DAEL CHURCHILL T.

GERONG Labor Law Review

G.R. No. 165935 February 8, 2012 BRIGHT MARITIME CORPORATION (BMC)/DESIREE P. TENORIO, Petitioners, vs.RICARDO B. FANTONIAL, Respondent. D E C I S I O N PERALTA, J.: This is a petition for review on certiorari1 of the Decision of the Court of Appeals in CA-G.R. SP No. 67571, dated October 25, 2004, reversing and setting aside the Decision of the National Labor Relations Commission (NLRC), and reinstating the Decision of the Labor Arbiter finding that respondent Ricardo B. Fantonial was illegally dismissed, but the Court of Appeals modified the award of damages. The facts are as follows: On January 15, 2000, a Contract of Employment2 was executed by petitioner Bright Maritime Corporation (BMC), a manning agent, and its president, petitioner Desiree P. Tenorio, for and in behalf of their principal, Ranger Marine S.A., and respondent Ricardo B. Fantonial, which contract was verified and approved by the Philippine Overseas Employment Administration (POEA) on January 17, 2000. The employment contract provided that respondent shall be employed as boatswain of the foreign vessel M/V AUK for one year, with a basic monthly salary of US$450, plus an allowance of US$220. The contract also provided for a 90 hours per month of overtime with pay and a vacation leave with pay of US$45 per month. Respondent was made to undergo a medical examination at the Christian Medical Clinic, which was petitioners accredited medical clinic. Respondent was issued a Medical Certificate 3 dated January 17, 2000, which certificate had the phrase "FIT TO WORK" stamped on its lower and upper portion. At about 3:30 p.m. of January 17, 2000, respondent, after having undergone the pre-departure orientation seminar and being equipped with the necessary requirements and documents for travel, went to the Ninoy Aquino International Airport upon instruction of petitioners. Petitioners told respondent that he would be departing on that day, and that a liaison officer would be delivering his plane ticket to him. At about 4:00 p.m., petitioners liaison officer met respondent at the airport and told him that he could not leave on that day due to some defects in his medical certificate. The liaison officer instructed respondent to return to the Christian Medical Clinic. Respondent went back to the Christian Medical Clinic the next day, and he was told by the examining physician, Dr. Lyn dela Cruz-De Leon, that there was nothing wrong or irregular with his medical certificate. Respondent went to petitioners office for an explanation, but he was merely told to wait for their call, as he was being lined-up for a flight to the ship's next port of call. However, respondent never got a call from petitioners. On May 16, 2000, respondent filed a complaint against petitioners for illegal dismissal, payment of salaries for the unexpired portion of the employment contract and for the award of moral, exemplary, and actual damages as well as attorneys fees before the Regional Arbitration Branch No. 7 of the NLRC in Cebu City. 4 In their Position Paper,5 petitioners stated that to comply with the standard requirements that only those who meet the standards of medical fitness have to be sent on board the vessel, respondent was referred to their accredited medical clinic, the Christian Medical Clinic, for pre-employment medical examination on January 17, 2000, the same day when respondent was supposed to fly to Germany to join the vessel. Unfortunately, respondent was not declared fit to work on January 17, 2000 due to some medical problems. Petitioners submitted the Affidavit6 of Dr. Lyn dela