On October 15, 1997, Joy filed a complaint17 with the National Labor Relations

Commission against petitioner and Wacoal. She claimed that she was illegally
dismissed.18 She asked for the return of her placement fee, the withheld amount
for repatriation costs, payment of her salary for 23 months as well as moral and
exemplary damages.19 She identified Wacoal as Sameer Overseas Placement
Agencys foreign principal.20

G.R. No. 170139, August 05, 2014 SAMEER vs CABILES

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. JOY C.
CABILES, Respondent.
DECISION

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LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our
duty, given the facts and the law, to approximate justice for her.
We are asked to decide a petition for review 1 on certiorari assailing the Court of
Appeals decision2 dated June 27, 2005. This decision partially affirmed the
National Labor Relations Commissions resolution dated March 31, 2004, 3
declaring respondents dismissal illegal, directing petitioner to pay respondents
three-month salary equivalent to New Taiwan Dollar (NT$) 46,080.00, and
ordering it to reimburse the NT$3,000.00 withheld from respondent, and pay her
NT$300.00 attorneys fees.4
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Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and

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

Sameer Overseas Placement Agency alleged that respondent's termination was

due to her inefficiency, negligence in her duties, and her failure to comply with
the work requirements [of] her foreign [employer]. 21 The agency also claimed
that it did not ask for a placement fee of ?70,000.00. 22 As evidence, it showed
Official Receipt No. 14860 dated June 10, 1997, bearing the amount of ?
20,360.00.23 Petitioner added that Wacoal's accreditation with petitioner had
already been transferred to the Pacific Manpower & Management Services, Inc.
(Pacific) as of August 6, 1997.24 Thus, petitioner asserts that it was already
substituted by Pacific Manpower.25
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Pacific Manpower moved for the dismissal of petitioners claims against it. 26 It
alleged that there was no employer-employee relationship between them. 27
Therefore, the claims against it were outside the jurisdiction of the Labor
Arbiter.28 Pacific Manpower argued that the employment contract should first be
presented so that the employers contractual obligations might be identified. 29 It
further denied that it assumed liability for petitioners illegal acts. 30
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On July 29, 1998, the Labor Arbiter dismissed Joys complaint. 31 Acting
Executive Labor Arbiter Pedro C. Ramos ruled that her complaint was based on
mere allegations.32 The Labor Arbiter found that there was no excess payment
of placement fees, based on the official receipt presented by petitioner.33 The
Labor Arbiter found unnecessary a discussion on petitioners transfer of
obligations to Pacific34 and considered the matter immaterial in view of the
dismissal of respondents complaint.35

Joys application was accepted.7 Joy was later asked to sign a one-year
employment contract for a monthly salary of NT$15,360.00. 8 She alleged that
Sameer Overseas Agency required her to pay a placement fee of P70,000.00
when she signed the employment contract.9
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Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26,
1997.10 She alleged that in her employment contract, she agreed to work as
quality control for one year.11 In Taiwan, she was asked to work as a cutter.12

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Joy appealed36 to the National Labor Relations Commission.

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Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr.
Huwang from Wacoal informed Joy, without prior notice, that she was
terminated and that she should immediately report to their office to get her
salary and passport.13 She was asked to prepare for immediate repatriation. 14

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Joy claims that she was told that from June 26 to July 14, 1997, she only earned
a total of NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her
plane ticket to Manila.16
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Page 1 of 12

In a resolution37 dated March 31, 2004, the National Labor Relations

Commission declared that Joy was illegally dismissed.38 It reiterated the doctrine
that the burden of proof to show that the dismissal was based on a just or valid
cause belongs to the employer.39 It found that Sameer Overseas Placement
Agency failed to prove that there were just causes for termination. 40 There was
no sufficient proof to show that respondent was inefficient in her work and that
she failed to comply with company requirements.41 Furthermore, procedural due
process was not observed in terminating respondent. 42
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The National Labor Relations Commission did not rule on the issue of
reimbursement of placement fees for lack of jurisdiction. 43 It refused to entertain
the issue of the alleged transfer of obligations to Pacific. 44 It did not acquire
jurisdiction over that issue because Sameer Overseas Placement Agency failed
to appeal the Labor Arbiters decision not to rule on the matter.45

AFFIRMED in accordance with the foregoing discussion, but subject to the

caveat embodied in the last sentence. No costs.
SO ORDERED.53

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Dissatisfied, Sameer Overseas Placement Agency filed this petition. 54

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The National Labor Relations Commission awarded respondent only three (3)
months worth of salary in the amount of NT$46,080, the reimbursement of the
NT$3,000 withheld from her, and attorneys fees of NT$300. 46
The Commission denied the agencys motion for reconsideration 47 dated May
12, 2004 through a resolution48 dated July 2, 2004.

