G.R. No.

167614 March 24, 2009

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

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-Moon

Global Forum on Migration and Development
Brussels, 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 Complaint 9 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. 01/30, 1998 2,590.00

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 complainants 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 complainants 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 complainants (petitioner's) claim for attorneys 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% Attorneys 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 petitioners 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-impairment of 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 labor as 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 right 70 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 classifications 73 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.

xxxx

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.

xxxx

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 Courts 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.

xxxx

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--vis OFWs with employment contracts
of one year or more;

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

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

OFWs with employment contracts of less than one year vis--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 respondents 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

88
Univan v. CA 12 months 3 months 9 months 3 months

Oriental v. CA 89 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

91
Olarte v. Nayona 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

94
Phil. Employ v. Paramio, et al. 12 months 10 months 2 months Unexpired portion

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 1 month 1 year, 9 months and 28 days 6 months or 3 months for each year of contract
days

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
in Talidano 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. Integrated v. NLRC99 2 years 7 days 23 months and 23 days 23 months and 23 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 for every 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--vis Local Workers

With 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 Compaia 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. Gay114 held:

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

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 right to 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.
 SERRANO V. GALLANT MARITIME SERVICES,INC.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the Decision and Resolution of
the Court of Appeals (CA).

FACTS:
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 month
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.
Respondents did not deliver on their promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as
Second Officer and wasrepatriated to the Philippines on May 26, 1998.
Petitioners employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at
the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his
contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for
payment of his money claims in the total amount of US$26,442.73.
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 complainants salary for three
(3) months of the unexpired portion of the aforesaid contract of employment.
The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.
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 petitioners
employment contract applying the subject clause. However, the LA applied the salary rate of US$2,590.00,
consisting of petitioners [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.
Respondents appealed to the National Labor Relations Commission (NLRC) to question the finding of the LA that
petitioner was illegally dismissed.
The NLRC modified the LA Decision and corrected the LAs 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.
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the
subject clause. The NLRC denied the motion.
Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge against the subject clause.
After initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this
Court in its Resolution which granted the petition for certiorari,filed by petitioner.
The CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the
constitutional issue raised by petitioner.
His Motion for Reconsideration having been denied by the CA, petitioner brings his cause to this Court on the
following grounds:
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.
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 petitioners award the overtime pay and vacation pay provided in his
contract since under the contract they form part of his salary.
The Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional question
raised therein.
ISSUES:
Whether Section 10 (par 5) of RA 8042 is unconstitutional

Proper computation of the Lump-sum salary to be awarded to petitioner by reason of his illegal dismissal

Whether the overtime and leave pay should form part of the salary basis in the computation of his monetary award

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.
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
Arguments of the Petitioner
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act
(R.A.) No. 8042, violates the OFWs constitutional rights in that it impairs the terms of their contract, deprives them of
equal protection and denies them due process.

The Arguments of Respondents

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 petitioners 1998 employment contract. Rather, R.A. No. 8042 having preceded petitioners contract, the
provisions thereof are deemed part of the minimum terms of petitioners employment, especially on the matter of
money claims, as this was not stipulated upon by the parties.

The Courts Ruling:

First Issue
Does the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3,
Article XIII on Labor as 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, Article II and Section 3, 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.

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
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 petitioners right to equal protection, but also her right to substantive due process under
Section 1, Article III of the Constitution.

Second Issue
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 latters
unexpired contracts fall short of one year.

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.

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 petitioners right to equal protection, but also her right to substantive due process
under Section 1, 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.

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.

In the same vein, the claim for the days 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 DECLARED
UNCONSTITUTIONAL; 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.
 PEOPLE OF THE PHILIPPINES vs. ELIZABETH BETH CORPUZ
G.R. No. 148198 October 1, 2003 YNARES-SANTIAGO, J.:

Nature: This is an appeal from the decision of the Regional Trial Court of Manila finding appellant Elizabeth Corpuz
guilty beyond reasonable doubt of Illegal Recruitment in Large Scale constituting economic sabotage under Sec. 6 (l)
and (m) in relation to Sec. 7(b) of R.A. No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act
of l995, and sentencing her to life imprisonment and to pay a fine of P500,000.00.

Facts: y y y y y y y y y y y In June 1998, private complainants Belinda Cabantog, Concepcion San Diego, Erlinda
Pascual and Restian Surio went to Alga-Moher International Placement Services Corporation at 1651 San Marcelino
Street, Malate, Manila to apply for employment as factory workers in Taiwan. They were accompanied by a certain
Aling Josie who introduced them to the agency s President and General Manager Mrs. Evelyn Gloria H. Reyes. Mrs.
Reyes asked them to accomplish the application forms. Thereafter, they were told to return to the office with
P10,000.00 each as processing fee. On July 30, 1998, private complainants returned to the agency to pay the processing
fees. Mrs. Reyes was not at the agency that time, but she called accused CORPUZ (secretary) on the telephone to ask
her to receive the processing fees. Thereafter, CORPUZ advised them to wait for the contracts to arrive from the
Taiwan employers. Two months later, nothing happened to their applications. Thus, private complainants decided to
ask for the refund of their money from CORPUZ who told them that the processing fees they had paid were already
remitted to Mrs. Reyes. When they talked to Mrs. Reyes, she told them that the money she received from CORPUZ
was in payment of the latter s debt. On January 13, 1999, private complainants filed their complaint with the National
Bureau of Investigation which led to the arrest and detention of CORPUZ. CORPUZ contends that she is not liable for
the foregoing illegal recruitment activities considering that she was merely an employee having no control over the
recruitment business of the Alga-Moher International Placement Services Corporation and that she did not actually
recruit the private complainants. Moreover, she did not appropriate for her own use the processing fees she received
and she had no knowledge that the agency s license was suspended by the POEA.

Issue/s:
1. WON accused CORPUZ is criminally liable despite the fact that she was merely an employee of the recruitment
agency. NO.

2. WON accused Corpuz knowingly and intentionally participated in the commission of the crime charged. NO.

Ratio: 1. y NO. From the testimonial evidence presented, it is clear that all appellant did was receive the processing
fees upon instruction of Mrs. Reyes. She neither convinced the private complainants to give their money nor promised
them employment abroad. y y y y Moreover, as stated in the last sentence of Section 6 of RA 8042, the persons who
may be held liable for illegal recruitment are the principals, accomplices and accessories. In case of juridical persons,
the officers having control, management or direction of their business shall be liable. In the case at bar, we have
carefully reviewed the records of the case and found that the prosecution failed to establish that CORPUZ, as secretary,
had control, management or direction of the recruitment agency. Appellant started her employment with the agency on
May 1, 1998 and she was tasked to hold and document employment contracts from the foreign employers. She did not
entertain applicants and she had no discretion over how the business was managed. The trial court s finding that
CORPUZ, being the secretary of the agency, had control over its business, is not only non sequitur but has no
evidentiary basis.