Cruz-De Leon, stating that the said doctor examined respondent on January 17, 2000; that physical and laboratory results were all within normal limits except for the finding, after chest x-ray, of Borderline Heart Size, and that respondent was positive to Hepatitis B on screening; that respondent underwent ECG to check if he had any heart problem, and the result showed left axis deviation. Dr. De Leon stated that she requested for a Hepatitis profile, which was done on January 18, 2000; that on January 20, 2000, the result of the Hepatitis profile showed non-infectious Hepatitis B. Further, Dr. De Leon stated that respondent was declared fit to work only on January 21, 2000; however, the date of the Medical Certificate was January 17, 2000, which was the date when she started to examine the patient per standard operating procedure. Petitioners argued that since respondent was declared fit to work only on January 21, 2000, he could not join the vessel anymore as it had left the port in Germany. Respondent was advised to wait for the next vacancy for boatswain, but he failed to report to petitioners office, and he gave them an incorrect telephone number. During the mandatory conference/conciliation stage of this case, petitioners offered respondent to join one of their vessels, but he refused. Petitioners further argued that they cannot be held liable for illegal dismissal as the contract of employment had not yet commenced based on Section 2 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA Memorandum Circular No. 055-96), which states: SEC 2. COMMENCEMENT/DURATION OF CONTRACT A. The employment contract between the employer and the seafarer shall commence upon actual departure of the seafarer from the airport or seaport in the point of hire and with a POEA approved contract. It shall be effective until the seafarers date of arrival at the point of hire upon termination of his employment pursuant to Section 18 of this Contract. Petitioners asserted that since respondent was not yet declared fit to work on January 17, 2000, he was not able to leave on the scheduled date of his flight to Germany to join the vessel. With his non-departure, the employment contract was not commenced; hence, there is no illegal dismissal to speak of. Petitioners prayed for the dismissal of the complaint. On September 25, 2000, Labor Arbiter Ernesto F. Carreon rendered a Decision 7 in favor of respondent. The pertinent portion of the decision reads: Unarguably, the complainant and respondents have already executed a contract of employment which was duly approved by the POEA. There is nothing left for the validity and enforceability of the contract except compliance with what are agreed upon therein and to all their consequences. Under the contract of employment, the respondents are under obligation to employ the complainant on board M/V AUK for twelve months with a monthly salary of 450 US$ and 220 US$ allowance. The respondents failed to present plausible reason why they have to desist from complying with their obligation under the contract. The allegation of the respondents that the complainant was unfit to work is ludicrous. Firstly, the respondents' accredited medical clinic had issued a medical certificate showing that the complainant was fit to work. Secondly, if the complainant was not fit to work, a contract of employment would not have been executed and approved by the POEA. We are not also swayed by the argument of the respondents that since the complainant did not actually depart from Manila his contract of employment can be withdrawn because he has not yet commenced his employment. The