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

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing
of a petition49 for certiorari with the Court of Appeals assailing the National Labor
Relations Commissions resolutions dated March 31, 2004 and July 2, 2004.

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

The Court of Appeals50 affirmed the decision of the National Labor Relations
Commission with respect to the finding of illegal dismissal, Joys entitlement to
the equivalent of three months worth of salary, reimbursement of withheld
repatriation expense, and attorneys fees.51 The Court of Appeals remanded the
case to the National Labor Relations Commission to address the validity of
petitioner's allegations against Pacific.52 The Court of Appeals held, thus:

Petitioner also reiterates that since Wacoals accreditation was validly

transferred to Pacific at the time respondent filed her complaint, it should be
Pacific that should now assume responsibility for Wacoals contractual
obligations to the workers originally recruited by petitioner.57

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Although the public respondent found the dismissal of the complainantrespondent illegal, we should point out that the NLRC merely awarded her three
(3) months backwages or the amount of NT$46,080.00, which was based upon
its finding that she was dismissed without due process, a finding that we uphold,
given petitioners lack of worthwhile discussion upon the same in the
proceedings below or before us. Likewise we sustain NLRCs finding in regard
to the reimbursement of her fare, which is squarely based on the law; as well as
the award of attorneys fees.
But we do find it necessary to remand the instant case to the public respondent
for further proceedings, for the purpose of addressing the validity or propriety of
petitioners third-party complaint against the transferee agent or the Pacific
Manpower & Management Services, Inc. and Lea G. Manabat. We should
emphasize that as far as the decision of the NLRC on the claims of Joy Cabiles,
is concerned, the same is hereby affirmed with finality, and we hold petitioner
liable thereon, but without prejudice to further hearings on its third party
complaint against Pacific for reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby partly

Page 2 of 12

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Sameer Overseas Placement Agencys petition is without merit. We find for

respondent.
I
Sameer Overseas Placement Agency failed to show that there was just cause
for causing Joys dismissal. The employer, Wacoal, also failed to accord her due
process of law.
Indeed, employers have the prerogative to impose productivity and quality
standards at work.58 They may also impose reasonable rules to ensure that the
employees comply with these standards.59 Failure to comply may be a just
cause for their dismissal.60 Certainly, employers cannot be compelled to retain
the services of an employee who is guilty of acts that are inimical to the interest
of the employer.61 While the law acknowledges the plight and vulnerability of
workers, it does not authorize the oppression or self-destruction of the
employer.62 Management prerogative is recognized in law and in our
jurisprudence.
This prerogative, however, should not be abused. It is tempered with the
employees right to security of tenure.63 Workers are entitled to substantive and

procedural due process before termination. They may not be removed from
employment without a valid or just cause as determined by law and without
going through the proper procedure.
Security of tenure for labor is guaranteed by our Constitution. 64

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

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Petitioner likewise attempts to sidestep the medical certificate requirement by

contending that since Osdana was working in Saudi Arabia, her employment
was subject to the laws of the host country. Apparently, petitioner hopes to make
it appear that the labor laws of Saudi Arabia do not require any certification by a
competent public health authority in the dismissal of employees due to illness.
Again, petitioners argument is without merit.
First, established is the rule that lex loci contractus (the law of the place
where the contract is made) governs in this jurisdiction. There is no
question that the contract of employment in this case was perfected here
in the Philippines. Therefore, the Labor Code, its implementing rules and
regulations, and other laws affecting labor apply in this case. Furthermore,
settled is the rule that the courts of the forum will not enforce any foreign claim
obnoxious to the forums public policy. Here in the Philippines, employment
agreements are more than contractual in nature. The Constitution itself, in
Article XIII, Section 3, guarantees the special protection of workers, to wit:
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The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment
opportunities for all.

This public policy should be borne in mind in this case because to allow foreign
employers to determine for and by themselves whether an overseas contract
worker may be dismissed on the ground of illness would encourage illegal or
arbitrary pre-termination of employment contracts. 66 (Emphasis supplied, citation
omitted)
Even with respect to fundamental procedural rights, this court emphasized in
PCL Shipping Philippines, Inc. v. NLRC,67 to wit:
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Petitioners admit that they did not inform private respondent in writing of the
charges against him and that they failed to conduct a formal investigation to give
him opportunity to air his side. However, petitioners contend that the twin
requirements of notice and hearing applies strictly only when the employment is
within the Philippines and that these need not be strictly observed in cases of
international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the
Labor Code which afford protection to labor apply to Filipino employees
whether working within the Philippines or abroad. Moreover, the principle
of lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. In the present case, it is not disputed that the
Contract of Employment entered into by and between petitioners and private
respondent was executed here in the Philippines with the approval of the
Philippine Overseas Employment Administration (POEA). Hence, the Labor
Code together with its implementing rules and regulations and other laws
affecting labor apply in this case.68 (Emphasis supplied, citations omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a
just or authorized cause and after compliance with procedural due process
requirements.
Article 282 of the Labor Code enumerates the just causes of termination by the
employer. Thus:
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It shall guarantee the rights of all workers to self-organization, collective

bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in
policy and decision-making processes affecting their rights and benefits as may
be provided by law.
....

