already asymptomatic for upper respiratory tract infection. As he no longer had fever, cough and cold, he was cleared of his pulmonary problem. He was advised to consult an internist on his own account with regard to his hyperthyroidism as this illness was allegedly not work-related.9

When Laurel returned to his hometown of Naga City, he consulted Dr. Ramon Caceres (Dr. Caceres), an endocrinologist. On January 21, 2006, Dr. Caceres issued a medical certificate attesting that he was treated for Euthyroid Graves’ Disease. By then, he was clinically and

biochemically euthyroid. His oral anti-thyroid medications were tapered off for possible discontinuation of treatment.10

On August 3, 2006, Laurel filed a complaint11 against the petitioners before the NLRC, claiming medical reimbursement, sickness allowance, permanent disability benefits, damages, and attorney’s fees.

Thereafter, Laurel returned to Dr. Caceres for a more extensive diagnosis. On August 12, 2006, he obtained a medical certificate12 with these findings – Stage 1B diffuse goiter, recurrent periodic paralysis of lower extremities Wayne’s Index to 27 points, and hyperthyroid TFT’s (suppressed TSH, elevated T3). Dr. Caceres diagnosed Laurel’s illness as Graves’ Disease (hyperthyroidism stage 1B diffuse goiter) with periodic paralysis. He was advised not to undergo strenuous activity as it was dangerous for him to ambulate given his unpredictable episodes of paralysis. His illness was described as equivalent to Grave 1 impediment.13

The petitioners opposed Laurel’s claims, contending that his illness had been categorically determined as not work-related.

The Labor Arbiter's Decision

The Labor Arbiter (LA), in a Decision,14 dated February 1, 2007, dismissed the complaint. The LA held that Laurel was not entitled to his claims, with his hyperthyroidism having been found as not work-related by petitioner’s company physician. The LA reasoned out that under the POEA-Standard Employment Contract (SEC), the employer was liable for the payment of disability benefits only for work-related illnesses sustained during the term of the contract and after determination of corresponding impediment grade by the company-designated physician. According to the LA, hyperthyroidism was not listed in Section 32 of POEA-SEC as a compensable occupational disease, and Laurel was not able to discharge his burden of proving that his illness was work-related or work-aggravated.

The NLRC Ruling

On appeal, the NLRC reversed the LA decision and awarded disability compensation in favor of Laurel. It found that the illness was work-related for failure of the petitioners to overcome the presumption provided under the POEA-SEC that an illness occurring during the employment, even if not listed, was work-related. The NLRC added that under the said contract, the petitioners had the legal obligation to compensate Laurel for his incapability to continue his job due to his illness. Citing Philippine Transmarine Carriers, Inc. v. NLRC,15 it held that it was not the illness which was being compensated, but rather the incapacity to work resulting in the impairment of his earning capacity. Finally, the NLRC pointed out that for a claimant to be entitled to disability benefits, it was not required that the employment be the sole cause of the illness. It was enough that the employment had contributed, even in a small degree, to the development of the disease. The NLRC disposed of the case as follows:

WHEREFORE, the foregoing premises considered, the instant appeal is hereby GRANTED.

Accordingly, the decision appealed from is REVERSED and SET ASIDE, and a new one is issued ordering respondent Magsaysay Maritime Services and/or Agripito Milano, Jr. to pay the disability benefits of Earlwin Meinrad Antero F. Laurel in the amount of US$60,000.00 or in Philippine Currency at the conversion rate prevailing at the time of payment.

SO ORDERED.16 [Emphasis in the original]

The CA Decision

After their motion for reconsideration was denied, the petitioners elevated the case to the CA through a petition for certiorari. The CA, however, dismissed the petition and sustained the award of disability benefits in favor of Laurel. It held that the NLRC did not commit a grave abuse of discretion in ordering the payment of disability benefits to Laurel.17

The CA explained that although the petitioners’ medical literature spoke of hyperthyroidism as hereditary, it also alluded to the triggers of the disease and cited that stress could also be a trigger. The CA concluded that stressful conditions could result in, or could be a factor in, the emergence of hyperthyroidism. It found that the working conditions on board the MV Star Princess had contributed and aggravated the illness of Laurel. This, according to the CA, was sufficient to entitle him to disability benefits.

The petitioners filed a motion for reconsideration18 of the said decision, but it was denied by the CA in its February 4, 2011 Resolution.

Hence, the petitioners interpose this petition before this Court anchored on the following

GROUNDS

I.

The Honorable Court of Appeals erred in affirming the Decision of the NLRC, awarding total and permanent disability compensation to Respondent. Respondent is not entitled to any disability compensation as his illness is not work-related. The POEA Standard Employment Contract clearly states that only those work-related illnesses or injuries which were suffered during the term of the employment contract are compensable.

II.

The Honorable Court of Appeals erred in holding that Petitioners failed to overcome the presumption of compensability. The Supreme Court has consistently held that it is the complainant (herein Respondent) who has the burden to prove entitlement to disability benefits.

III.

The Honorable Court of Appeals erred in not upholding the findings and assessment of the company-designated physician. The POEA Standard Employment Contract states that it is the company-designated physician who is tasked to assess a seafarer’s condition and determine his disability, if any. Thus, the company-designated physician’s declaration concerning Respondent’s state of health binds him.19

Petitioners' Argument

The petitioners argue that the CA erred in affirming the award of disability benefits to Laurel because his illness was not work-related as convincingly proven through the expert opinion of the company-designated physician. They insist that their doctor’s assessment should have been accorded weight and credence considering his detailed knowledge of, and his familiarity with, Laurel’s condition and

the extensive medical attention given to him. They aver that hyperthyroidism is not among those listed in the POEA-SEC as an occupational disease, hence, not compensable. They emphasize that Laurel’s illness was essentially genetic and was not caused by his employment. Citing jurisprudence, the petitioners assert that the burden is placed upon the seafarer to substantiate his claim that the illness is work-related and to prove that there is a connection between his employment and his illness. Laurel presented no substantial proof that his hyperthyroidism was caused or aggravated by the working conditions on board MV Star Princess.

Respondent's Position

Laurel, in his Compliance and Manifestation with Comment to Petitioners’ Petition for Review on Certiorari,20counters that his illness is compensable because it was acquired during the effectivity of his employment contract while performing his work aboard the petitioners’ vessel. The fact that Grave’s Disease may be hereditary does not bar him from entitlement to disability benefits. Compensability does not require that employment be the sole cause of the illness. It is enough that there exists a reasonable work connection. The strenuous condition of his employment on board the MV Star Princess triggered the development of his hyperthyroidism due to his exposure to varying temperature and chemical irritants. Contrary to the petitioners’ contention, Laurel asserts that the burden of proof rests on the petitioners by virtue of the presumption of compensability under Section 32 of the POEA contract.

Laurel likewise contends that the jurisdiction of the Court in cases brought before it from the CA by way of petition for review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing errors of law, and that findings of fact of the latter are conclusive. Specifically, Laurel cited the case of Palomado v. National Labor Relations Commission,21 in stating the fundamental rule that the factual findings of quasi-judicial agencies like the NLRC if supported by substantial evidence are generally accorded not only great respect but even finality, and are binding upon the Court, unless the petitioner is able to show that the NLRC arbitrarily disregarded evidence before it or misapprehended evidence to such an extent as to compel a contrary conclusion if such evidence were to be properly appreciated. In this case, according to him, the CA correctly affirmed the finding of the NLRC that Laurel was entitled to disability compensation and other charges.