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commencement of the employment is not one of those requirements in order to make the contract of employment consummated and enforceable between the parties, but only as a gauge for the payment of salary. In this case, while it is true that the complainant is not yet entitled to the payment of wages because then his employment has not yet commenced, nevertheless, the same did not relieve the respondents from fulfilling their obligation by unilaterally revoking the contract as the same amounted to pre-termination of the contract without just or authorized cause perforce, we rule to be constitutive of illegal dismissal. Anent our finding of illegal dismissal, we condemn the respondent corporation to pay the complainant three (3) months salary and the refund of his placement fee, including documentation and other actual expenses, which we fixed at one month pay. The granted claims are computed as follows:
US$670 x 4 months US$ 2,680.00 WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Bright Maritime Corporation to pay the complainant Ricardo Fantonial the peso equivalent at the time of actual payment of US$ 2,680.00. The other claims and the case against respondent Desiree P. Tenorio are dismissed for lack of merit.8

Petitioners appealed the decision of the Labor Arbiter to the NLRC. On May 31, 2001, the NLRC, Fourth Division, rendered a Decision 9 reversing the decision of the Labor Arbiter. The dispositive portion of the NLRC decision reads:
WHEREFORE, premises considered, the decision of Labor Arbiter Ernesto F. Carreon, dated 25 September 2000, is SET ASIDE and a new one is entered DISMISSING the complaint of the complainant for lack of merit.SO ORDERED.10