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Page 3 of 12

Art. 282. Termination by employer. An employer may terminate an employment

for any of the following causes:
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(a) Serious misconduct or willful disobedience by the employee of the lawful

orders of his employer or representative in connection with his work;
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(b) Gross and habitual neglect by the employee of his duties;

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

evaluated will increase ones chances of being positively assessed for

regularization by his or her employer.

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

Assessing an employees work performance does not stop after regularization.

The employer, on a regular basis, determines if an employee is still qualified and
efficient, based on work standards. Based on that determination, and after
complying with the due process requirements of notice and hearing, the
employer may exercise its management prerogative of terminating the
employee found unqualified.

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(e) Other causes analogous to the foregoing.

Petitioners allegation that respondent was inefficient in her work and negligent
in her duties69 may, therefore, constitute a just cause for termination under
Article 282(b), but only if petitioner was able to prove it.
The burden of proving that there is just cause for termination is on the employer.
The employer must affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause.70 Failure to show that there was valid or
just cause for termination would necessarily mean that the dismissal was
illegal.71
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To show that dismissal resulting from inefficiency in work is valid, it must be

shown that: 1) the employer has set standards of conduct and workmanship
against which the employee will be judged; 2) the standards of conduct and
workmanship must have been communicated to the employee; and 3) the
communication was made at a reasonable time prior to the employees
performance assessment.
This is similar to the law and jurisprudence on probationary employees, which
allow termination of the employee only when there is just cause or when [the
probationary employee] fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time
of his [or her] engagement.72
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However, we do not see why the application of that ruling should be limited to
probationary employment. That rule is basic to the idea of security of tenure and
due process, which are guaranteed to all employees, whether their employment
is probationary or regular.
The pre-determined standards that the employer sets are the bases for
determining the probationary employees fitness, propriety, efficiency, and
qualifications as a regular employee. Due process requires that the probationary
employee be informed of such standards at the time of his or her engagement
so he or she can adjust his or her character or workmanship accordingly. Proper
adjustment to fit the standards upon which the employees qualifications will be

Page 4 of 12

The regular employee must constantly attempt to prove to his or her employer
that he or she meets all the standards for employment. This time, however, the
standards to be met are set for the purpose of retaining employment or
promotion. The employee cannot be expected to meet any standard of character
or workmanship if such standards were not communicated to him or her. Courts
should remain vigilant on allegations of the employers failure to communicate
work standards that would govern ones employment if [these are] to discharge
in good faith [their] duty to adjudicate.73
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In this case, petitioner merely alleged that respondent failed to comply with her
foreign employers work requirements and was inefficient in her work. 74No
evidence was shown to support such allegations. Petitioner did not even bother
to specify what requirements were not met, what efficiency standards were
violated, or what particular acts of respondent constituted inefficiency.
There was also no showing that respondent was sufficiently informed of the
standards against which her work efficiency and performance were judged. The
parties conflict as to the position held by respondent showed that even
the matter as basic as the job title was not clear.
The bare allegations of petitioner are not sufficient to support a claim that there
is just cause for termination. There is no proof that respondent was legally
terminated.
Petitioner failed to comply with
the due process requirements
Respondents dismissal less than one year from hiring and her repatriation on
the same day show not only failure on the part of petitioner to comply with the
requirement of the existence of just cause for termination. They patently show
that the employers did not comply with the due process requirement.
A valid dismissal requires both a valid cause and adherence to the valid

procedure of dismissal.75 The employer is required to give the charged

employee at least two written notices before termination. 76 One of the written
notices must inform the employee of the particular acts that may cause his or
her dismissal.77 The other notice must [inform] the employee of the employers
decision.78 Aside from the notice requirement, the employee must also be given
an opportunity to be heard.79
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Petitioner failed to comply with the twin notices and hearing requirements.
Respondent started working on June 26, 1997. She was told that she was
terminated on July 14, 1997 effective on the same day and barely a month from
her first workday. She was also repatriated on the same day that she was
informed of her termination. The abruptness of the termination negated any
finding that she was properly notified and given the opportunity to be heard. Her
constitutional right to due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her
salary for the unexpired portion of the employment contract that was violated
together with attorneys fees and reimbursement of amounts withheld from her
salary.
Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers
and Overseas Filipinos Act of 1995, states that overseas workers who were
terminated without just, valid, or authorized cause shall be entitled to the full
reimbursement of his placement fee with interest of twelve (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.
Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC)
shall have the original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after filing of the complaint, the claims arising out of
an employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency for
any and all claims under this section shall be joint and several. This provisions
[sic] shall be incorporated in the contract for overseas employment and shall be
a condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the