The Court's Ruling

A perusal of the petitioners’ arguments discloses that the issues raised are essentially factual in nature. Generally, factual issues are not proper subjects of the Court’s power of judicial review.

It is elementary that this Court is not a trier of facts and this rule applies with greater force in labor cases. Questions of fact are for the labor tribunals to resolve. Only errors of law are generally reviewed in petitions for review on certiorari criticizing the decisions of the CA. Indeed, findings of fact of quasi-judicial bodies like the NLRC, as affirmed by the CA, are generally conclusive on this Court. In exceptional cases, however, the Court may be urged to probe and resolve factual issues when there is insufficient or insubstantial evidence to support the findings of the tribunal or the court below, or when too much is concluded, inferred or deduced from the bare or incomplete facts submitted by the parties or, where the LA and the NLRC came up with conflicting positions.22 The present case clearly falls within these exceptions as the finding of the LA, on one hand, conflicts with those of the NLRC and the CA, on the other.

The Court, nevertheless, finds for respondent Laurel, and resolves that his hyperthyroidism is compensable.

The POEA-SEC, as provided under Department Order No. 4, series of 2000 of the Department of Labor and Employment, which contains the Standard Terms and Conditions Governing The Employment of Filipino Seafarers On-Board Ocean-Going Vessels, governs the employment contract between Laurel and the petitioners. POEA came out with it pursuant to its mandate under Executive Order (E.O.) No. 24723 to "secure the best terms and conditions of employment of Filipino contract workers and ensure compliance therewith" and to "promote and protect the well-being of Filipino workers overseas."24 Section 20-B of the POEA-SEC enumerates the duties of an employer to his employee who suffers work-related disease or injury during the term of his employment contract, to quote:

Section 20 (B)

COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as follows:

x x x x

6. In case of permanent total or partial disability of the seafarer caused by either injury or illness the seafarer shall be compensated in accordance with the schedule of benefits enumerated in Section 32 of this Contract. Computation of his benefits arising from an illness or disease shall be governed by the rates and rules of compensation applicable at the time the illness or disease was contracted.

Pursuant to the aforequoted provision, two elements must concur for an injury or illness of a seafarer to be compensable. First, the injury or illness must be work-related; and second, that the work-related injury or illness must have existed during the term of the seafarer’s employment contract.25 Both requisites obtain in this case.

For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, it must be the result of a work-related injury or a work-related illness, which are defined as "injury(ies) resulting in disability or death arising out of and in the course of employment" and as "any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied."

Section 32-A. OCCUPATIONAL DISEASES

For an occupational disease and the resulting disability or death to be compensable, all of the following conditions must be satisfied:

1. The seafarer’s work must involve the risks described herein;

2. The disease was contracted as a result of the seafarer’s exposure to the described risks;

3. The disease was contracted within a period of exposure and under such other factors necessary to contract it;

4. There was no notorious negligence on the part of the seafarer.

As borne by the records, Laurel was afflicted with hyperthyroidism during the term of his employment contract that caused his discharge for medical examination in Florida, U.S.A. on April 3, 2005 and his subsequent repatriation to the Philippines.

Hyperthyroidism is the medical term to describe the signs and symptoms associated with an overproduction of thyroid hormones. It is a condition in which the thyroid gland makes too much thyroid hormones affecting the tissues of the body.26 Although there are several causes of hyperthyroidism, most of the symptoms patients experience are the same regardless of the cause. Because the body's metabolism is increased, patients often feel hotter than those around them and can slowly lose weight even though they may be eating more. The weight issue is confusing sometimes since some patients actually gain weight because of an increase in their appetite. Patients with hyperthyroidism usually experience fatigue at the end of the day, but have trouble sleeping. Trembling of the hands and a hard or irregular heartbeat (called palpitations) may develop. These individuals may become irritable and easily upset. When hyperthyroidism is severe, patients can suffer shortness of breath, chest pain and muscle weakness.27

The most common underlying cause of hyperthyroidism is Graves' Disease. It is classified as an autoimmune disease, caused by the patient's own immune system turning against the patient's own thyroid gland. The hyperthyroidism of Graves' Disease, therefore, is caused by antibodies that the patient's immune system makes. The antibodies attach to specific activating sites on the thyroid gland and those, in turn, cause the thyroid to make more hormones.28

Stress is a factor that appears to trigger the onset of Graves' Disease. 1âwphi1 Researchers have documented a definite connection between major life stressors and the onset of Graves' disease.29 Lifestyle factors are perhaps the biggest factor that lead to a hyperthyroid condition. Two of the biggest lifestyle factors are chronic stress and poor eating habits. There are other risk factors for the disorder. Based on family and twin studies, genetic factors are important. Postulated environmental and lifestyle risk factors include cigarette smoking, stress and adverse life events, and high dietary iodine intake.30 With regard to stress, while there is nothing that can be done to entirely eliminate it in people’s lives, most can do a much better job in handling it. Too much stress can create problems with the adrenal glands, as while they are designed to handle acute stress situations, they cannot adequately handle chronic, prolonged stress. Problems with the adrenal glands will eventually affect other areas of the body, including the thyroid gland.31 [Emphases supplied]

Laurel, in his Memorandum,32 aptly explained how stress can lead to a thyroid condition, to quote:

‘It’s important to understand that our bodies weren’t designed to handle chronic stress. 1âwphi1 The adrenal glands were designed to handle acute stress situations without much of a problem. But in today’s world most people are overwhelmed with stressful situations, as they have stressful jobs, stressful relationships, financial issues, and many issues that lead to chronic stress. Since the adrenal glands weren’t designed to handle chronic stress situations, what happens is that for a person who deals with a lot of stress AND does a poor job of managing it, over a period of months and years their adrenal glands will weaken, which can eventually lead to adrenal fatigue. But even before these glands reach this point, this can create other problems, including dysfunction of the thyroid gland. The way that stressed out adrenals can cause thyroid malfunction is the following: when the adrenal glands are stressed out, it puts the body in a state of catabolism, which means that the body is breaking down. Because of this, the body will slow down the thyroid gland as a protective mechanism. The reason behind this is because the thyroid gland controls the metabolism of the body, and so the body slows it down in order to slow down the catabolic process. This is why many times the thyroid gland won’t respond to treatment until you address the adrenal glands.

If the adrenal glands are not addressed, this can affect other bodily systems. For example, someone with weak adrenal glands who has a thyroid disorder can develop a compromised immune system. This eventually can lead to an autoimmune thyroid disorder, such as Graves’ Disease or Hashimoto’s Thyroiditis.’33 [Emphasis and underscoring in the original]

In sum, chronic stress can cause a lot of different problems, and if not managed, it can ultimately lead to a thyroid condition. Of course, this does not mean that all thyroid conditions are caused by stress, but there is no question that stress is a culprit in many thyroid disorders.34

Given the foregoing, although Graves’ Disease is attributed to genetic influence, the Court finds a reasonable work connection between Laurel’s condition at work as pastryman (cook) and the development of his hyperthyroidism. His constant exposure to hazards such as chemicals and the varying temperature, like the heat in the kitchen of the vessel and the coldness outside, coupled by stressful tasks in his employment caused, or at least aggravated, his illness. It is already recognized that any kind of work or labor produces stress and strain normally resulting in wear and tear of the human body.35 Thus, the Court sustains the finding of the CA that:

Stressful conditions in the environment, in a word, can result in hyperthyroidism, and the employment conditions of a seafarer on board an ocean-going vessel are likely stress factors in the development of hyperthyroidism irrespective of its origin. As recounted by the respondent in his position paper, the work on board the MV Star Princess was a strenuous one. It involved day-to-day activities that brought him under pressure and strain and exposed him to chemical and other irritants, and his being away from home and family only aggravated these stresses.36

Indeed, Laurel has shown a reasonable causation between his working condition and his hyperthyroidism contracted during his employment warranting the recovery of compensation. Settled is the rule that for illness to be compensable, it is not necessary that the nature of the employment be the sole and only reason for the illness suffered by the seafarer. It is sufficient that there is a reasonable linkage between the disease suffered by the employee and his work to lead a rational mind to conclude that his work may have contributed to the establishment or, at the very least, aggravation of any pre-existing condition he might have had.37

The case of Career Philippines Shipmanagement, Inc. v. Serna38 may be relevant. In the said case, the Court sustained the award of disability benefits and held:

The causal connection the petitioners cite is a factual question that we cannot touch in Rule 45. The factual question is also irrelevant to the 1996 POEA-SEC. In Remigio v. National Labor Relations Commission, we expressly declared that illnesses need not be shown to be work-related to be compensable under the 1996 POEA-SEC, which covers all injuries or illnesses occurring in the lifetime of the employment contract. We contrast this with the 2000 POEA-SEC which lists the compensable occupational diseases. Even granting that work-relatedness may be considered in this case, we fail to see, too, how the idiopathic character of toxic goiter and/or thyrotoxicosis excuses the petitioners, since it does not negate the probability, indeed the possibility, that Serna’s toxic goiter was caused by the undisputed work conditions in the petitioners’ chemical tankers. (Underscoring supplied)

Moreover, it should be noted that Laurel was not only diagnosed with Graves’ Disease. Per medical certificate of Dr. Caceres, Laurel’s physician, he was also found to be suffering from: (1) Stage 1B diffuse goiter; (2) recurrent periodic paralysis of lower extremities; (3) Wayne’s Index to

27 points; and (4) hyperthyroid TFT’s (suppressed TSH, elevated T3). His illness/disability was assessed as equivalent to Grade 1 Impediment. Thus, he was advised "not to undergo strenuous

activity, as it may be very dangerous for him to ambulate with the unpredictable episodes of periodic paralysis." Evidently, these illnesses disabled him to continue his job on board the vessel. Therefore, there is no doubt that under the 2000 POEA-SEC, he is entitled to disability compensation.

The petitioners cannot successfully invoke the case of Magsaysay Maritime Corp. v. NLRC39 to insulate themselves from liability for disability benefits. The said case is not applicable. In that case, a causal connection between the nature of claimant’s employment as assistant housekeeping manager on board the vessel and his lymphoma, or the fact that the risk of contracting the illness was increased by his working conditions was not established. The petitioner, through the medical report of its company-designated physician, was able to sufficiently explain the basis in concluding that the claimant’s illness was not work-related. It was shown that the claimant had not been exposed to any carcinogenic fumes or to any viral infection in his workplace. In addition, he was declared fit to resume sea duties. No contrary medical finding was presented by him. Thus, it was held that he was not entitled to disability benefits.

In the case at bench, a causal link between Laurel’s ailment and his working condition was sufficiently established. Other than the specific determination by the attending company doctor that "hyperthyroidism, in which there is overactivity of the thyroid gland, usually secondary to an immunologic reaction, is not work-related,"40 no further explanation was given to support the conclusion that the illness was indeed not work-related. There was no declaration from the company doctor as regards his fitness to return to work, while he was advised by his own physician to refrain from undergoing strenuous activities.

Anent the issue as to who has the burden to prove entitlement to disability benefits, the petitioners argue that the burden is placed upon Laurel to prove his claim that his illness was work-related and compensable. Their posture does not persuade the Court.

True, hyperthyroidism is not listed as an occupational disease under Section 32-A of the 2000 POEA-SEC. Nonetheless, Section 20 (B), paragraph (4) of the said POEA-SEC states that "those illnesses not listed in Section 32 of this Contract are disputably presumed as work-related." The said provision explicitly establishes a presumption of compensability although disputable by substantial evidence. The presumption operates in favor of Laurel as the burden rests upon the employer to overcome the statutory presumption. Hence, unless contrary evidence is presented by the seafarer’s employer/s, this disputable presumption stands.41 In the case at bench, other than the alleged declaration of the attending physician that Laurel’s illness was not work-related, the petitioners failed to discharge their burden. In fact, they even conceded that hyperthyroidism may be caused by environmental factor.

As correctly concluded by the CA:

In the present case, it is reasonable to conclude with the NLRC that the respondent’s employment has contributed to some degree to the development of the disease. It is probable that the respondent’s thyroid condition was the result of an aggravation due to exposure to chemicals and stress that accompanied his work on an ocean-going vessel. In this light, the POEA Standard Contract has created a disputable presumption in favor of compensability saying that those illnesses not listed in Section 32 are disputably presumed as work-related. This means that even if the illness is not listed under the POEA standard contract as an occupational diseases or illness, it will still be presumed as work-related, and it becomes incumbent on the employer to overcome the presumption. The petitioner has not hurdled the bar, as the medical evidence that it submits even concedes that hyperthyroidism may be caused by both environmental and congenital factors. A mere aggravation of the illness by working conditions will suffice to warrant entitlement to the benefits. The presumption of compensability stands.42

Although the employer is not the insurer of the health of his employees, he takes them as he finds them and assumes the risk of liability.43 The quantum of evidence required in labor cases to determine the liability of an employer for the illness suffered by an employee under the POEA-SEC is not proof beyond reasonable doubt but mere substantial evidence or "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion."44 In this case, the Court finds that the decisions of both the NLRC and the CA that Laurel’s illness was compensable were supported by substantial evidence.

The compensability of Laurel’s hyperthyroidism having been established, the opinion of the petitioners’ company-designated doctor that the illness was not work-related no longer holds any particular significance.

As correctly pointed out by the CA,

In this light, the opinion of the company-designated physician that the illness is not work-related may have to be rejected. It is already idle to discuss whether his views or those of the seafarer’s physician should carry more weight, where it appears by the evidence that the illness is, in fact, compensable.45

Nonetheless, the petitioners’ assertion that Laurel’s condition and disability can only be assessed by the company-designated physician is a blatant misconception of the provisions of the law. Section 20 (B), paragraph (3) of the POEA-SEC provides that:

Section 20 (B)

COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as follows:

x x x x

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall this period exceed one hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the employer and the seafarer. The third doctor’s decision shall be final and binding on both parties. (Emphases and underscoring supplied)

Based on the aforequoted provision, it is crystal clear that the determination by the company-designated physician pertains only to the entitlement of the seafarer to sickness allowance and nothing more. Moreover, the said provision recognizes the right of a seafarer to seek a second medical opinion and the. prerogative to consult a physician of his choice. In fact, it allows a third

opinion in case the seafarer's doctor disagrees with the assessment of the company-designated physician. Therefore, the provision should not be construed that it is only the company-designated physician who could assess the condition and declare the disability of seamen. The provision does not serve as a limitation but rather a guarantee of protection to overseas workers.

After all, the POEA-SEC is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean-going vessels. Its provisions must, therefore, be construed and applied fairly, reasonably and liberally in their favor. Only then can its beneficent provisions be fully carried into effect.46

In fine, the Court holds that the CA correctly found that the NLRC committed no grave abuse of discretion in ordering payment of disability benefits to Laurel.