DOCTRINES used in the CASE

An employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with
his employer, if it is shown that he actively and consciously participated in illegal recruitment.
Settled is the rule that the existence of the corporate entity does not shield from prosecution the corporate agent who
knowingly and intentionally causes the corporation to commit a crime. The corporation obviously acts, and can act,
only by and through its human agents, and it is their conduct which the law must deter. The employee or agent of a
corporation engaged in unlawful business naturally aids and abets in the carrying on of such business and will be
prosecuted as principal if, with knowledge of the business, its purpose and effect, he consciously contributes his efforts
to its conduct and promotion, however slight his contribution may be. The law of agency, as applied in civil cases, has
no application in criminal cases, and no man can escape punishment when he participates in the commission of a crime
upon the ground that he simply acted as an agent of any party.
The culpability of the employee therefore hinges on his knowledge of the offense and his active participation in its
commission. Where it is shown that the employee was merely acting under the direction of his superiors and was
unaware that his acts constituted a crime, he may not be held criminally liable for an act done for and in behalf of his
employer.

NO. y y y In the appreciation of evidence in criminal cases, it is a basic tenet that the prosecution has the burden of
proof in establishing the guilt of the accused for the offense with which he is charged. In the case at bar, the
prosecution failed to adduce sufficient evidence to prove CORPUZ active participation in the illegal recruitment
activities of the agency. As already established, CORPUZ received the processing fees of the private complainants for
and in behalf of Mrs. Reyes who ordered her to receive the same. She neither gave an impression that she had the
ability to deploy them abroad nor convinced them to part with their money. More importantly, she had no knowledge
that the license was suspended the day before she received the money.
 G.R. No. 148198 October 1, 2003
PEOPLE OF THE PHILIPPINES, appellee, vs. ELIZABETH "BETH" CORPUZ, appellant.

This is an appeal from the decision1 of the Regional Trial Court of Manila, Branch 54, in Criminal Case No. 99-176637
finding appellant Elizabeth Corpuz guilty beyond reasonable doubt of Illegal Recruitment in Large Scale constituting
economic sabotage under Sec. 6 (l) and (m) in relation to Sec. 7(b) of R.A. No. 8042, otherwise known as the "Migrant
Workers and Overseas Filipinos Act of l995," and sentencing her to life imprisonment and to pay a fine of
P500,000.00.

The Information against appellant reads as follows:

That sometime in July 1998 in the City of Manila and within the jurisdiction of this Honorable Court, the above-named
accused, representing herself to have the capacity to contract, enlist and transport workers abroad, did then and there
willfully, unlawfully and feloniously recruit for a fee the following persons, namely: BELINDA CABANTOG,
CONCEPCION SAN DIEGO, ERLINDA PASCUAL AND RESTIAN SURIO for employment abroad without first
obtaining the required license and/or authority from the Philippine Overseas Employment Administration and said
accused failed to actually deploy without valid reasons said complainants abroad and to reimburse the expenses
incurred by them in connection with their documentation and processing for purposes of deployment abroad to their
damage and prejudice.

CONTRARY TO LAW.2

When arraigned on March 21, 2000, appellant pleaded not guilty. Whereupon, trial on the merits ensued.

The facts of the case are as follows:

In June 1998, private complainants Belinda Cabantog, Concepcion San Diego, Erlinda Pascual and Restian Surio went
to Alga-Moher International Placement Services Corporation at 1651 San Marcelino Street, Malate, Manila to apply for
employment as factory workers in Taiwan. They were accompanied by a certain "Aling Josie" who introduced them to
the agencys President and General Manager Mrs. Evelyn Gloria H. Reyes.3 Mrs. Reyes asked them to accomplish the
application forms. Thereafter, they were told to return to the office with P10,000.00 each as processing fee.4

On July 30, 1998, private complainants returned to the agency to pay the processing fees. Mrs. Reyes was not at the
agency that time, but she called appellant on the telephone to ask her to receive the processing fees. Thereafter,
appellant advised them to wait for the contracts to arrive from the Taiwan employers.5

Two months later, nothing happened to their applications. Thus, private complainants decided to ask for the refund of
their money from appellant6 who told them that the processing fees they had paid were already remitted to Mrs. Reyes.
When they talked to Mrs. Reyes, she told them that the money she received from appellant was in payment of the
latters debt. Thus, on January 13, 1999, private complainants filed their complaint with the National Bureau of
Investigation7 which led to the arrest and detention of appellant.

On March 23, 2000, while the case was before the trial court, private complainants received the refund of their
processing fees from appellants sister-in-law. Consequently, they executed affidavits of desistance8 from participation
in the case against appellant.

For her part, appellant resolutely denied having a hand in the illegal recruitment and claimed that she merely received
the money on behalf of Mrs. Reyes, the President/General Manager of Alga-Moher International Placement Services
Corporation, where she had been working as secretary for three months prior to July 30, 1998. On that day, Mrs. Reyes
called her on the telephone and told her to receive private complainants processing fees. In compliance with the order
of her employer and since the cashier was absent, she received the processing fees of private complainants, which she
thereafter remitted to Mrs. Reyes. She had no knowledge that the agencys license was suspended by the POEA on July
29, 1998.9

On November 16, 2000, the trial court rendered the assailed decision, the dispositive portion of which reads:

WHEREFORE, in view of the above observations and findings accused Elizabeth "Beth" Corpuz is hereby found
guilty of the offense charged in the Information for violation of Sec. 6 (l), (m) in relation to Sec. 7 (b) of R.A. 8042
without any mitigating nor aggravating circumstances attendant to its commission, without applying the benefit of the
Indeterminate Sentence Law, Elizabeth "Beth" Corpuz is hereby sentenced to suffer a life imprisonment and to pay a
fine of P500,000.00.

Her body is hereby committed to the custody of the Director of the Bureau of Correction for Women, Mandaluyong
City thru the City Jail Warden of Manila. She shall be credited with the full extent of her preventive imprisonment
under Art. 29 of the Revised Penal Code.

No pronouncement of civil liability is hereby made since all the complainants have been refunded of the fees.