Page 5 of 12

recruitment/placement agency is a juridical being, the corporate officers and

directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid claims and
damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution, amendment
or modification made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims
inclusive of damages under this section shall be paid within four (4) months from
the approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.
....
(Emphasis supplied)

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Section 15 of Republic Act No. 8042 states that repatriation of the worker and
the transport of his [or her] personal belongings shall be the primary
responsibility of the agency which recruited or deployed the worker overseas.
The exception is when termination of employment is due solely to the fault of
the worker,80 which as we have established, is not the case. It reads:
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SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION

FUND. The repatriation of the worker and the transport of his personal
belongings shall be the primary responsibility of the agency which recruited or
deployed the worker overseas. All costs attendant to repatriation shall be borne
by or charged to the agency concerned and/or its principal. Likewise, the
repatriation of remains and transport of the personal belongings of a deceased
worker and all costs attendant thereto shall be borne by the principal and/or
local agency. However, in cases where the termination of employment is due
solely to the fault of the worker, the principal/employer or agency shall not in any
manner be responsible for the repatriation of the former and/or his belongings.
....
The Labor Code81 also entitles the employee to 10% of the amount of withheld

wages as attorneys fees when the withholding is unlawful.

The Court of Appeals affirmed the National Labor Relations Commissions
decision to award respondent NT$46,080.00 or the three-month equivalent of
her salary, attorneys fees of NT$300.00, and the reimbursement of the withheld
NT$3,000.00 salary, which answered for her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The
award of the three-month equivalent of respondents salary should,
however, be increased to the amount equivalent to the unexpired term of
the employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc.,82
this court ruled that the clause or for three (3) months for every year of the
unexpired term, whichever is less83 is unconstitutional for violating the equal
protection clause and substantive due process.84
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A statute or provision which was declared unconstitutional is not a law. It

confers no rights; it imposes no duties; it affords no protection; it creates no
office; it is inoperative as if it has not been passed at all.85
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We are aware that the clause or for three (3) months for every year of the
unexpired term, whichever is less was reinstated in Republic Act No. 8042
upon promulgation of Republic Act No. 10022 in 2010. Section 7 of Republic Act
No. 10022 provides:
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Section 7. Section 10 of Republic Act No. 8042, as amended, is hereby

amended to read as follows:
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the recruitment/placement agency, as provided by law, shall be answerable for

all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid claims and
damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution, amendment
or modification made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims
inclusive of damages under this section shall be paid within thirty (30) days from
approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, or any unauthorized deductions from the
migrant workers salary, the worker shall be entitled to the full reimbursement if
[sic] his placement fee and the deductions made with interest at twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever
is less.
In case of a final and executory judgement against a foreign employer/principal,
it shall be automatically disqualified, without further proceedings, from
participating in the Philippine Overseas Employment Program and from
recruiting and hiring Filipino workers until and unless it fully satisfies the
judgement award.

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

Noncompliance with the mandatory periods for resolutions of case provided

under this section shall subject the responsible officials to any or all of the
following penalties:

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

any and all claims under this section shall be joint and several. This provision
shall be incorporated in the contract for overseas employment and shall be a
condition precedent for its approval. The performance bond to de [sic] filed by

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

Page 6 of 12

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(a) The salary of any such official who fails to render his decision or resolution
within the prescribed period shall be, or caused to be, withheld until the said
official complies therewith;
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(b) Suspension for not more than ninety (90) days; or

Provided, however, That the penalties herein provided shall be without prejudice

to any liability which any such official may have incured [sic] under other existing
laws or rules and regulations as a consequence of violating the provisions of
this paragraph. (Emphasis supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This means that
the reinstatement of the clause in Republic Act No. 8042 was not yet in effect at
the time of respondents termination from work in 1997. 86 Republic Act No. 8042
before it was amended by Republic Act No. 10022 governs this case.
When a law is passed, this court awaits an actual case that clearly raises
adversarial positions in their proper context before considering a prayer to
declare it as unconstitutional.
However, we are confronted with a unique situation. The law passed
incorporates the exact clause already declared as unconstitutional, without any
perceived substantial change in the circumstances.
This may cause confusion on the part of the National Labor Relations
Commission and the Court of Appeals. At minimum, the existence of Republic
Act No. 10022 may delay the execution of the judgment in this case, further
frustrating remedies to assuage the wrong done to petitioner. Hence, there is a
necessity to decide this constitutional issue.
Moreover, this court is possessed with the constitutional duty to [p]romulgate
rules concerning the protection and enforcement of constitutional rights. 87 When
cases become moot and academic, we do not hesitate to provide for guidance
to bench and bar in situations where the same violations are capable of
repetition but will evade review. This is analogous to cases where there are
millions of Filipinos working abroad who are bound to suffer from the lack of
protection because of the restoration of an identical clause in a provision
previously declared as unconstitutional.
In the hierarchy of laws, the Constitution is supreme. No branch or office of the
government may exercise its powers in any manner inconsistent with the
Constitution, regardless of the existence of any law that supports such exercise.
The Constitution cannot be trumped by any other law. All laws must be read in
light of the Constitution. Any law that is inconsistent with it is a nullity.
Thus, when a law or a provision of law is null because it is inconsistent with the
Constitution, the nullity cannot be cured by reincorporation or reenactment of
the same or a similar law or provision. A law or provision of law that was already
declared unconstitutional remains as such unless circumstances have so
changed as to warrant a reverse conclusion.