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. Nos. 194490-91               March 20, 2013

TRANSOCEAN SHIP MANAGEMENT (PHILS.), INC., CARLOS S. SALINAS, and GENERAL MARINE SERVICES CORPORATION, Petitioners, vs.INOCENCIO B. VEDAD, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. Nos. 194518 & 194524

INOCENCIO B. VEDAD, Petitioner, vs.TRANSOCEAN SHIP MANAGEMENT (PHILS.), INC., CARLOS S. SALINAS, and GENERAL MARINE SERVICES CORPORATION, Respondents.

D E C I S I O N

VELASCO, JR., J.:

It would be an unsound policy to allow manning agencies and their principals to hedge in giving sickness allowance to our seafarers while waiting for the assessment and declaration by the company-designated physician on whether or not the injury or illness is work-related. Otherwise, our poor seafarers who sacrifice their health and time away from their families and are stricken with some ailments will not be given the '-wherewithal to keep body and soul together and provide for their families while they are incapacitated or unable to perform their usual work as such seafarers.

The Case

In these consolidated Petitions for Review on Certiorari under Rule 45, the parties uniformly assail the July 28, 2010 Decision1 and November 11, 2010 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP Nos. 105601 and 105615, which modified the National Labor Relations Commission's (NLRC's) reversal of the grant by the Labor Arbiter of full permanent total disability benefits to seaman Inocencio B. Vedad (Inocencio).

The Facts

Inocencio was a seafarer employed as second engineer by Transocean Ship Management (Phils.), Inc. (Transocean),3 a local manning agency, for its principal, General Marine Services Corporation (General Marine). Carlos S. Salinas (Salinas) was the President of Transocean.4 Inocencio's employment under the Philippine Overseas Employment Agency-Standard Employment Contract (POEA-SEC) was for a 10-month period from June 1, 2005 to March 1, 2006.5 Inonencio was deployed and went on board M/V Invicta after the required pre-employment medical examination (PEME) which gave him a clean bill of health.

Before the expiry of his 1 0-month contract or specifically on February 19, 2006, Inocencio was, however, repatriated for medical reasons. On board M/V lnvicta he fell ill and experienced fever, sore throat and pain in his right car. The ship docked on February 3, 2006 at Port Louis, Mauritius. The day after, on February 4. 2006, he underwent medical examination with the finding of ''chronic suppurative otitis media right CSOM(R) with acute

pharyngitis, with mild maxillary sinusitis," for which he was prescribed antibiotics and ear drops with the recommendation of a follow-up examination of the CSOM(R).6 Subsequently on February 16, 2006, he underwent a follow-up examination on his illness in Tanjung Priok, Indonesia, and consequently, his eventual repatriation on February 19, 2006 for further evaluation and treatment.

Inocencio immediately reported to the company-designated doctor, Dr. Nicomedes G. Cruz (Dr. Cruz) of the NGC Medical Clinic in Manila, for diagnosis and treatment. On May 10, 2006, he underwent tonsillectomy but was later found by a histopathology report to be suffering from cancer of the right tonsil. The final histopathologic diagnosis reports: "undifferentiated carcinoma, right tonsil; and chronic follicular tonsillitis with actinomycosis, left tonsil."7 Dr. Cruz then advised Inocencio to undergo chemotherapy and linear treatment at an estimated cost of PhP 500,000, which Transocean and General Marine promised to shoulder. Inocencio started with the procedure but could not continue due to the failure of Transocean and General Marine to provide the necessary amount. This constrained Inoncencio to file, on July 17, 2006, a Complaint8 before the Labor Arbiter for, among others, total permanent disability benefits and sickness allowance, docketed as NLRC NCR OFW Case No. (M) 06-97-02117-00.

Decision of the Labor Arbiter

On August 10, 2007, the Labor Arbiter rendered a Decision, awarding Inocencio USD 60,000 as permanent total disability benefits plus I 0% attorney's fees while dismissing all other claims, the decretal portion reading:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents Transocean Ship Management Phils. and General Marine Services Corporation to jointly and severally pay the complainant his disability compensation in the amount of USS60,000.00 in its peso equivalent at the time of actual payment, plus 10% thereof by way of attorney's fees.

All other claims are dismissed for lack of merit.

SO ORDERED.9

The Labor Arbiter, applying Section 20 of the POEA-SEC, decreed Inocencio's tonsil cancer to be presumptively work-related, since it has not been proved otherwise and which lasted for more than 120 days. The Labor Arbiter likewise found Transocean and General Marine to have reneged on their promise to shoulder the medical procedures prescribed for Inocencio's treatment.

Decision of the NLRC

Upon appeal by Transocean, Salinas, and General Marine, the NLRC, by its May 29, 2008 Decision in NLRC LAC No. 12-000379-07(8), vacated that of the Labor Arbiter and awarded sickness allowance only equivalent to 120 days or four months salary amounting to US D 4,616 and the payment or reimbursement of Inocencio's medical expenses. The decretal portion of the NLRC's Decision reads:

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby VACATED and the Respondents-Appellants are ordered to pay Complainant-Appellee sickness allowance equivalent to his basic wage for 120 days, amounting US$4,616.00 (USS1,154 x 4 months) or its peso equivalent at the time of payment, plus payment/reimbursement of his medical expenses.

SO ORDERED.10

The NLRC held that the June 9, 2006 medical report/certification11 by the company-designated physician, Dr. Cruz, that the tonsil cancer of Inocencio was not work-related shifted the burden of proof to Inocencio who failed to substantiate that his illness was work-related. As the NLRC further ruled, the PEME alone was not conclusive proof of Inocencio's state of health before deployment. However, the NLRC did find that Inocencio was, indeed, permanently totally disabled and was not at fault when he failed to undergo the necessary treatment given his condition due to the failure of Transocean and General Marine to provide the payment as earlier promised. Thus, Transocean, et al. were ordered to reimburse Inocencio's medical expenses.12

Decision of the CA

Both parties appealed the NLRC ruling before the CA, docketed as CA-G.R. SP Nos. 105601 and 105615. On July 28, 2010, theCA rendered its Decision, modifying the NLRC Decision by setting aside the award of sickness allowance of USD 4,616 but affirming the grant of reimbursement of medical expenses. The fallo reads:

ACCORDINGLY:

(a) In CA-G.R. SP No. 105601, the petition is GRANTED IN PART. The Decision dated May 29, 2008 of the National Labor Relations Commission in NLRC LAC No. 12-000379-07(8) is MODIFIED so that the portion therein awarding Inocencio Vedad sickness allowance, amounting to USS4,616.00 (USS I, 154 x 4 months) or its peso equivalent at the time of payment, is SET ASIDE. So far as it ordered Trans Ocean Ship Management Philippines and General Marine Services Corporation to reimburse or pay for jointly and severally the medical expenses of Inocencio Vedad, the same is AFFIRMED.

(b) In CA-G.R. SP No. 105615, the petition is DISMISSED for lack of merit.

No costs.