The NLRC held that the affidavit of Dr. Lyn dela Cruz-De Leon proved that respondent was declared fit to work only on January 21, 2000, when the vessel was no longer at the port of Germany. Hence, respondents failure to depart on January 17, 2000 to join the vessel M/V AUK in Germany was due to respondents health. The NLRC stated that as a recruitment agency, petitioner BMC has to protect its name and goodwill, so that it must ensure that an applicant for employment abroad is both technically equipped and physically fit because a labor contract affects public interest. Moreover, the NLRC stated that the Labor Arbiters decision ordering petitioners to refund respondents placement fee and other actual expenses, which was fixed at one month pay in the amount of US$670.00, does not have any bases in law, because in the deployment of seafarers, the manning agency does not ask the applicant for a placement fee. Hence, respondent is not entitled to the said amount. Respondent filed a motion for reconsideration of the NLRC decision, which motion was denied in a Resolution 11 dated July 23, 2001. Respondent filed a petition for certiorari before the Court of Appeals, alleging that the NLRC committed grave abuse of discretion in rendering the Decision dated May 31, 2001and the Resolution dated July 23, 2001. On March 12, 2002, respondents counsel filed a Manifestation with Motion for Substitution of Parties due to the death of respondent on November 15, 2001, which motion was granted by the Court of Appeals. On October 25, 2004, the Court of Appeals rendered a Decision, the dispositive portion of which reads: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us REVERSING and SETTING ASIDE the May 31, 2001 Decision and the July 23, 2001 Resolution of the NLRC, Fourth Division, and REINSTATING the September 25, 2000 Decision of the Labor Arbiter with the modification that the placement fee and other expenses equivalent to one (1) month salary is deleted and that the private respondent Bright Maritime Corporation must also pay the amounts of P30,000.00 and P10,000.00 as moral and exemplary damages, respectively, to the petitioner. 12 The Court of Appeals held that the NLRC, Fourth Division, acted with grave abuse of discretion in reversing the decision of the Labor Arbiter who found that respondent was illegally dismissed. It agreed with the Labor Arbiter that the unilateral revocation of the employment contract by petitioners amounted to pre-termination of the said contract without just or authorized cause. The Court of Appeals held that the contract of employment between petitioners and respondent had already been perfected and even approved by the POEA. There was no valid and justifiable reason for petitioners to withhold the departure of respondent on January 17, 2000. It found petitioners argument that respondent was not fit to work on the said date as preposterous, since the medical certificate issued by petitioners accredited medical clinic showed that respondent was already fit to work on the said date. The Court of Appeals stated, thus: Private respondent's contention, which was contained in the affidavit of Dr. Lyn dela Cruz-De Leon, that the Hepatitis profile was done only on January 18, 2000 and was concluded on January 20, 2000, is of dubious merit. For how could the said examining doctor place in the medical certificate dated January 17, 2000 the words "CLASS-B NON-Infectious Hepatitis" (Rollo, p. 17) if she had not conducted the hepatitis profile? Would the private respondent have us believe that its accredited physician would fabricate medical findings? It is obvious, therefore, that the petitioner had been fit to work on January 17, 2000 and he should have been able to leave for Germany to meet with the vessel M/V AUK, had it not been for the unilateral act by private respondent of preventing him from leaving. The private respondent was merely grasping at straws in attacking the medical condition of the petitioner just so it can justify its act in preventing petitioner from leaving for abroad. 13 The Court of Appeals held that petitioners act of preventing respondent from leaving for Germany was tainted with bad faith, and that petitioners were also liable to respondent for moral and exemplary damages. Thereafter, petitioners filed this petition raising the following issues:
I WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED A SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION WHEN IT HELD THE PETITIONERS LIABLE FOR ILLEGALLY TERMINATING THE PRIVATE RESPONDENT FROM HIS EMPLOYMENT. II WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN SETTING ASIDE THE OVERWHELMING EVIDENCE SHOWING THAT THE PRIVATE RESPONDENT FAILED TO COMPLY WITH THE REQUIREMENTS SET BY THE POEA RULES REGARDING FITNESS FOR WORK.