SO ORDERED.10
In this appeal, appellant raises the following assignment of errors:

THE TRIAL COURT ERRED IN CONVICTING THE ACCUSED IN THAT:

A. THE PROSECUTION FAILED TO PROVE BEYOND REASONABLE DOUBT THAT THE ACCUSED
REPRESENTED HERSELF TO HAVE THE CAPACITY TO CONTRACT, ENLIST AND TRANSPORT
WORKERS ABROAD, OR UNLAWFULLY RECRUIT THE COMPLAINANTS FOR A FEE.

B. THE PROSECUTION FAILED TO PROVE BEYOND REASONABLE DOUBT THAT THE ACCUSED
HAS MANAGEMENT CONTROL OVER ALGA-MOHERs RECRUITMENT BUSINESS.11

The Information charged appellant for Illegal recruitment in large scale under Section 6 (l) and (m) of R.A. No. 8042,
otherwise known as "Migrant Workers and Overseas Filipinos Act of 1995," which reads:

SECTION 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee 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 any such non-licensee 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:

xxxxxxxxx

(l) Failure to actually deploy without valid reason as determined by the Department of Labor and Employment; and

(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for
purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic
sabotage.

xxxxxxxxx

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons
conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or
more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical
persons, the officers having control, management or direction of their business shall be liable.

Appellant contends that she is not liable for the foregoing illegal recruitment activities considering that she was merely
an employee having no control over the recruitment business of the Alga-Moher International Placement Services
Corporation and that she did not actually recruit the private complainants. Moreover, she did not appropriate for her
own use the processing fees she received and she had no knowledge that the agencys license was suspended by the
POEA.

The trial court convicted appellant based on its findings that despite the suspension of the agencys license, appellant
still convinced the applicants to give their money with the promise to land a job abroad. Moreover, as the registered
secretary of the agency she had management control of the recruitment business.

It is axiomatic that findings of facts of the trial court, its calibration of the collective testimonies of witnesses and
probative weight thereof and its conclusions culled from said findings are accorded by this Court great respect, if not
conclusive effect, because of the unique advantage of the trial court in observing and monitoring at close range, the
conduct, deportment and demeanor of the witnesses as they testify before the trial court. 12 However, this principle does
not apply if the trial court ignored, misunderstood or misconstrued cogent facts and circumstances of substance which,
if considered, would alter the outcome of the case.13 The exception obtains in this case.

The records of the case show that Alga-Moher International Placement Service Corporation is a licensed land-based
recruitment agency. Its license was valid until August 24, 1999.14 Likewise, appellant was its registered secretary while
Mrs. Evelyn Gloria H. Reyes is its President/General Manager.15 Part of its regular business activity is to accept
applicants who desire to work here or abroad. Appellant, as secretary of the agency, was in charge of the custody and
documentation of the overseas contracts.

On July 30, 1998, appellant received the processing fees of the private complainants since the cashier was absent that
day. Her receipt of the money was in compliance with the order of her employer, Mrs. Reyes. She did not convince the
applicants to give her their money since they went to the agency precisely to pay the processing fees upon the earlier
advice of Mrs. Reyes. Private complainant Belinda Cabantog testified as follows:
FISCAL BALLENA:
Q. Please tell the Court how did it happen that you went to the said agency?
A. When someone brought us there and introduced to the owner, Sir.
Q. And who is this friend or person you said you know who accompanied you?
A. Aling Josie, Sir.
Q. What is her full name?
A. I do not know, Sir.
Q. And who is this owner to whom you were introduced?
A. Mrs. Evelyn Ty, Sir.
Q. And why do you know this Ty was the owner?
A. Because she is the friend of Aling Josie, Sir.
Q. Now, after the introduction to this owner what happened?
A. We were told to fill up the application form by Mrs. Evelyn Ty, Sir.
Q. And after filling up this application form, what did you do with the same?
A. We went home and we were asked to come back, Sir.
Q. Now, did you come back?
A. Yes, Sir.
Q. When did you come back?
A. July 30, Sir.
COURT:
Q. What year?
A. 1998, Your Honor.
FISCAL BALLENA:
Q. What happened when you come back?
A. When we came back we brought along the processing fee they needed, Sir.
Q. Why did you bring this processing fee?
A. We were required to bring it for the smooth processing of the papers, Sir.
Q. Who required you to bring this processing fee?
A. Mrs. Evelyn Ty, Sir.
Q. Now, when you came back what happened?
A. She was not at the office so she called up by phone and told us to give the money, Sir.
Q. And to whom did to give the money?
A. Beth Corpuz, Sir.16

From the foregoing testimony, it is clear that all appellant did was receive the processing fees upon instruction of Mrs.
Reyes. She neither convinced the private complainants to give their money nor promised them employment abroad.

Moreover, as stated in the last sentence of Section 6 of RA 8042, the persons who may be held liable for illegal
recruitment are the principals, accomplices and accessories. In case of juridical persons, the officers having control,
management or direction of their business shall be liable.

In the case at bar, we have carefully reviewed the records of the case and found that the prosecution failed to establish
that appellant, as secretary, had control, management or direction of the recruitment agency. Appellant started her
employment with the agency on May 1, 1998 and she was tasked to hold and document employment contracts from the
foreign employers.17 She did not entertain applicants and she had no discretion over how the business was
managed.18 The trial courts finding that appellant, being the secretary of the agency, had control over its business, is
not only non sequitur but has no evidentiary basis.

An employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with
his employer, if it is shown that he actively and consciously participated in illegal recruitment. Settled is the rule that
the existence of the corporate entity does not shield from prosecution the corporate agent who knowingly and
intentionally causes the corporation to commit a crime. The corporation obviously acts, and can act, only by and
through its human agents, and it is their conduct which the law must deter. The employee or agent of a corporation
engaged in unlawful business naturally aids and abets in the carrying on of such business and will be prosecuted as
principal if, with knowledge of the business, its purpose and effect, he consciously contributes his efforts to its conduct
and promotion, however slight his contribution may be. The law of agency, as applied in civil cases, has no application
in criminal cases, and no man can escape punishment when he participates in the commission of a crime upon the
ground that he simply acted as an agent of any party. The culpability of the employee therefore hinges on his
knowledge of the offense and his active participation in its commission. Where it is shown that the employee was
merely acting under the direction of his superiors and was unaware that his acts constituted a crime, he may not be held
criminally liable for an act done for and in behalf of his employer.19

Anent the issue of whether or not appellant knowingly and intentionally participated in the commission of the crime
charged, we find that she did not.