SO ORDERED.13

In so ruling, the CA affirmed the NLRC's determination that Inocencio's cancer of the tonsil, based on the certification of the company-designated physician, Dr. Cruz, was not work-related. This determination, the C A observed, citing NYK-Fil Ship Management, Inc. v. Talavera,14 was not rebutted by contrary findings. The CA also held that the mere allegations of Inocencio on the causal relation between his work and ailment are not substantial proof of such relation, and that the PEME before deployment did not render Inocencio's tonsil cancer work-related either, for the PEME is not considered exploratory enough to fully ascertain his health before deployment. However, the CA agreed with the NLRC and ruled that Transocean and General Marine must pay or reimburse Inocencio's medical expenses based on their offer and promise to shoulder the medical treatment, such as the ''chemotherapy of Inocencio, costing PhP 500,000,"15 pointing out that Inocencio, indeed, initially underwent some of the prescribed medical procedures until Transocean and General Marine unilaterally withdrew the payment of their obligation.

Hence, the parties filed these petitions.

The Issues

In G .R. Nos. 194490-91, Transocean, et al. raise the sole ground that:

The Honorable Court of Appeals committed grave abuse of discretion in ordering herein petitioners Transocean, et al. to pay or reimburse respondent Inocencio's medical expenses.16

On the other hand, Inocencio raises the following assignment of errors in G.R. Nos. 194518 & 194524:

1. The Honorable Court of Appeals committed a reversible error in the questioned decision and resolution sufficient to warrant the exercise of this Honorable Court's discretionary appellate jurisdiction. The factual findings of the NLRC and the Court of Appeals arc not based on substantial evidence.

2. The decisions of the Court of Appeals are contrary to applicable lav, and jurisprudence.

3. The Court of Appeals made manifest error in not avvarding attorney's fees.17

The Court's Ruling

The petition of Transocean, et al. is unmeritorious. The petitions of Inocencio, on the other hand, are partly meritorious. He is entitled to both sickness allowance and payment or reimbursement of his medical expenses as properly awarded by the NLRC.

Pertinent to the resolution of this case arc the following provisos of the POEA-SEC governing the employment of Filipino seafarers on board ocean-going vessels under POEA Memorandum Circular No. 09, Series of 2000:

SECTION 20. COMPENSATION AND BENEFITS

x x x x

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

x x x x

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall this period exceed one hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor's decision shall be final and binding on both parties.

4. Those illnesses not listed in Section 32 of this Contract are disputably presumed as work related. (Emphasis supplied.)

Inocencio entitled to sickness allowance

Inocencio got ill with what appeared to be tonsillitis while on board MV lnvicta, for which he was treated at a foreign port where the ship docked. His malady still continued despite the treatment as he was, in fact, repatriated before the end of his 1 0-month contract on medical grounds.

With the foregoing facts and the application of the above-quoted pertinent POEA-SEC provisos, it is abundantly clear that Inocencio is entitled to receive sickness allowance from his repatriation for medical treatment, which is equivalent to his basic wage for a period not exceeding 120 days or four months.

The fact that Inocencio's sickness was later medically declared as not work-related does not prejudice his right to receive sickness allowance, considering that he got ill while on board the ship and was repatriated for medical treatment before the end of his 10-month employment contract. Moreover, at the time of his repatriation. his illness was not yet medically declared as not work-related by Dr. Cruz; thus, the presumption under the aforequoted Sec. 20(B)( 4) of the POEA-SEC applies. He is, therefore, entitled to sickness allowance pending assessment and declaration by the company-designated physician on the work-relatedness of his ailment. When the assessment of the company physician is that the ailment is not work-related but such assessment is duly contested by the second opinion from a physician of the seafarer's choice, then pending the final detennination by a third opinion pursuant to the mechanism provided under the third paragraph of Sec. 20(B)(3), the seafarer is still entitled to sickness allowance but not to exceed 120 days.

Considering that Inocencio's sickness in question manifested itself and that he was repatriated during the period of his employment, he is entitled to sickness allowance, his sickness being then disputably presumed to be work-related pursuant to Sec. 20(B) above. Later he had tonsillectomy on May 10, 2006. Though Inocencio was later diagnosed with cancer of the tonsils or tonsillar carcinoma and the company-designated doctor ce11ified that it is not work-related, yet that fact should not prejudice the grant of sickness allowance which the law mandates the employers to give seafarers upon their repatriation for medical reasons to cushion their needs. Here, Inocencio was unable to work for a period of more than 120 days. The NLRC is, therefore, correct in awarding Inocencio his 120-day sickness allowance as required by the POEA-SEC from the time he was repatriated on February 19, 2006.

The POEA formulated the standard employment contract for seafarers pursuant to its mandate under Executive Order No. 247, Series of 1995, to ''secure the best terms and conditions of employment of Filipino contract workers and ensure compliance therewith'' and 1.0 "promote and protect the well-being of Filipino workers overseas."18 As in Crystal Shipping. Inc. v. Natividad,19 an award of sickness allowance to Inocencio would be germane to the purpose of the benefit, which is to help the seafarer in making ends meet at the time when he is unable to work.

The law looks tenderly on laborers. Where the evidence may be reasonably interpreted in two divergent ways, one prejudicial and the other favorable to them, the balance must be tilted in their favor consistent with the principle of social justice.20

Inocencio not entitled to permanent total disability benefits

Anent Inocencio's claim for pe1manent total disability benefits, its propriety hinges on whether or not his illness was work-related. We find no compelling reason to deviate from the factual findings of the NLRC that Inocencio failed to establish that his illness was work-related. Thus, he is not entitled to claim total permanent disability benefits. This Court has, time and again, held that the "factual findings of quasi-judicial agencies like the NLRC, when affirmed by the Court of Appeals, are

conclusive upon the parties and binding on this Court."21 "It must be stressed that in petitions for review under Rule 45 of the Rules of Court, only questions of law must be raised"22 before this Court.

Tonsil cancer or tonsillar carcinoma is, indeed, not work-related. The NLRC and the CA correctly ruled on this issue. It is not included in the list of occupational diseases. Thus, Inocencio carried the burden of showing by substantial evidence that his cancer developed or was aggravated from work-related causes. As both the NLRC and the CA found, he had nothing to support his claim other than his bare allegations.1âwphi1

We note that when Inocencio was repatriated, Dr. Cruz, the company-designated physician, conducted the examination, diagnosis and treatment of Inocencio until the hispathology report showed he had cancer of the tonsils. Signitlcantly, Dr. Cruz issued on June 9, 2006 his assessment and medical certification that Inocencio's cancer was not work-related or work-aggravated. In detemining whether or not a given illness is work-related, it is understandable that a company-designated physician would be more positive and in favor of the company than, say, the physician of the seafarer's choice. It is on this account that a seafarer is given the option by the POEA-SEC to seek a second opinion from his preferred physician. And the law has anticipated the possibility of divergence in the medical findings and assessments by incorporating a mechanism for its resolution wherein a third doctor selected by both parties decides the dispute with finality, as provided by Sec. 20(B)(3) of the POEA-SEC quoted above.

Inocencio, however, failed to seek a second opinion from a physician of his choice. As already mentioned, Inocencio did not present any proof of work-relatedness other than his bare allegations. We, thus, have no option but to declare that the company-designated doctor's certification is the final determination that must prevail. To recapitulate, the CA properly affirmed the findings of the NLRC that Inocencio's illness was not work-related. The NLRC's Endings of facts have sufficient basis in evidence and in the records of the case and, in our own view, far from the arbitrariness that characterizes excess of jurisdiction. If Inocencio had any basis at all to support his claim, such basis might have been found after considering that he was medically fit when he boarded the ship based on the requisite PEME. Under this Court's ruling in "Montoya v. Transmed Manila Corporation,23 work-relatedness could possibly have been shown, since the cancer of the tonsil, already latent when Inocencio boarded his ship, "flared up" after work-related stresses intervened. In the absence, however, of any duly medically proven work-relatedness, Inocencio cannot . be accorded permanent total disability benefits.