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We are not convinced by the pleadings submitted by the parties that the
situation has so changed so as to cause us to reverse binding precedent.
Likewise, there are special reasons of judicial efficiency and economy that
attend to these cases.
The new law puts our overseas workers in the same vulnerable position as they
were prior to Serrano. Failure to reiterate the very ratio decidendi of that case
will result in the same untold economic hardships that our reading of the
Constitution intended to avoid. Obviously, we cannot countenance added
expenses for further litigation that will reduce their hard-earned wages as well
as add to the indignity of having been deprived of the protection of our laws
simply because our precedents have not been followed. There is no
constitutional doctrine that causes injustice in the face of empty procedural
niceties. Constitutional interpretation is complex, but it is never unreasonable.
Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the
Office of the Solicitor General to comment on the constitutionality of the
reinstated clause in Republic Act No. 10022.
In its comment,89 petitioner argued that the clause was constitutional. 90 The
legislators intended a balance between the employers and the employees
rights by not unduly burdening the local recruitment agency.91 Petitioner is also
of the view that the clause was already declared as constitutional in Serrano.92

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The Office of the Solicitor General also argued that the clause was valid and
constitutional.93 However, since the parties never raised the issue of the
constitutionality of the clause as reinstated in Republic Act No. 10022, its
contention is that it is beyond judicial review.94
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On the other hand, respondent argued that the clause was unconstitutional
because it infringed on workers right to contract.95
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We observe that the reinstated clause, this time as provided in Republic Act. No.
10022, violates the constitutional rights to equal protection and due process. 96
Petitioner as well as the Solicitor General have failed to show any compelling
change in the circumstances that would warrant us to revisit the precedent.
We reiterate our finding in Serrano v. Gallant Maritime that limiting wages
that should be recovered by an illegally dismissed overseas worker to
three months is both a violation of due process and the equal protection
clauses of the Constitution.

the subject clause a suspect classification prejudicial to OFWs.111

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Equal protection of the law is a guarantee that persons under like circumstances
and falling within the same class are treated alike, in terms of privileges
conferred and liabilities enforced.97 It is a guarantee against undue favor and
individual or class privilege, as well as hostile discrimination or the oppression of
inequality.98
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In creating laws, the legislature has the power to make distinctions and
classifications.99 In exercising such power, it has a wide discretion.100
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The equal protection clause does not infringe on this legislative power.101 A law
is void on this basis, only if classifications are made arbitrarily.102 There is no
violation of the equal protection clause if the law applies equally to persons
within the same class and if there are reasonable grounds for distinguishing
between those falling within the class and those who do not fall within the
class.103 A law that does not violate the equal protection clause prescribes a
reasonable classification.104
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We also noted in Serrano that before the passage of Republic Act No. 8042, the
money claims of illegally terminated overseas and local workers with fixed-term
employment were computed in the same manner.112 Their money claims were
computed based on the unexpired portions of their contracts. 113 The adoption
of the reinstated clause in Republic Act No. 8042 subjected the money claims of
illegally dismissed overseas workers with an unexpired term of at least a year to
a cap of three months worth of their salary.114 There was no such limitation on
the money claims of illegally terminated local workers with fixed-term
employment.115
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We observed that illegally dismissed overseas workers whose employment

contracts had a term of less than one year were granted the amount equivalent
to the unexpired portion of their employment contracts. 116 Meanwhile, illegally
dismissed overseas workers with employment terms of at least a year were
granted a cap equivalent to three months of their salary for the unexpired
portions of their contracts.117
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A reasonable classification (1) must rest on substantial distinctions; (2) must be

germane to the purposes of the law; (3) must not be limited to existing
conditions only; and (4) must apply equally to all members of the same
class.105
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The reinstated clause does not satisfy the requirement of reasonable

classification.