In the appreciation of evidence in criminal cases, it is a basic tenet that the prosecution has the burden of proof in
establishing the guilt of the accused for the offense with which he is charged.20 Ei incumbit probation qui dicit non qui
negat, i.e., "he who asserts, not he who denies, must prove."21 The conviction of appellant must rest not on the
weakness of his defense, but on the strength of the prosecutions evidence.22
In the case at bar, the prosecution failed to adduce sufficient evidence to prove appellants active participation in the
illegal recruitment activities of the agency. As already established, appellant received the processing fees of the private
complainants for and in behalf of Mrs. Reyes who ordered her to receive the same. She neither gave an impression that
she had the ability to deploy them abroad nor convinced them to part with their money. More importantly, she had no
knowledge that the license was suspended the day before she received the money. Their failure to depart for Taiwan
was due to the suspension of the license, an event which appellant did not have control of. Her failure to refund their
money immediately upon their demand was because the money had been remitted to Mrs. Reyes on the same day she
received it from them.

While we strongly condemn the pervasive proliferation of illegal job recruiters and syndicates preying on innocent
people anxious to obtain employment abroad, nevertheless, we find the pieces of evidence insufficient to prove the
guilt of appellant beyond reasonable doubt. They do not pass the requisite moral certainty, as they admit of the
alternative inference that other persons, not necessarily the appellant, may have perpetrated the crime. Where the
evidence admits of two interpretations, one of which is consistent with guilt, and the other with innocence, the accused
must be acquitted. Indeed, it would be better to set free ten men who might be probably guilty of the crime charged
than to convict one innocent man for a crime he did not commit.23

WHEREFORE, in view of the foregoing, the decision of the Regional Trial Court Regional Trial Court of Manila,
Branch 54, in Criminal Case No. 99-176637 finding appellant Elizabeth Corpuz guilty beyond reasonable doubt of
Illegal Recruitment in Large Scale constituting economic sabotage under Sec. 6 (l) and (m) in relation to Sec. 7(b) of
R.A. No. 8042, is REVERSED and SET ASIDE. Appellant Elizabeth Corpuz is ACQUITTED of the offense charged
on the ground of reasonable doubt. The Superintendent of the Correctional Institution for Women is directed to cause
the immediate release of appellant unless she is lawfully held for another offense, and to inform this Court of the date
of her release, or the ground for her continued confinement, within ten days from notice.

SO ORDERED.
 G.R. Nos. L-57999, 58143-53 August 15, 1989

RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA, ANTONIO TANEDO, AMORSOLO

CABRERA, DOMINADOR SANTOS, ISIDRO BRACIA, RAMON DE BELEN, ERNESTO SABADO, MARTIN
MALABANAN, ROMEO HUERTO and VITALIANO PANGUE, petitioners, vs.
THE HON. JUDGE ALFREDO L. BENIPAYO and MAGSAYSAY LINES, INC., respondents.

G.R. Nos. L-64781-99 August 15, 1989

RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA, ANTONIO TANEDO, RAYMUNDO

PEREZ, AMORSOLO CABRERA, DOMINADOR SANTOS, ISIDRO BRACIA, CATALINO CASICA, VITALIANO
PANGUE, RAMON DE BELEN, EDUARDO PAGTALUNAN, ANTONIO MIRANDA, RAMON UNIANA, ERNESTO
SABADO, MARTIN MALABANAN, ROMEO HUERTO and WILFREDO CRISTOBAL, petitioners, vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, THE NATIONAL SEAMEN BOARD (now the
Philippine Overseas Employment Administration), and MAGSAYSAY LINES, INC., respondents.

These petitions ask for a re-examination of this Court's precedent setting decision in Vir-Jen Shipping and Marine
Services Inc. v. National Labor Relations Commission, et al. (125 SCRA 577 [1983]). On constitutional, statutory, and
factual grounds, we find no reason to disturb the doctrine in Vir-Jen Shipping and to turn back the clock of progress for
sea-based overseas workers. The experience gained in the past few years shows that, following said doctrine, we
should neither deny nor diminish the enjoyment by Filipino seamen of the same rights and freedoms taken for granted
by other working-men here and abroad.

The cases at bar involve a group of Filipino seamen who were declared by the defunct National Seamen Board (NSB)
guilty of breaching their employment contracts with the private respondent because they demanded, upon the
intervention and assistance of a third party, the International Transport Worker's Federation (ITF), the payment of
wages over and above their contracted rates without the approval of the NSB. The petitioners were ordered to
reimburse the total amount of US$91,348.44 or its equivalent in Philippine Currency representing the said over-
payments and to be suspended from the NSB registry for a period of three years. The National Labor Relations
Commission (NLRC) affirmed the decision of the NSB.

In a corollary development, the private respondent, for failure of the petitioners to return the overpayments made to
them upon demand by the former, filed estafa charges against some of the petitioners. The criminal cases were
eventually consolidated in the sala of then respondent Judge Alfredo Benipayo. Hence, these consolidated petitions,
G.R. No. 64781-99 and G.R. Nos. 57999 and 58143-53, which respectively pray for the nullification of the decisions of
the NLRC and the NSB, and the dismissal of the criminal cases against the petitioners.

The facts are found in the questioned decision of the NSB in G.R. No. 64781-99.

From the records of this case it appears that the facts established and/or admitted by the parties are the following:
that on different dates in 1977 and 1978 respondents entered into separate contracts of employment (Exhs. "B" to
"B-17", inclusive) with complainant (private respondent) to work aboard vessels owned/operated/manned by the
latter for a period of 12 calendar months and with different rating/position, salary, overtime pay and allowance,
hereinbelow specified: ...; that aforesaid employment contracts were verified and approved by this Board; that on
different dates in April 1978 respondents (petitioners) joined the M/V "GRACE RIVER"; that on or about October
30, 1978 aforesaid vessel, with the respondents on board, arrived at the port of Vancouver, Canada; that at this
port respondent received additional wages under rates prescribed by the Intemational Transport Worker's
Federation (ITF) in the total amount of US$98,261.70; that the respondents received the amounts appearing
opposite their names, to wit: ...; that aforesaid amounts were over and above the rates of pay of respondents as
appearing in their employment contracts approved by this Board; that on November 10, 1978, aforesaid vessel,
with respondent on board, left Vancouver, Canada for Yokohama, Japan; that on December 14, 1978, while
aforesaid vessel, was at Yura, Japan, they were made to disembark. (pp. 64-66, Rollo)

Furthermore, according to the petitioners, while the vessel was docked at Nagoya, Japan, a certain Atty. Oscar Torres
of the NSB Legal Department boarded the vessel and called a meeting of the seamen including the petitioners, telling
them that for their own good and safety they should sign an agreement prepared by him on board the vessel and that if
they do, the cases filed against them with NSB on November 17, 1978 would be dismissed. Thus, the petitioners signed
the. "Agreement" dated December 5, 1978. (Annex C of Petition) However, when they were later furnished xerox
copies of what they had signed, they noticed that the line "which amount(s) was/were received and held by
CREWMEMBERS in trust for SHIPOWNERS" was inserted therein, thereby making it appear that the amounts given
to the petitioners representing the increase in their wages based on ITF rates were only received by them in trust for the
private respondent.