Transocean, et al. must honor their obligation

The award granted by the NLRC and the CA for payment or reimbursement of the medical expenses of Inocencio relative to the required treatment for his cancer is proper. In fact, Transocean, et al. acknowledged offering to shoulder these expenses, alleging, however, that Inocencio did not continue with the treatment. They judicially admitted this in their Respondents' Position Paper filed at the outset before the Labor Arbiter, as follows:

Upon request of the Respondents Transocean. et al. the Complainant visited undersigned counsel" s office on 9 June 2006. During said meeting. the undersigned counsel explained to Complainant that his illness known as Tonsil Cancer is not work-related but. nonetheless. the Respondents agreed to shoulder the costs of treatment estimated at PhP500,000. The undersigned counsel then instructed Complainant to visit Dr. Cruz and arrange for the schedule of his treatment.

To the Respondents’ dismay. the said treatment never materialized as the Complainant failed to go back to Dr. Cruz’ clinic on the dates he was scheduled to be treated. It turned out that Complainant already decided to engage services of counsel to claim disability benefits from the Respondents.

Despite requests from undersigned counsel coursed through Complainant's counsel for him to go back to the company doctor. the Complainant failed to do so.24 (Emphasis supplied.)

Having obliged themselves to shoulder the medical treatment of Inocencio, Transocean, et al. 1âwphi1 must be held answerable to said obligation, a finding of fact not only determined by the NLRC and the CA, but is also a judicial admission of Transocean, et a!. As aptly put by the CA, Inocencio started with the medical procedure which could not be completed, for Transocean and General Marine unilaterally withheld payment for the procedure. Notably, Inocencio's last consultation with Dr. Cruz was on June 15, 2006. At such time, Transocean, et al. had not remitted money for his treatment.

As the NLRC's Decision dated May 29, 2008 and Resolution dated July 22, 2008 are vague as to the nature of Transocean, et al.' s liability, the Court rules that they are jointly and solidarily liable to Inocencio for the payment of his sickness allowance and medical expenses. In view of the unjustified refusal of Transocean, et a!. to reimburse the medical expenses to Inocencio after they agreed to such obligation, interests of 6o/o per annum shall be imposed on said medical expenses and sickness allowance of USD 4,616 from June 15, 2006 up to the finality of this Decision and 12% per annum from finality of this Decision until paid.25

WHEREFORE, the petition in G.R. Nos. 194490-91 is DENIED for lack of merit, while the petition in G.R. Nos. 194518 & 194524 is PARTLY GRANTED. The CA's July 28, 2010 Decision and November 11, 2010 Resolution in CA-G.R. SP Nos. 105601 and 105615 are hereby REVERSED and SET ASIDE, and the May 29, 2008 Decision and July 22, 2008 Resolution of the National Labor Relations Commission in NLRC LAC No. 12-0003 79-07(8) accordingly REINSTATED, with the modification that Transocean, Salinas, and General Marine shall be jointly and solidarity liable to Inocencio for the payment of PhP 500,000 representing the medical expenses agreed to by them in their Position Paper before the Labor Arbiter, inclusive of the actual expenses incurred by Inocencio, and the sickness allowance of USD 4,616. Interest shall be imposed on them at the rate of 6% per annum from June 15, 2006 until the finality of this Decision and at 12% per annum from finality of this Decision until paid.

The Labor Arbiter shall determine the actual medical expenses incurred by Inocencio.

No costs.

SO ORDERED.

G.R. No. 200837               June 5, 2013

MAERSK FILIPINAS CREWING INC./MAERSK SERVICES LTD., AND/OR MR. JEROME DELOS ANGELES,Petitioners, vs.NELSON E. MESINA, Respondent.

R E S O L U T I O N

REYES, J.:

This Petition for Review on Certiorari,1 under Rule 45 of the Rules of Court, assails the Decision2 dated October 27, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 113470 which reversed and set aside the Decision3 dated July 23, 2009 of the National Labor Relations Commission (NLRC) and reinstated the Decision4 dated April 14, 2008 of the Labor Arbiter (LA) awarding US$75,000.00 total disability benefits to Nelson Mesina (respondent) as well as attorney’s fees.

Likewise assailed is the CA Resolution5 dated February 29, 2012 which denied reconsideration.

Antecedent Facts

On March 29, 2005, the respondent was employed by Maersk Filipinas Crewing Inc., with Mr. Jerome delos Angeles as its Manager, for and in behalf of its principal, Maersk Services, Ltd., (petitioners) as a steward on board the vessel "Sealand Innovator" for a period of nine (9) months with a monthly basic salary of US$425.00.6

The respondent boarded the vessel on May 3, 2005 after having been declared ‘fit for sea duties’ in his Pre-Employment Medical Examination.7

As a steward, the respondent’s functions involved kitchen-related services, cleaning accommodation spaces and performing laundry services, as may be required. Thus, while on board he cooked and served three meals everyday for sixty (60) persons. He also washed a cabin-load of dirty laundry all by himself using strong detergent and fabric conditioner. He was further ordered by the vessel’s captain to wash-paint the decks from second to fourth deck using special soap and chemicals.

Sometime in June 2005, the respondent started to feel unusual itchiness all over his body followed by the appearance of small spots on his skin. He initially deferred seeking medical attention but when the itching became unbearable in October 2005, he requested for a thorough medical check-up.

He was subjected to medical check-up on board. After considering the extent of the rashes on his upper torso8 and the fact that he is engaged in food preparation and service, he was medically repatriated on October 7, 2005.

Upon arrival in the Philippines, the respondent was referred to the petitioners’ company-designated physician, Dr. Natalio Alegre II (Dr. Alegre),9 before whom he reported for treatment twice a week for eight (8) months. The respondent also underwent phototherapy for not less than twenty (20) sessions. During all these times, the petitioners shouldered the medical expenses of the respondent and paid him sick wage benefits.

In a letter dated June 23, 2006 to the petitioners, Dr. Alegre declared the respondent to be afflicted with psoriasis, an auto-immune ailment that is not work-related, viz:

Mr. Nelson E. Mesina followed-up on 23 June 2006.

The complete hepatitis profile was normal. The SGPT and SGOT were elevated indicating liver inflammation.

Ultrasound of the liver showed severe fatty infiltration.

Essentiale Forte three times daily is prescribed and follow-up is requested on 23 July 2006.

Psoriasis is an auto-immune ailment whereby the immune system misbehaves for no known reasons to attack a particular part of the body (in this case, the skin). It is not work-related and based on POEA contract, no disability could be assessed.10

Based on Dr. Alegre’s finding that psoriasis is not work-related, the petitioners discontinued paying the respondent’s benefits. Aggrieved, the respondent sought the assistance of his union, the Associated Maritime Officers’ and Seamen’s Union of the Philippines (AMOSUP), which submitted him for diagnosis to Dr. Glenda Anastacio-Fugoso (Dr. Fugoso), a dermatologist at the Seaman’s Hospital.

In a handwritten certification dated February 13, 2007, Dr. Fugoso confirmed that the respondent is suffering from Psoriasis Vulgaris, a disease aggravated by work but is not contagious. In another handwritten certification dated February 20, 2007, Dr. Fugoso certified that:

Mr. Nelson E, Mesina is at present disabled. Diagnosed as Psoriasis Vulgaris (a recurring non-contagious papulosquamous disease aggravated by stress drug intake alcohol etc.). His skin condition has occupied 80% of his body which will need a longer time to control.11

In view of the conflicting findings of the two doctors on the causal connection between respondent’s illness and work, the parties pursued grievance machinery under the Total Crew Cost-International Maritime Employers Committee-Collective Bargaining Agreement (TCC-IMEC CBA). Their conferences, however, yielded no settlement. This prompted the respondent to commence the herein complaint for the payment of full disability benefits, damages, and attorney’s fees before the LA.