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

distinguished between fixed-period overseas workers and fixed-period local
workers.106 It also distinguished between overseas workers with employment
contracts of less than one year and overseas workers with employment
contracts of at least one year.107 Within the class of overseas workers with at
least one-year employment contracts, there was a distinction between those
with at least a year left in their contracts and those with less than a year left in
their contracts when they were illegally dismissed.108
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The Congress classification may be subjected to judicial review. In Serrano,

there is a legislative classification which impermissibly interferes with the
exercise of a fundamental right or operates to the peculiar disadvantage of a
suspect class.109
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Under the Constitution, labor is afforded special protection. 110 Thus, this court in
Serrano, [i]mbued with the same sense of obligation to afford protection to
labor, . . . employ[ed] the standard of strict judicial scrutiny, for it perceive[d] in

Page 8 of 12

We do not need strict scrutiny to conclude that these classifications do not rest
on any real or substantial distinctions that would justify different treatments in
terms of the computation of money claims resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to security of
tenure, at least for the period agreed upon in their contracts. This means that
they cannot be dismissed before the end of their contract terms without due
process. If they were illegally dismissed, the workers right to security of tenure
is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated
are neither greater than nor less than the rights violated when a fixed-period
overseas worker is illegally terminated. It is state policy to protect the rights of
workers without qualification as to the place of employment. 119 In both cases, the
workers are deprived of their expected salary, which they could have earned
had they not been illegally dismissed. For both workers, this deprivation

translates to economic insecurity and disparity.120 The same is true for the
distinctions between overseas workers with an employment contract of less than
one year and overseas workers with at least one year of employment contract,
and between overseas workers with at least a year left in their contracts and
overseas workers with less than a year left in their contracts when they were
illegally dismissed.
For this reason, we cannot subscribe to the argument that [overseas workers]
are contractual employees who can never acquire regular employment status,
unlike local workers121 because it already justifies differentiated treatment in
terms of the computation of money claims.122
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Likewise, the jurisdictional and enforcement issues on overseas workers money

claims do not justify a differentiated treatment in the computation of their money
claims.123 If anything, these issues justify an equal, if not greater protection and
assistance to overseas workers who generally are more prone to exploitation
given their physical distance from our government.
We also find that the classifications are not relevant to the purpose of the law,
which is to establish a higher standard of protection and promotion of the
welfare of migrant workers, their families and overseas Filipinos in distress, and
for other purposes.124 Further, we find specious the argument that reducing the
liability of placement agencies redounds to the benefit of the [overseas]
workers.125
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Putting a cap on the money claims of certain overseas workers does not
increase the standard of protection afforded to them. On the other hand, foreign
employers are more incentivized by the reinstated clause to enter into contracts
of at least a year because it gives them more flexibility to violate our overseas
workers rights. Their liability for arbitrarily terminating overseas workers is
decreased at the expense of the workers whose rights they violated. Meanwhile,
these overseas workers who are impressed with an expectation of a stable job
overseas for the longer contract period disregard other opportunities only to be
terminated earlier. They are left with claims that are less than what others in the
same situation would receive. The reinstated clause, therefore, creates a
situation where the law meant to protect them makes violation of rights easier
and simply benign to the violator.
As Justice Brion said in his concurring opinion in Serrano:

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Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in
fact provides a hidden twist affecting the principal/employers liability. While
intended as an incentive accruing to recruitment/manning agencies, the law, as

Page 9 of 12

worded, simply limits the OFWs recovery in wrongful dismissal situations. Thus,
it redounds to the benefit of whoever may be liable, including the
principal/employer the direct employer primarily liable for the wrongful
dismissal. In this sense, Section 10 read as a grant of incentives to
recruitment/manning agencies oversteps what it aims to do by effectively
limiting what is otherwise the full liability of the foreign principals/employers.
Section 10, in short, really operates to benefit the wrong party and allows that
party, without justifiable reason, to mitigate its liability for wrongful dismissals.
Because of this hidden twist, the limitation of liability under Section 10 cannot be
an appropriate incentive, to borrow the term that R.A. No. 8042 itself uses to
describe the incentive it envisions under its purpose clause.
What worsens the situation is the chosen mode of granting the incentive:
instead of a grant that, to encourage greater efforts at recruitment, is directly
related to extra efforts undertaken, the law simply limits their liability for the
wrongful dismissals of already deployed OFWs. This is effectively a legallyimposed partial condonation of their liability to OFWs, justified solely by the
laws intent to encourage greater deployment efforts. Thus, the incentive, from a
more practical and realistic view, is really part of a scheme to sell Filipino
overseas labor at a bargain for purposes solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the OFWs
the benefits accruing to the recruitment/manning agencies and their
principals are taken from the pockets of the OFWs to whom the full salaries for
the unexpired portion of the contract rightfully belong. Thus, the
principals/employers and the recruitment/manning agencies even profit from
their violation of the security of tenure that an employment contract embodies.
Conversely, lesser protection is afforded the OFW, not only because of the
lessened recovery afforded him or her by operation of law, but also because this
same lessened recovery renders a wrongful dismissal easier and less onerous
to undertake; the lesser cost of dismissing a Filipino will always be a
consideration a foreign employer will take into account in termination of
employment decisions. . . .126
Further, [t]here can never be a justification for any form of government action
that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private
businesses such as placement agencies, while the disadvantaged sector is
composed of OFWs whose protection no less than the Constitution commands.
The idea that private business interest can be elevated to the level of a
compelling state interest is odious.127
cralawred