When the vessel reached Manila, the private respondent demanded from the petitioners the "overpayments" made to
them in Canada. As the petitioners refused to give back the said amounts, charges were filed against some of them with
the NSB and the Professional Regulations Commission. Estafa charges were also filed before different branches of the
then Court of First Instance of Manila which, as earlier stated, were subsequently consolidated in the sala of the
respondent Judge Alfredo Benipayo and which eventually led to G.R. Nos. 57999 and 58143-53.
In G.R. Nos. 64781-99, the petitioners claimed before the NSB that contrary to the private respondent's allegations,
they did not commit any illegal act nor stage a strike while they were on board the vessel; that the "Special Agreement"
entered into in Vancouver to pay their salary differentials is valid, having been executed after peaceful negotiations.
Petitioners further argued that the amounts they received were in accordance with the provision of law, citing among
others, Section 18, Rule VI, Book I of the Rules and Regulations Implementing the Labor Code which provides that
"the basic minimum salary of seamen shall not be less than the prevailing minimum rates established by the
International Labor Organization (ILO) or those prevailing in the country whose flag the employing vessel carries,
whichever is higher ..."; and that the "Agreement" executed in Nagoya, Japan had been forced upon them and that
intercalations were made to make it appear that they were merely trustees of the amounts they received in Vancouver.

On the other hand, the private respondent alleged that the petitioners breached their employment contracts when they,
acting in concert and with the active participations of the ITF while the vessel was in Vancouver, staged an illegal
strike and by means of threats, coercion and intimidation compelled the owners of the vessel to pay to them various
sums totalling US$104,244.35; that the respondent entered into the "Special Agreement" to pay the petitioners' wage
differentials because it was under duress as the vessel would not be allowed to leave Vancouver unless the said
agreement was signed, and to prevent the shipowner from incurring further delay in the shipment of goods; and that in
view of petitioners' breach of contract, the latter's names must be removed from the NSB's Registry and that they
should be ordered to return the amounts they received over and above their contracted rates.

The respondent NSB ruled that the petitioners were guilty of breach of contract because despite subsisting and valid
NSB-approved employment contracts, the petitioners sought the assistance of a third party (ITF) to demand from the
private respondent wages in accordance with the ITF rates, which rates are over and above their rates of pay as
appearing in their NSB-approved contracts. As bases for this conclusion, the NSB stated:

1) The fact that respondents sought the aid of a third party (ITF) and demanded for wages and overtime pay
based on ITF rates is shown in the entries of their respective Pay-Off Clearance Slips which were marked as
their Exhs. "1" to "18", and we quote "DEMANDED ITF WAGES, OVERTIME, DIFFERENTIALS APRIL TO
OCTOBER 1978". Respondent Suzara admitted that the entries in his Pay-Off Clearance Slip (Exh. "1") are
correct (TSN., p. 16, Dec. 6, 1979).lwph1.t Moreover, it is the policy (reiterated very often) by the ITF that it
does not interfere in the affairs of the crewmembers and masters and/or owners of a vessel unless its assistance is
sought by the crewmembers themselves. Under this pronounced policy of the ITF, it is reasonable to assume that
the representatives of the ITF in Vancouver, Canada assisted and intervened by reason of the assistance sought
by the latter.

2) The fact that the ITF assisted and intervened for and in behalf of the respondents in the latter's demand for
higher wages could be gleaned from the answer of the respondents when they admitted that the ITF acted in their
behalf in the negotiations for increase of wages. Moreover, respondent Cesar Dimaandal admitted that the ITF
differential pay was computed by the ITF representative (TSN, p. 7, Dec. 12, 1979)

3) The fact that complainant and the owner/operator of the vessel were compelled to sign the Special Agreement
(Exh. "20") and to pay ITF differentials to respondents in order not to delay the departure of the vessel and to
prevent further losses is shown in the "Agreement" (Exhs. "R-21") ... (pp. 69-70, Rollo)

The NSB further said:

While the Board recognizes the rights of the respondents to demand for higher wages, provided the means are
peaceful and legal, it could not, however, sanction the same if the means employed are violent and illegal. In the
case at bar, the means employed are violent and illegal for in demanding higher wages the respondents sought
the aid of a third party and in turn the latter intervened in their behalf and prohibited the vessel from sailing
unless the owner and/or operator of the vessel acceded to respondents' demand for higher wages. To avoid
suffering further incalculable losses, the owner and/or operator of the vessel had no altemative but to pay
respondents' wages in accordance with the ITF scale. The Board condemns the act of a party who enters into a
contract and with the use of force/or intimidation causes the other party to modify said contract. If the
respondents believe that they have a valid ground to demand from the complainant a revision of the terms of their
contracts, the same should have been done in accordance with law and not thru illegal means. (at p. 72, Rollo).

Although the respondent NSB found that the petitioners were entitled to the payment of earned wages and overtime
pay/allowance from November 1, 1978 to December 14, 1978, it nevertheless ruled that the computation should be
based on the rates of pay as appearing in the petitioners' NSB-approved contracts. It ordered that the amounts to which
the petitioners are entitled under the said computation should be deducted from the amounts that the petitioners must
return to the private respondent.

On appeal, the NLRC affirmed the NSB's findings. Hence, the petition in G.R. Nos. 64781-99.

Meanwhile, the petitioners in G.R. Nos. 57999 and 58143-53 moved to quash the criminal cases of estafa filed against
them on the ground that the alleged crimes were committed, if at all, in Vancouver, Canada and, therefore, Philippine
courts have no jurisdiction. The respondent judge denied the motion. Hence, the second petition.
The principal issue in these consolidated petitions is whether or not the petitioners are entitled to the amounts they
received from the private respondent representing additional wages as determined in the special agreement. If they are,
then the decision of the NLRC and NSB must be reversed. Similarly, the criminal cases of estafa must be dismissed
because it follows as a consequence that the amounts received by the petitioners belong to them and not to the private
respondent.