The respondent claimed that his illness is compensable because it manifested during his employment aboard the petitioners’ vessel. He further averred that it was triggered by his exposure to strong detergent soap and chemicals which he used in washing the dishes, laundry and ship decks. Upon the other hand, the petitioners denied liability on the basis of Dr. Alegre’s declaration that it is not a work-related ailment and psoriasis is not an occupational disease under the 2000 Philippine Overseas Employment Administration-Standard Employment Contract for Seafarers (POEA-SEC).

Ruling of the LA

In its Decision12 dated April 14, 2008, LA Romelita N. Rioflorido adjudged the respondent’s illness to be reasonably connected to his work and thus compensable. The LA explained, thus:

Our own research confirms that respondent’s illness can be reasonably related to his work as steward. Not every everyone [sic] who has the gene mutations gets psoriasis and there are several forms of psoriasis that people can develop. Certain environmental triggers play a role in causing psoriasis in people who have these gene mutations. Also, psychological stress has long been understood as a trigger for psoriasis flares, but scientists are still unclear about exactly how this occurs. Studies do show that not only can a sudden, stressful event trigger a rash to worsen; daily hassles of life can also trigger a flare. In addition, one study showed that people who are categorized as "huge worriers" were almost two times less likely to respond to treatment compared to "low worriers". (//dermatology.about.com/od/psoriasisbasics/a/psorcause.htm). Sometimes even mild injuries to the skin such as abrasions can trigger psoriasis flares. This is called koebner phenomenon. (www.psoriasiscafe.org/psoriasis-cause.htm).

There is nothing in the record to show that respondent’s illness was caused by genetic predisposition or drug reaction. Having ruled out these causes, what remains is the environmental factor such as respondent’s constant exposure to strong laundry detergent powder and fabric conditioner, chemicals and the stress and strain which are present in his work.13

The LA further reasoned that in disability compensation, it is not the injury which is compensated but rather the incapacity to work resulting in the impairment of one’s earning capacity. Obviously, the respondent’s continued employment is deleterious to his health because he will be exposed to factors that can increase the risk of the further recurrence or aggravation of his psoriasis. The fact that the petitioners no longer employed him is the most eloquent proof of his permanent disability.14 Accordingly, the decretal portion of the LA decision read:

WHEREFORE, premises considered, judgment is hereby rendered ordering petitioners to pay the respondent, jointly and severally, the amount of US$75,000.00 representing his total disability benefits, plus attorney’s fees of US$7,500.00, in Philippine currency, at the rate of exchange prevailing at the time of actual payment. All other claims are dismissed.

SO ORDERED.15

Ruling of the NLRC

The NLRC differed with the conclusions of the LA and held that there is actually no substantial evidence to prove that the nature of and the stress concomitant to the respondent’s work aggravated his psoriasis. The NLRC observed that the only evidence substantiating the claim that the respondent’s illness is work-related were his bare allegations and the two certifications of Dr. Fugoso who examined him only once. The NLRC noted that Dr. Fugoso even failed to make a clear finding that it was the stress specifically experienced by the respondent while aboard the vessel that aggravated his disease. The NLRC accorded more weight to the certification issued by Dr. Alegre, who was in a better position to assess the respondent after having examined and treated him twice a week for eight (8) months. Thus, the NLRC reversed the LA’s ruling and disposed as follows in its Decision16 dated July 23, 2009, viz:

WHEREFORE, premises considered, the appealed Decision is hereby REVERSED and SET ASIDE, and another one entered DISMISSING the instant complaint for lack of merit.

SO ORDERED.17

Ruling of the CA

The CA sustained the LA’s judgment elaborating that inasmuch as the actual cause of psoriasis is unknown and given the probability that its onset was caused by factors found within the respondent’s work environment, the doubt as to whether his illness is work-related should be resolved in his

The CA further pointed out that despite the failure of the two doctors to declare the respondent to be fit to return to work, the abrasions on his skin remain repulsive despite treatment for eight (8) months, and the fact that there is no known cure for psoriasis reasonably establish that he can no longer work as seaman; hence, permanently and totally disabled for purposes of compensation under the law. The decretal portion of the CA Decision18 dated October 27, 2011 thus read:

WHEREFORE, the foregoing considered, the assailed Decision dated 23 July 2009 of the National Labor Relations Commission in NLRC LAC No. (OFW-M) 07-000527-08 is REVERSED and SET ASIDE, and the Decision dated 14 April 2008 of the Labor Arbiter Romelita N. Rioflorido rendered in NLRC NCR CASE No. OFW-(M)-06-06586-07 is hereby REINSTATED.

SO ORDERED.19

The petitioners moved for reconsideration but their motion was denied in the CA Resolution20 dated February 29, 2012.

Issues

The petitioners impute the following errors to the appellate court, viz:

I.

THE CONCLUSION OF THE CA WAS BASED ON INFERENCES THAT WERE MANIFESTLY MISTAKEN; ITS FINDINGS WERE CONTRARY TO THE PROVISIONS OF THE POEA STANDARD EMPLOYMENT CONTRACT AND THE CBA, AND THE AGREEMENTS BETWEEN THE PARTIES;

II.

THE HONORABLE CA BLATANTLY ERRED IN REVERSING THE DECISION OF THE NLRC EVEN IF RESPONDENT FAILED TO DEMONSTRATE THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION IN DECIDING TO REVERSE THE DECISION OF LA RIOFLORIDO.21

The primordial issue submitted for the Court’s resolution is whether or not the respondent is entitled to permanent total disability benefits.

Ruling of the Court

At the onset, it is well to note that in resolving disputes on disability benefits, the fundamental consideration has been that the POEA-SEC was designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean-going vessels. As such, its provisions must be construed and applied fairly, reasonably and liberally in their favor because only then can its beneficent provisions be fully carried into effect.22

Under Section 20.1.4.123 of the parties’ AMOSUP/IMEC-CPA for 2004, the respondent shall be entitled to compensation if he suffers permanent disability as a result of a work-related illness while

serving on board. The provision further states that the determination of whether an illness is work-related shall be made in accordance with Philippine laws on employees’ compensation.24

The 2000 POEA-SEC25 defines "work-related illness" as "any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied."26

In interpreting the said definition, the Court has held that for disability to be compensable under Section 20(B) of the 2000 POEA-SEC,27 it is not sufficient to establish that the seafarer’s illness or injury has rendered him permanently or partially disabled; it must also be shown that there is a causal connection between the seafarer’s illness or injury and the work for which he had been contracted.28

The Court has likewise ruled that the list of illnesses/diseases in Section 32-A does not preclude other illnesses/diseases not so listed from being compensable. The POEA-SEC cannot be presumed to contain all the possible injuries that render a seafarer unfit for further sea duties.29 This is in view of Section 20(B)(4) of the POEA-SEC which states that "those illnesses not listed in Section 32 of this Contract are disputably presumed as work-related."