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III WHETHER OR NOT THE HONORABLE APPELLATE COURT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT AWARDED MONETARY BENEFITS TO THE PRIVATE RESPONDENT DESPITE THE PROVISION OF THE POEA [STANDARD EMPLOYMENT CONTRACT] TO THE CONTRARY. IV WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED SERIOUS ERROR WITH REGARD TO ITS FINDINGS OF FACTS, WHICH, IF NOT CORRECTED, WOULD CERTAINLY CAUSE GRAVE OR IRREPARABLE DAMAGE OR INJURY TO THE PETITIONERS.14

The general rule that petitions for review only allow the review of errors of law by this Court is not ironclad. 15 Where the issue is shrouded by a conflict of factual perceptions by the lower court or the lower administrative body, such as the NLRC in this case, this Court is constrained to review the factual findings of the Court of Appeals. 16 Petitioners contend that the Court of Appeals erred in doubting the Affidavit of Dr. Lyn dela Cruz-De Leon, which affidavit stated that the Hepatitis profile of respondent was done only on January 18, 2000 and was concluded on January 20, 2000. Petitioners stated that they had no intention to fabricate or mislead the appellate court and the Labor Arbiter, but they had to explain the circumstances that transpired in the conduct of the medical examination. Petitioners reiterated that the medical examination was conducted on January 17, 2000 and the result was released on January 20, 2000. As explained by Dr. Lyn dela Cruz-De Leon, the date "January 17, 2000" was written on the medical examination certificate because it was the day when respondent was referred and initially examined by her. The medical examination certificate was dated January 17, 2000 not for any reason, but in accordance with a generally accepted medical practice, which was not controverted by respondent. Petitioners assert that respondents failure to join the vessel on January 17, 2000 should not be attributed to it for it was a direct consequence of the delay in the release of the medical report. Respondent was not yet declared fit to work at the time when he was supposed to be deployed on January 17, 2000, as instructed by petitioners principal. Respondents fitness to work is a condition sine qua non for purposes of deploying an overseas contract worker. Since respondent failed to qualify on the date designated by the principal for his deployment, petitioners had to find a qualified replacement considering the nature of the shipping business where delay in the departure of the vessel is synonymous to demurrage/damages on the part of the principal and on the vessels charterer. Without a clean bill of health, the contract of employment cannot be considered to have been perfected as it is wanting of an important requisite. Based on the foregoing argument of petitioners, the first issue to be resolved is whether petitioners reason for preventing respondent from leaving Manila and joining the vessel M/V AUK in Germany on January 17, 2000 is valid. The Court rules in the negative. The Court has carefully reviewed the records of the case, and agrees with the Court of Appeals that respondents Medical Certificate17 dated January 17, 2000, stamped with the words "FIT TO WORK," proves that respondent was medically fit to leave Manila on January 17, 2000 to join the vessel M/V AUK in Germany. The Affidavit of Dr. Lyn dela Cruz-De Leon that respondent was declared fit to work only on January 21, 2000 cannot overcome the evidence in the Medical Certificate dated January 17, 2000, which already stated that respondent had "Class-B Non-Infectious Hepatitis-B," and that he was fit to work. The explanation given by Dr. Lyn dela Cruz-De Leon in her affidavit that the Medical Certificate was dated January 17, 2000, since it carries the date when they started to examine the patient per standard operating procedure, does not persuade as it goes against logic and the chronological recording of medical procedures. The Medical Certificate submitted as documentary evidence18 is proof of its contents, including the date thereof which states that respondent was already declared fit to work on January 17, 2000, the date of his scheduled deployment. Next, petitioners contend that respondents employment contract was not perfected pursuant to the POEA Standard Employment Contract, which provides: SEC 2. COMMENCEMENT/DURATION OF CONTRACT A. The employment contract between the employer and the seafarer shall commence upon actual departure of the seafarer from the airport or seaport in the point of hire and with a POEA approved contract. It shall be effective until the seafarers date of arrival at the point of hire upon termination of his employment pursuant to Section 18 of this Contract. 19 Petitioners argue that, as ruled by the NLRC, since respondent did not actually depart from the Ninoy Aquino International Airport in Manila, no employer-employee relationship existed between respondent and petitioners principal, Ranger Marine S.A., hence, there is no illegal dismissal to speak of, so that the award of damages must be set aside. Petitioners assert that they did not conceal any information from respondent related to his contract of employment, from his initial application until the release of the result of his medical examination. They even tried to communicate with respondent for another shipboard assignment even after his failed deployment, which ruled out bad faith. They pray that respondents complaint be dismissed for lack of merit. Petitioners argument is partly meritorious. An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the contract, and (c) cause of the obligation. 20 The object of the contract was the rendition of service by respondent on board the vessel for which service he would be paid the salary agreed upon. Hence, in this case, the employment contract was perfected on January 15, 2000 when it was signed by the parties, respondent and petitioners, who entered into the contract in behalf of their principal, Ranger Marine S.A., thereby signifying their consent to the terms and conditions of employment embodied in the contract, and the contract was approved by the POEA on January 17, 2000. However, the employment contract did not commence, since petitioners did not allow respondent to leave on January 17, 2000 to embark the vessel M/V AUK in Germany on the ground that he was not yet declared fit to work on the day of departure, although his Medical Certificate dated January 17, 2000 proved that respondent was fit to work. In Santiago v. CF Sharp Crew Management, Inc.,21 the Court held that the employment contract did not commence when the petitioner therein, a hired seaman, was not able to depart from the airport or seaport in the point of hire; thus, no employer-employee relationship was created between the parties.