In arriving at the questioned decision, the NSB ruled that the petitioners are not entitled to the wage differentials as
determined by the ITF because the means employed by them in obtaining the same were violent and illegal and
because in demanding higher wages the petitioners sought the aid of a third party, which, in turn, intervened in their
behalf and prohibited the vessel from sailing unless the owner and/or operator of the vessel acceded to respondents'
demand for higher wages. And as proof of this conclusion, the NSB cited the following: (a) the entries in the
petitioners Pay-Off Clearance Slip which contained the phrase "DEMANDED ITF WAGES ..."; (b) the alleged policy
of the ITF in not interfering with crewmembers of a vessel unless its intervention is sought by the crewmembers
themselves; (c), the petitioners' admission that ITF acted in their behalf; and (d) the fact that the private respondent was
compelled to sign the special agreement at Vancouver, Canada.

There is nothing in the public and private respondents' pleadings, to support the allegations that the petitioners used
force and violence to secure the special agreement signed in Vancouver. British Columbia. There was no need for any
form of intimidation coming from the Filipino seamen because the Canadian Brotherhood of Railways and Transport
Workers (CBRT), a strong Canadian labor union, backed by an international labor federation was actually doing all the
influencing not only on the ship-owners and employers but also against third world seamen themselves who, by
receiving lower wages and cheaper accommodations, were threatening the employment and livelihood of seamen from
developed nations.

The bases used by the respondent NSB to support its decision do not prove that the petitioners initiated a conspiracy
with the ITF or deliberately sought its assistance in order to receive higher wages. They only prove that when ITF acted
in petitioners' behalf for an increase in wages, the latter manifested their support. This would be a logical and natural
reaction for any worker in whose benefit the ITF or any other labor group had intervened. The petitioners admit that
while they expressed their conformity to and their sentiments for higher wages by means of placards, they,
nevertheless, continued working and going about their usual chores. In other words, all they did was to exercise their
freedom of speech in a most peaceful way. The ITF people, in turn, did not employ any violent means to force the
private respondent to accede to their demands. Instead, they simply applied effective pressure when they intimated the
possibility of interdiction should the shipowner fail to heed the call for an upward adjustment of the rates of the
Filipino seamen. Interdiction is nothing more than a refusal of ITF members to render service for the ship, such as to
load or unload its cargo, to provision it or to perform such other chores ordinarily incident to the docking of the ship at
a certain port. It was the fear of ITF interdiction, not any action taken by the seamen on board the vessel which led the
shipowners to yield.

The NSB's contusion that it is ITF's policy not to intervene with the plight of crewmembers of a vessel unless its
intervention was sought is without basis. This Court is cognizant of the fact that during the period covered by the labor
controversies in Wallem Philippines Shipping, Inc. v. Minister of Labor (102 SCRA 835 [1981]; Vir-Jen Shipping and
Marine Services, Inc. v. NLRC (supra) and these consolidated petitions, the ITF was militant worldwide especially in
Canada, Australia, Scandinavia, and various European countries, interdicting foreign vessels and demanding wage
increases for third world seamen. There was no need for Filipino or other seamen to seek ITF intervention. The ITF
was waiting on its own volition in all Canadian ports, not particularly for the petitioners' vessel but for all ships
similarly situated. As earlier stated, the ITF was not really acting for the petitioners out of pure altruism. The ITF was
merely protecting the interests of its own members. The petitioners happened to be pawns in a higher and broader
struggle between the ITF on one hand and shipowners and third world seamen, on the other. To subject our seamen to
criminal prosecution and punishment for having been caught in such a struggle is out of the question.

As stated in Vir-Jen Shipping (supra):

The seamen had done no act which under Philippine law or any other civilized law would be termed illegal,
oppressive, or malicious. Whatever pressure existed, it was mild compared to accepted and valid modes of labor
activity. (at page 591)

Given these factual situations, therefore, we cannot affirm the NSB and NLRC's finding that there was violence,
physical or otherwise employed by the petitioners in demanding for additional wages. The fact that the petitioners
placed placards on the gangway of their ship to show support for ITF's demands for wage differentials for their own
benefit and the resulting ITF's threatened interdiction do not constitute violence. The petitioners were exercising their
freedom of speech and expressing sentiments in their hearts when they placed the placard We Want ITF Rates." Under
the facts and circumstances of these petitions, we see no reason to deprive the seamen of their right to freedom of
expression guaranteed by the Philippine Constitution and the fundamental law of Canada where they happened to
exercise it.

As we have ruled in Wallem Phil. Shipping Inc. v. Minister of Labor, et al. supra:

Petitioner claims that the dismissal of private respondents was justified because the latter threatened the ship
authorities in acceding to their demands, and this constitutes serious misconduct as contemplated by the Labor
 Code. This contention is now well-taken. The records fail to establish clearly the commission of any threat. But
even if there had been such a threat, respondents' behavior should not be censured because it is but natural for
them to employ some means of pressing their demands for petitioner, who refused to abide with the terms of the
Special Agreement, to honor and respect the same. They were only acting in the exercise of their rights, and to
deprive them of their freedom of expression is contrary to law and public policy. ... (at page 843)

We likewise, find the public respondents' conclusions that the acts of the petitioners in demanding and receiving wages
over and above the rates appearing in their NSB-approved contracts is in effect an alteration of their valid and
subsisting contracts because the same were not obtained through. mutual consent and without the prior approval of the
NSB to be without basis, not only because the private respondent's consent to pay additional wages was not vitiated by
any violence or intimidation on the part of the petitioners but because the said NSB-approved form contracts are not
unalterable contracts that can have no room for improvement during their effectivity or which ban any amendments
during their term.

For one thing, the employer can always improve the working conditions without violating any law or stipulation.

We stated in the Vir-Jen case (supra) that:

The form contracts approved by the National Seamen Board are designed to protect Filipino seamen not foreign
shipowners who can take care of themselves. The standard forms embody the basic minimums which must be
incorporated as parts of the employment contract. (Section 15, Rule V, Rules and Regulations Implementing the
Labor Code).lwph1.t They are not collective bargaining agreements or immutable contracts which the
parties cannot improve upon or modify in the course of the agreed period of time. To state, therefore, that the
affected seamen cannot petition their employer for higher salaries during the 12 months duration of the contract
runs counter to estabhshed principles of labor legislation. The National Labor Relations Commission, as the
appellate tribunal from the decisions of the National Seamen Board, correctly ruled that the seamen did not
violate their contracts to warrant their dismissal. (at page 589)

It is impractical for the NSB to require the petitioners, caught in the middle of a labor struggle between the ITF and
owners of ocean going vessels halfway around the world in Vancouver, British Columbia to first secure the approval of
the NSB in Manila before signing an agreement which the employer was willing to sign. It is also totally unrealistic to
expect the petitioners while in Canada to exhibit the will and strength to oppose the ITF's demand for an increase
in their wages, assuming they were so minded.