Concomitant with such presumption is the burden placed upon the claimant to present substantial evidence that his working conditions caused or at least increased the risk of contracting the disease.30 Substantial evidence consists of such relevant evidence which a reasonable mind might accept as adequate to justify a conclusion that there is a causal connection between the nature of his employment and his illness, or that the risk of contracting the illness was increased by his working conditions.31 Only a reasonable proof of work-connection, not direct causal relation is required to establish compensability of a non-occupational disease.32

Equally relevant to the resolution of the present claim are the following provisions of the POEA-SEC, viz:

SECTION 20. COMPENSATION AND BENEFITS

(B) COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

x x x x

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall this period exceed one hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post employment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the employer and the seafarer. The third doctor’s decision shall be final and binding on both parties.

4. Those illnesses not listed in Section 32 of this Contract are disputably presumed as work related.

5. Upon sign-off of the seafarer from the vessel for medical treatment, the employer shall bear the full cost of repatriation in the event the seafarer is declared (1) fit for repatriation; or (2) fit to work but the employer is unable to find employment for the seafarer on board his former vessel or another vessel of the employer despite earnest efforts.

6. In case of permanent total or partial disability of the seafarer caused by either injury or illness the seafarer shall be compensated in accordance with the schedule of benefits arising from an illness or disease shall be governed by the rates and the rules of compensation applicable at the time the illness or disease was contracted.

In determining the work-causation of a seafarer’s illness, the diagnosis of the company-designated physician bears vital significance. After all, it is before him that the seafarer must initially report to upon medical repatriation pursuant to above terms. Nevertheless, the company physician’s assessment does not evince irrefutable and conclusive weight in assessing the compensability of an illness as the seafarer has the right to seek a second opinion from his preferred physician.33

The conflicting findings of the company’s doctor and the seafarer’s physician often stir suits for disability compensation. As an extrajudicial measure of settling their differences, the POEA-SEC gives the parties the option of agreeing jointly on a third doctor whose assessment shall break the impasse and shall be the final and binding diagnosis.

While it has been held that failure to resort to a third doctor will render the company doctor’s diagnosis controlling, it is not the absolute and automatic consequence in all cases. This is because resort to a third doctor remains a mere directory not a mandatory provision as can be gleaned from the tenor of Section 20(B)(3), POEA-SEC itself. Further, the right of a seafarer to consult a physician of his choice can only be sensible when his findings are duly evaluated by the labor tribunals in awarding disability claims.34

Hence, it has been held that if serious doubt exists on the company designated physician’s declaration of the nature of a seaman’s injury, resort to prognosis of other competent medical professionals should be made. In doing so, a seaman should be given the opportunity to assert his claim after proving the nature of his injury. This proof will in turn be used to determine the benefits rightfully accruing to him.35

Psoriasis comes from the Greek word "psora" which means itch. It is a common disfiguring and stigmatising skin disease associated with profound impaired quality of life.36 People with psoriasis typically have sharply demarcated erythematous plaques covered by silvery white scales, which most commonly appear on the elbows, knees, scalp, umbilicus, and lumbar area.37 Chronic plaque psoriasis (psoriasis vulgaris) is the most common type of the disease which manifests thru plaques of varying degrees of scaling, thickening and inflammation in the skin. The plaques are typically oval-shaped, of variable size and clearly distinct from adjacent normal skin.38

As a result of the chronic, incurable nature of psoriasis, associated morbidity is significant. Patients in primary care and hospital settings have similar reductions in quality of life specifically in the functional, psychological and social dimensions. Symptoms specifically related to the skin (i.e., chronic itch, bleeding, scaling, nail involvement), problems related to treatments (mess, odor, inconvenience, time), arthritis, and the effect of living with a highly visible, disfiguring skin disease (difficulties with relationships, difficulties with securing employment, and poor self- esteem) all contribute to morbidity. About one in four patients experience major psychological distress, and the extent to which they feel socially stigmatised and excluded is significant.39

Current available treatments for the disease are reasonably effective as short-term therapy. Extended disease control is, however, difficult to achieve as the safety profile of most therapeutic agents limit their long-term use.40

Until now, the exact cause of psoriasis remains a mystery. But several family studies have provided compelling evidence of a genetic predisposition to psoriasis, although the inheritance pattern is still unclear.41 Other environmental factors such as climate changes, physical trauma, infections of the upper respiratory tract,42 drugs, and stress may also trigger its onset or development.43

After a circumspect evaluation of the conflicting medical certifications of Drs. Alegre and Fugoso, the Court finds that serious doubts pervade in the former. While both doctors gave a brief description of psoriasis, it was only Dr. Fugoso who categorically stated a factor that triggered the activity of the respondent’s disease – stress, drug or alcohol intake, etc. Dr. Alegre immediately concluded that it is not work-related on the basis merely of the absence of psoriasis in the schedule of compensable diseases in Sections 32 and 32-A of the POEA-SEC. Dr. Alegre failed to consider the varied factors the respondent could have been exposed to while on board the vessel. At best, his certification was merely concerned with the examination of the respondent for purposes of diagnosis and treatment and not with the determination of his fitness to resume his work as a seafarer in stark contrast with the certification issued by Dr. Fugoso which categorically declared the respondent as "disabled." The certification of Dr. Alegre is, thus, inconclusive for purposes of determining the compensability of psoriasis under the POEA-SEC. Moreover, Dr. Alegre’s specialization is General Surgery44 while Dr. Fugoso is a dermatologist, or one with specialized knowledge and expertise in skin conditions and diseases like psoriasis. Based on these observations, it is the Court’s considered view that Dr. Fugoso’s certification deserves greater weight.

It remains undisputed that the respondent used strong detergent, fabric conditioner, special soap and chemicals in performing his duties as a steward. Stress and climate changes likewise permeate his working environment as with that of any other seafarer. These factors, taken together with Dr. Fugoso’s certification, confirm the existence of a reasonable connection between the nature of respondent’s work and the onset of his psoriasis.

At any rate, even in the absence of an official finding by the company-designated physician or the respondent’s own physician, he is deemed to have suffered permanent total disability pursuant to the following guidelines in Fil-Star Maritime Corporation v. Rosete,45 thus:

Permanent disability is inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body.

Total disability, on the other hand, means the disablement of an employee to earn wages in the same kind of work of similar nature that he was trained for, or accustomed to perform, or any kind of work which a person of his mentality and attainments could do.

A total disability does not require that the employee be completely disabled, or totally paralyzed.1âwphi1 What is necessary is that the injury must be such that the employee cannot pursue his or her usual work and earn from it. A total disability is considered permanent if it lasts continuously for more than 120 days. x x x.46 (Citations omitted)

It is undisputed that from the time the respondent was medically repatriated on October 7, 2005 he was unable to work for more than 120 days. In fact, Dr. Alegre’s certification was issued only after 259 days with the respondent needing further medical treatments thus rendering him unable to pursue his customary work. Despite the declaration in the medical reports that psoriasis is not contagious, no profit-minded employer will hire him considering the repulsive physical manifestation

of the disease, it’s chronic nature, lack of long-term cure and the vulnerability of the patient to cardiovascular diseases and some cancers.47 Its inevitable impact to the respondent’s chances of being hired and capacity to continue working as a seaman cannot be ignored. His permanent disability thus effectively became total in nature entitling him to permanent total disability benefits as correctly awarded by the LA and the CA.

WHEREFORE, premises considered, the petition is hereby DENIED. The Decision dated October 27, 2011 and Resolution dated February 29, 2012 of the Court of Appeals in CA-G.R. SP No. 113470 are AFFIRMED.

SO ORDERED.