Along the same line, we held that the reinstated clause violates due process

rights. It is arbitrary as it deprives overseas workers of their monetary claims

without any discernable valid purpose.128
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Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her
contract, in accordance with Section 10 of Republic Act No. 8042. The award of
the three-month equivalence of respondents salary must be modified
accordingly. Since she started working on June 26, 1997 and was terminated on
July 14, 1997, respondent is entitled to her salary from July 15, 1997 to June 25,
1998. To rule otherwise would be iniquitous to petitioner and other OFWs, and
would, in effect, send a wrong signal that principals/employers and
recruitment/manning agencies may violate an OFWs security of tenure which
an employment contract embodies and actually profit from such violation based
on an unconstitutional provision of law. 129
cralawred

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

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved
the following revisions governing the rate of interest in the absence of stipulation
in loan contracts, thereby amending Section 2 of Circular No. 905, Series of
1982:
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Section 1. The rate of interest for the loan or forbearance of any money, goods
or credits and the rate allowed in judgments, in the absence of an express
contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the
Manual of Regulations for Non-Bank Financial Institutions are hereby amended
accordingly.
This Circular shall take effect on 1 July 2013.

1. When the obligation is breached, and it consists in the payment of a

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

And, in addition to the above, judgments that have become final and executory
prior to July 1, 2013, shall not be disturbed and shall continue to be
implemented applying the rate of interest fixed therein. 131

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

Circular No. 799 is applicable only in loans and forbearance of money, goods, or
credits, and in judgments when there is no stipulation on the applicable interest
rate. Further, it is only applicable if the judgment did not become final and
executory before July 1, 2013.132

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

We add that Circular No. 799 is not applicable when there is a law that states
otherwise. While the Bangko Sentral ng Pilipinas has the power to set or limit
interest rates,133 these interest rates do not apply when the law provides that a

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Page 10 of 12

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different interest rate shall be applied. [A] Central Bank Circular cannot repeal a
law. Only a law can repeal another law.134
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For example, Section 10 of Republic Act No. 8042 provides that unlawfully
terminated overseas workers are entitled to the reimbursement of his or her
placement fee with an interest of 12% per annum. Since Bangko Sentral ng
Pilipinas circulars cannot repeal Republic Act No. 8042, the issuance of Circular
No. 799 does not have the effect of changing the interest on awards for
reimbursement of placement fees from 12% to 6%. This is despite Section 1 of
Circular No. 799, which provides that the 6% interest rate applies even to
judgments.
Moreover, laws are deemed incorporated in contracts. The contracting parties
need not repeat them. They do not even have to be referred to. Every contract,
thus, contains not only what has been explicitly stipulated, but the statutory
provisions that have any bearing on the matter. 135 There is, therefore, an
implied stipulation in contracts between the placement agency and the overseas
worker that in case the overseas worker is adjudged as entitled to
reimbursement of his or her placement fees, the amount shall be subject to a
12% interest per annum. This implied stipulation has the effect of removing
awards for reimbursement of placement fees from Circular No. 799s coverage.
The same cannot be said for awards of salary for the unexpired portion of the
employment contract under Republic Act No. 8042. These awards are covered
by Circular No. 799 because the law does not provide for a specific interest rate
that should apply.
In sum, if judgment did not become final and executory before July 1, 2013 and
there was no stipulation in the contract providing for a different interest rate,
other money claims under Section 10 of Republic Act No. 8042 shall be subject
to the 6% interest per annum in accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum on
her money claims from the finality of this judgment.
IV
Finally, we clarify the liabilities of Wacoal as principal and petitioner as the
employment agency that facilitated respondents overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides
that the foreign employer and the local employment agency are jointly and
severally liable for money claims including claims arising out of an employer-