An examination of Annex C of the petition, the agreement signed in Japan by the crewmembers of the M/V Grace
River and a certain M. Tabei, representative of the Japanese shipowner lends credence to the petitioners' claim that the
clause "which amount(s) was received and held by CREWMEMBERS in trust for SHIPOWNER" was an intercalation
added after the execution of the agreement. The clause appears too closely typed below the names of the 19 crewmen
and their wages with no similar intervening space as that which appears between all the paragraphs and the triple space
which appears between the list of crewmembers and their wages on one hand and the paragraph above which
introduces the list, on the other. The verb "were" was also inserted above the verb "was" to make the clause
grammatically correct but the insertion of "were" is already on the same line as "Antonio Miranda and 5,221.06" where
it clearly does not belong. There is no other space where the word "were" could be intercalated. (See Rollo, page 80).

At any rate, the proposition that the petitioners should have pretended to accept the increased wages while in
Vancouver but returned them to the shipowner when they reached its country, Japan, has already been answered earlier
by the Court:

Filipino seamen are admittedly as competent and reliable as seamen from any other country in the world.
Otherwise, there would not be so many of them in the vessels sailing in every ocean and sea on this globe. It is
competence and reliability, not cheap labor that makes our seamen so greatly in demand. Filipino seamen have
never demanded the same high salaries as seamen from the United States, the United Kingdom, Japan and other
developed nations. But certainly they are entitled to government protection when they ask for fair and decent
treatment by their employer and when they exercise the right to petition for improved terms of employment,
especially when they feel that these are sub-standard or are capable of improvement according to internationally
accepted rules. In the domestic scene, there are marginal employers who prepare two sets of payrolls for their
employees one in keeping with minimum wages and the other recording the sub-standard wages that the
employees really receive. The reliable employers, however, not only meet the minimums required by fair labor
standards legislation but even go away above the minimums while earning reasonable profits and prospering. The
same is true of international employment. There is no reason why this court and the Ministry of Labor and
Employment or its agencies and commissions should come out with pronouncements based on the standards and
practices of unscrupulous or inefficient shipowners, who claim they cannot survive without resorting to tricky and
deceptive schemes, instead of Government maintaining labor law and jurisprudence according to the practices of
honorable, competent, and law-abiding employers, domestic or foreign. (Vir-Jen Shipping, supra, pp. 587-588)

It is noteworthy to emphasize that while the Intemational Labor Organization (ILO) set the minimum basic wage of
able seamen at US$187.00 as early as October 1976, it was only in 1979 that the respondent NSB issued Memo
Circular No. 45, enjoining all shipping companies to adopt the said minimum basic wage. It was correct for the
respondent NSB to state in its decision that when the petitioners entered into separate contracts between 1977-1978, the
monthly minimum basic wage for able seamen ordered by NSB was still fixed at US$130.00. However, it is not the
fault of the petitioners that the NSB not only violated the Labor Code which created it and the Rules and Regulations
Implementing the Labor Code but also seeks to punish the seamen for a shortcoming of NSB itself.

Article 21(c) of the Labor Code, when it created the NSB, mandated the Board to "(O)btain the best possible terms and
conditions of employment for seamen."

Section 15, Rule V of Book I of the Rules and Regulations Implementing the Labor Code provides:

Sec. 15. Model contract of employment. The NSB shall devise a model contract of employment which shall
embody all the requirements of pertinent labor and social legislations and the prevailing standards set by
applicable International Labor Organization Conventions. The model contract shall set the minimum standards
of the terms and conditions to govern the employment of Filipinos on board vessels engaged in overseas trade.
All employers of Filipinos shall adopt the model contract in connection with the hiring and engagement of the
services of Filipino seafarers, and in no case shall a shipboard employment contract be allowed where the same
provides for benefits less than those enumerated in the model employment contract, or in any way conflicts with
any other provisions embodied in the model contract.

Section 18 of Rule VI of the same Rules and Regulations provides:

Sec. 18. Basic minimum salary of able-seamen. The basic minimum salary of seamen shall be not less than
the prevailing minimxun rates established by the International Labor Organization or those prevailing in the
country whose flag the employing vessel carries, whichever is higher. However, this provision shall not apply if
any shipping company pays its crew members salaries above the minimum herein provided.

Section 8, Rule X, Book I of the Omnibus Rules provides:

Section 8. Use of standard format of service agreement. The Board shall adopt a standard format of service
agreement in accordance with pertinent labor and social legislation and prevailing standards set by applicable
International Labor Organization Conventions. The standard format shall set the minimum standard of the terms
and conditions to govern the employment of Filipino seafarers but in no case shall a shipboard employment
contract (sic), or in any way conflict with any other provision embodied in the standard format.

It took three years for the NSB to implement requirements which, under the law, they were obliged to follow and
execute immediately. During those three years, the incident in Vancouver happened. The terms and conditions agreed
upon in Vancouver were well within ILO rates even if they were above NSB standards at the time.

The sanctions applied by NSB and affirmed by NLRC are moreover not in keeping with the basic premise that this
Court stressed in the Vir-Jen Shipping case (supra) that the Ministry now the Department of Labor and Employment
and all its agencies exist primarily for the workingman's interest and the nation's as a whole.

Implicit in these petitions and the only reason for the NSB to take the side of foreign shipowners against Filipino
seamen is the "killing the goose which lays the golden eggs" argument. We reiterate the ruling of the Court in Vir-Jen
Shipping (supra)

There are various arguments raised by the petitioners but the common thread running through all of them is the
contention, if not the dismal prophecy, that if the respondent seamen are sustained by this Court, we would in
effect "kill the hen that lays the golden egg." In other words, Filipino seamen, admittedly among the best in the
world, should remain satisfied with relatively lower if not the lowest, international rates of compensation, should
not agitate for higher wages while their contracts of employment are subsisting, should accept as sacred, iron
clad, and immutable the side contracts which require: them to falsely pretend to be members of international
labor federations, pretend to receive higher salaries at certain foreign ports only to return the increased pay once
the ship leaves that port, should stifle not only their right to ask for improved terms of employment but their
freedom of speech and expression, and should suffer instant termination of employment at the slightest sign of
dissatisfaction with no protection from their Government and their courts. Otherwise, the petitioners contend that
Filipinos would no longer be accepted as seamen, those employed would lose their jobs, and the still
unemployed would be left hopeless.