Page 11 of 12

employee relationship and/or damages. This section also provides that the
performance bond filed by the local agency shall be answerable for such money
claims or damages if they were awarded to the employee.
This provision is in line with the states policy of affording protection to labor and
alleviating workers plight.136
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In overseas employment, the filing of money claims against the foreign

employer is attended by practical and legal complications. The distance of the
foreign employer alone makes it difficult for an overseas worker to reach it and
make it liable for violations of the Labor Code. There are also possible conflict of
laws, jurisdictional issues, and procedural rules that may be raised to frustrate
an overseas workers attempt to advance his or her claims.
It may be argued, for instance, that the foreign employer must be impleaded in
the complaint as an indispensable party without which no final determination
can be had of an action.137
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The provision on joint and several liability in the Migrant Workers and Overseas
Filipinos Act of 1995 assures overseas workers that their rights will not be
frustrated with these complications.
The fundamental effect of joint and several liability is that each of the debtors is
liable for the entire obligation.138 A final determination may, therefore, be
achieved even if only one of the joint and several debtors are impleaded in an
action. Hence, in the case of overseas employment, either the local agency or
the foreign employer may be sued for all claims arising from the foreign
employers labor law violations. This way, the overseas workers are assured that
someone the foreign employers local agent may be made to answer for
violations that the foreign employer may have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas
workers have recourse in law despite the circumstances of their employment.
By providing that the liability of the foreign employer may be enforced to the full
extent139 against the local agent, the overseas worker is assured of immediate
and sufficient payment of what is due them.140
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Corollary to the assurance of immediate recourse in law, the provision on joint

and several liability in the Migrant Workers and Overseas Filipinos Act of 1995
shifts the burden of going after the foreign employer from the overseas worker
to the local employment agency. However, it must be emphasized that the local
agency that is held to answer for the overseas workers money claims is not left
without remedy. The law does not preclude it from going after the foreign

employer for reimbursement of whatever payment it has made to the employee

to answer for the money claims against the foreign employer.
A further implication of making local agencies jointly and severally liable with the
foreign employer is that an additional layer of protection is afforded to overseas
workers. Local agencies, which are businesses by nature, are inoculated with
interest in being always on the lookout against foreign employers that tend to
violate labor law. Lest they risk their reputation or finances, local agencies must
already have mechanisms for guarding against unscrupulous foreign employers
even at the level prior to overseas employment applications.
With the present state of the pleadings, it is not possible to determine whether
there was indeed a transfer of obligations from petitioner to Pacific. This should
not be an obstacle for the respondent overseas worker to proceed with the
enforcement of this judgment. Petitioner is possessed with the resources to
determine the proper legal remedies to enforce its rights against Pacific, if any.
V
Many times, this court has spoken on what Filipinos may encounter as they
travel into the farthest and most difficult reaches of our planet to provide for their
families. In Prieto v. NLRC:141
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The Court is not unaware of the many abuses suffered by our overseas workers
in the foreign land where they have ventured, usually with heavy hearts, in
pursuit of a more fulfilling future. Breach of contract, maltreatment, rape,
insufficient nourishment, sub-human lodgings, insults and other forms of
debasement, are only a few of the inhumane acts to which they are subjected
by their foreign employers, who probably feel they can do as they please in their
own country. While these workers may indeed have relatively little defense
against exploitation while they are abroad, that disadvantage must not continue
to burden them when they return to their own territory to voice their muted
complaint. There is no reason why, in their very own land, the protection of our
own laws cannot be extended to them in full measure for the redress of their
grievances.142
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But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be told a
million times over; each of their stories as real as any other. Overseas Filipino
workers brave alien cultures and the heartbreak of families left behind daily.
They would count the minutes, hours, days, months, and years yearning to see
their sons and daughters. We all know of the joy and sadness when they come

Page 12 of 12

home to see them all grown up and, being so, they remember what their work
has cost them. Twitter accounts, Facetime, and many other gadgets and online
applications will never substitute for their lost physical presence.
Unknown to them, they keep our economy afloat through the ebb and flow of
political and economic crises. They are our true diplomats, they who show the
world the resilience, patience, and creativity of our people. Indeed, we are a
people who contribute much to the provision of material creations of this world.
This government loses its soul if we fail to ensure decent treatment for all
Filipinos. We default by limiting the contractual wages that should be paid to our
workers when their contracts are breached by the foreign employers. While we
sit, this court will ensure that our laws will reward our overseas workers with
what they deserve: their dignity.
Inevitably, their dignity is ours as well.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is
AFFIRMED with modification. Petitioner Sameer Overseas Placement Agency is
ORDERED to pay respondent Joy C. Cabiles the amount equivalent to her
salary for the unexpired portion of her employment contract at an interest of 6%
per annum from the finality of this judgment. Petitioner is also ORDERED to
reimburse respondent the withheld NT$3,000.00 salary and pay respondent
attorneys fees of NT$300.00 at an interest of 6% per annum from the finality of
this judgment.
The clause, or for three (3) months for every year of the unexpired term,
whichever is less in Section 7 of Republic Act No. 10022 amending Section 10
of Republic Act No. 8042 is declared unconstitutional and, therefore, null and
void.