This is not the first time and it will not be the last where the threat of unemployment and loss of jobs would be used to
argue against the interests of labor; where efforts by workingmen to better their terms of employment would be
characterized as prejudicing the interests of labor as a whole.

xxx xxx xxx

Unionism, employers' liability acts, minimum wages, workmen's compensation, social security and collective
bargaining to name a few were all initially opposed by employers and even well meaning leaders of government
and society as "killing the hen or goose which lays the golden eggs." The claims of workingmen were described
as outrageously injurious not only to the employer but more so to the employees themselves before these claims
 or demands were established by law and jurisprudence as "rights" and before these were proved beneficial to
management, labor, and the national as a whole beyond reasonable doubt.

The case before us does not represent any major advance in the rights of labor and the workingmen. The private
respondents merely sought rights already established. No matter how much the petitioner-employer tries to
present itself as speaking for the entire industry, there is no evidence that it is typical of employers hiring
Filipino seamen or that it can speak for them.

The contention that manning industries in the Philippines would not survive if the instant case is not decided in
favor of the petitioner is not supported by evidence. The Wallem case was decided on February 20, 1981. There
have been no severe repercussions, no drying up of employment opportunities for seamen, and none of the dire
consequences repeatedly emphasized by the petitioner. Why should Vir-Jen be an exception?

The wages of seamen engaged in international shipping are shouldered by the foreign principal. The local
manning office is an agent whose primary function is recruitment and who usually gets a lump sum from the
shipowner to defray the salaries of the crew. The hiring of seamen and the determination of their compensation
is subject to the interplay of various market factors and one key factor is how much in terms of profits the local
manning office and the foreign shipowner may realize after the costs of the voyage are met. And costs include
salaries of officers and crew members. (at pp. 585-586)

The Wallem Shipping case, was decided in 1981. Vir-Jen Shipping was decided in 1983. It is now 1989. There has'been
no drying up of employment opportunities for Filipino seamen. Not only have their wages improved thus leading ITF
to be placid and quiet all these years insofar as Filipinos are concerned but the hiring of Philippine seamen is at its
highest level ever.

Reporting its activities for the year 1988, the Philippine Overseas Employment Administration (POEA) stated that
there will be an increase in demand for seamen based overseas in 1989 boosting the number to as high as 105,000. This
will represent a 9.5 percent increase from the 1988 aggregate. (Business World, News Briefs, January 11, 1989 at page
2) According to the POEA, seabased workers numbering 95,913 in 1988 exceeded by a wide margin of 28.15 percent
the year end total in 1987. The report shows that sea-based workers posted bigger monthly increments compared to
those of landbased workers. (The Business Star, Indicators, January 11, 1988 at page 2)

Augmenting this optimistic report of POEA Administrator Tomas Achacoso is the statement of Secretary of Labor
Franklin M. Drilon that the Philippines has a big jump over other crewing nations because of the Filipinos' abilities
compared with any European or westem crewing country. Drilon added that cruise shipping is also a growing market
for Filipino seafarers because of their flexibility in handling odd jobs and their expertise in handling almost all types of
ships, including luxury liners. (Manila Bulletin, More Filipino Seamen Expected Development, December 27, 1988 at
page 29).lwph1.t Parenthetically, the minimum monthly salary of able bodied seamen set by the ILO and adhered
to by the Philippines is now $276.00 (id.) more than double the $130.00 sought to be enforced by the public
respondents in these petitions.

The experience from 1981 to the present vindicates the finding in Vir-Jen Shipping that a decision in favor of the
seamen would not necessarily mean severe repercussions, drying up of employment opportunities for seamen, and
other dire consequences predicted by manning agencies and recruiters in the Philippines.

From the foregoing, we find that the NSB and NLRC committed grave abuse of discretion in finding the petitioners
guilty of using intimidation and illegal means in breaching their contracts of employment and punishing them for these
alleged offenses. Consequently, the criminal prosecutions for estafa in G.R. Nos. 57999 and 58143-53 should be
dismissed.

WHEREFORE, the petitions are hereby GRANTED. The decisions of the National Seamen Board and National Labor
Relations Commission in G. R. Nos. 64781-99 are REVERSED and SET ASIDE and a new one is entered holding the
petitioners not guilty of the offenses for which they were charged. The petitioners' suspension from the National
Seamen Board's Registry for three (3) years is LIFTED. The private respondent is ordered to pay the petitioners their
earned but unpaid wages and overtime pay/allowance from November 1, 1978 to December 14, 1978 according to the
rates in the Special Agreement that the parties entered into in Vancouver, Canada.

The criminal cases for estafa, subject matter of G. R. Nos. 57999 and 58143-53, are ordered DISMISSED.

SO ORDERED.
PRIL Overseas Employment Contract 95
Suzara vs Benipayo (1989)

Facts:
1. Suzara et al entered into employment contracts with Magsaysay lines to work aboard vessels
owned/operated/manned by the latter for a period of 12 calendar months and with different rating/position,
salary, overtime pay and allowance. The contracts were approved by the National Seamen Board.
2. Upon arrival at the port of Vancouver, Canada, demands for increase in wages were made through the help of the
International Transport Workers Federation (ITF), a militant worldwide especially in Canada, Australia,
Scandinavia, and various European countries, interdicting foreign vessels and demanding wage increases for third
world seamen.
3. Wages were increased but complaints were filed by Magsaysay before the NSB. NSB ordered the return of the
additional wages paid for being obtained thru violent means and for lacking NSB approval. NLRC affirmed the
order.
4. Meanwhile, Magsaysay filed estafa charges against the seamen.
5. In this petition, the seamen seeks for the reversal of the NLRC decision and the quashal of the complaints for estafa.

Issue:
Whether the increase in wages needed the approval of the NSB to be legal (NO)

Ratio:
1. There is nothing in the record supporting the finding that the workers resorted to violent means to obtain an
increase in their wages.
2. It is impractical for the NSB to require the petitioners, caught in the middle of a labor struggle between the ITF and
owners of ocean going vessels halfway around the world in Vancouver, British Columbia to first secure the
approval of the NSB in Manila before signing an agreement which the employer was willing to sign
3. Accdg to the case of Vir-Jen: The form contracts approved by the National Seamen Board are designed to protect
Filipino seamen not foreign shipowners who can take care of themselves. The standard forms embody the basic
minimums which must be incorporated as parts of the employment contract. (Section 15, Rule V, Rules and
Regulations Implementing the Labor Code).lwph1.t They are not collective bargaining agreements or
immutable contracts which the parties cannot improve upon or modify in the course of the agreed period of time
4. The NSB, the Department of Labor and Employment and all its agencies exist primarily for the workingman's
interest and the nation's as a whole.