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Nevertheless, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party.22 If the reverse happened, that is, the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.23 The Court agrees with the NLRC that a recruitment agency, like petitioner BMC, must ensure that an applicant for employment abroad is technically equipped and physically fit because a labor contract affects public interest. Nevertheless, in this case, petitioners failed to prove with substantial evidence that they had a valid ground to prevent respondent from leaving on the scheduled date of his deployment. While the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.24 Petitioners act of preventing respondent from leaving and complying with his contract of employment constitutes breach of contract for which petitioner BMC is liable for actual damages to respondent for the loss of one-year salary as provided in the contract.25 The monthly salary stipulated in the contract is US$670, inclusive of allowance. The Court upholds the award of moral damages in the amount of P30,000.00, as the Court of Appeals correctly found petitioners act was tainted with bad faith,26 considering that respondents Medical Certificate stated that he was fit to work on the day of his scheduled departure, yet he was not allowed to leave allegedly for medical reasons. 1wphi1 Further, the Court agrees with the Court of Appeals that petitioner BMC is liable to respondent for exemplary damages, 27 which are imposed by way of example or correction for the public good in view of petitioners act of preventing respondent from being deployed on the ground that he was not yet declared fit to work on the date of his departure, despite evidence to the contrary. Such act, if tolerated, would prejudice the employment opportunities of our seafarers who are qualified to be deployed, but prevented to do so by a manning agency for unjustified reasons. Exemplary damages are imposed not to enrich one party or impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions.28 In this case, petitioner should be held liable to respondent for exemplary damages in the amount of P50,000.00,29 following the recent case of Claudio S. Yap v. Thenamaris Ships Management, et al., 30 instead of P10,000.00 The Court also holds that respondent is entitled to attorneys fees in the concept of damages and expenses of litigation. 31 Attorney's fees are recoverable when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest.32 Petitioners failure to deploy respondent based on an unjustified ground forced respondent to file this case, warranting the award of attorneys fees equivalent to ten percent (10%) of the recoverable amount. 33 WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 67571, dated October 25, 2004, is AFFIRMED with modification. Petitioner Bright Maritime Corporation is hereby ORDERED to pay respondent Ricardo B. Fantonial actual damages in the amount of the peso equivalent of US$8,040.00, representing his salary for one year under the contract; moral damages in the amount Thirty Thousand Pesos (P30,000.00); exemplary damages that is increased from Ten Thousand Pesos (P10,000.00) to Fifty Thousand Pesos (P50,000.00), and attorneys fees equivalent to ten percent (10%) of the recoverable amount. Costs against petitioners. SO ORDERED. G.R. No. 163657 April 18, 2012 INTERNATIONAL MANAGEMENT SERVICES/MARILYN C. PASCUAL, Petitioner, vs.ROEL P. LOGARTA, Respondent. D E C I S I O N PERALTA, J.: This is a petition for review on certiorari assailing the Decision 1 dated January 8, 2004 of the Court of Appeals (CA) in CAG.R. SP No. 58739, and the Resolution2 dated May 12, 2004 denying petitioners motion for reconsideration. The factual and procedural antecedents are as follows: Sometime in 1997, the petitioner recruitment agency, International Management Services (IMS), a single proprietorship owned and operated by Marilyn C. Pascual, deployed respondent Roel P. Logarta to work for Petrocon Arabia Limited (Petrocon) in Alkhobar, Kingdom of Saudi Arabia, in connection with general engineering services of Petrocon for the Saudi Arabian Oil Company (Saudi Aramco). Respondent was employed for a period of two (2) years, commencing on October 2, 1997, with a monthly salary of eight hundred US Dollars (US$800.00). In October 1997, respondent started to work for Petrocon as Piping Designer for works on the projects of Saudi Aramco. Thereafter, in a letter3 dated December 21, 1997, Saudi Aramco informed Petrocon that for the year 1998, the former is allotting to the latter a total work load level of 170,850 man-hours, of which 100,000 man-hours will be allotted for crosscountry pipeline projects. However, in a letter4 dated April 29, 1998, Saudi Aramco notified Petrocon that due to changes in the general engineering services work forecast for 1998, the man-hours that were formerly allotted to Petrocon is going to be reduced by 40%. Consequently, due to the considerable decrease in the work requirements of Saudi Aramco, Petrocon was constrained to reduce its personnel that were employed as piping designers, instrument engineers, inside plant engineers, etc., which totaled to some 73 personnel, one of whom was respondent. Thus, on June 1, 1998, Petrocon gave respondent a written notice 5 informing the latter that due to the lack of project works related to his expertise, he is given a 30-day notice of termination, and that his last day of work with Petrocon will be on July 1, 1998. Petrocon also informed respondent that all due benefits in accordance with the terms and conditions of his employment contract will be paid to respondent, including his ticket back to the Philippines. On June 23, 1998, respondent, together with his co-employees, requested Petrocon to issue them a letter of Intent stating that the latter will issue them a No Objection Certificate once they find another employer before they leave Saudi Arabia. 6 On June 27, 1998, Petrocon granted the request and issued a letter of intent to respondent. 7 Before his departure from Saudi Arabia, respondent received his final paycheck 8 from Petrocon amounting SR7,488.57. Upon his return, respondent filed a complaint with the Regional Arbitration Branch VII, National Labor Relations Commission (NLRC), Cebu City, against petitioner as the recruitment agency which employed him for employment abroad. In filing the complaint, respondent sought to recover his unearned salaries covering the unexpired portion of his employment contract with Petrocon on the ground that he was illegally dismissed. After the parties filed their respective position papers, the Labor Arbiter rendered a Decision 9 in favor of the respondent, the dispositive portion of which reads:

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WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Marilyn C. Pascual, doing business under the name and style International Management Services, to pay the complainant Roel Logarta the peso equivalent of US $5,600.00 based on the rate at the time of actual payment, as payment of his wages for the unexpired portion of his contract of employment. The other claims are dismissed for lack of merit. So Ordered.10

Aggrieved, petitioner filed an Appeal11 before the NLRC. On October 29, 1999, the NLRC, Fourth Division, Cebu City rendered a Decision12 affirming the decision of the Labor Arbiter, but reduced the amount to be paid by the petitioner, to wit:
WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby AFFIRMED with MODIFICATION reducing the award to only US $4,800.00 or its peso equivalent at the time of payment. SO ORDERED.13

Petitioner filed a motion for reconsideration, but it was denied in the Resolution 14 dated April 17, 2000. Not satisfied, petitioner sought recourse before the CA, 15 arguing that the NLRC gravely abused its discretion: (a) in holding that while Petrocons retrenchment was justified, Petrocon failed to observe the legal procedure for a valid retrenchment when, in fact, Petrocon did observe the legal procedural requirements for a valid implementation of its retrenchment scheme; and (b) in making an award under Section 10 of R.A. No. 8042 which is premised on a termination of employment without just, valid or authorized cause as defined by law or contract, notwithstanding that NLRC itself found Petrocons retrenchment to be justified.16 On January 8, 2004, the CA rendered the assailed Decision dismissing the petition, the decretal portion of which reads:
WHEREFORE, premises considered, the petition is DISMISSED and the impugned Decision dated October 29, 1999 and Resolution dated April 17, 2000 are AFFIRMED. Costs against the petitioner. SO ORDERED.17

In ruling in favor of the respondent, the CA agreed with the findings of the NLRC that retrenchment could be a valid cause to terminate respondents employment with Petrocon. Considering that there was a considerable reduction in Petrocons work allocation from Saudi Aramco, the reduction of its work personnel was a valid exercise of management prerogative to reduce the number of its personnel, particularly in those fields affected by the reduced work allocation from Saudi Aramco. However, although there was a valid ground for retrenchment, the same was implemented without complying with the requisites of a valid retrenchment. Also, the CA concluded that although the respondent was given a 30-day notice of his termination, there was no showing that the Department of Labor and Employment (DOLE) was also sent a copy of the said notice as required by law. Moreover, the CA found that a perusal of the check payroll details would readily show that respondent was not paid his separation pay. Petitioner filed a motion for reconsideration, but it was denied in the Resolution 18 dated May 12, 2004. Hence, the petition assigning the following errors:
I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT THE 30-DAY NOTICE TO DOLE PRIOR TO RETRENCHMENT IS NOT APPLICABLE IN THIS CASE. II. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT RESPONDENT EMPLOYEE DID NOT CONSENT TO HIS SEPARATION FROM THE PRINCIPAL COMPANY. III. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT JARIOL VS. IMS IS NOT APPLICABLE TO THE INSTANT CASE. IV. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT RESPONDENT DID NOT RECEIVE THE SEPARATION PAY REQUIRED BY LAW.19

Petitioner argues that the 30-day notice of termination, as required in Serrano v. NLRC, 20 is not applicable in the case at bar, considering that respondent was in fact given the 30-day notice. More importantly, Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipino Act of 1995 nor its Implementing Rules do not require the sending of notice to the DOLE, 30 days before the effectivity of a retrenchment of an Overseas Filipino Worker (OFW) based on grounds under Article 283 of the Labor Code. Petitioner maintains that respondent has consented to his termination, since he raised no objection to his retrenchment and actually sought another employer during his 30-day notice of termination. Respondent even requested from Petrocon a No Objection Certificate, which the latter granted to facilitate respondents application to other Saudi Arabian employers. Petitioner also posits that the CA should have applied the case of Jariol v. IMS 21 even if the said case was only decided by the NLRC, a quasi-judicial agency. The said case involved similar facts, wherein the NLRC categorically ruled that employers of OFWs are not required to furnish the DOLE in the Philippines a notice if they intend to terminate a Filipino employee. Lastly, petitioner insists that respondent received his separation pay. Moreover, petitioner contends that Section 10 of R.A. No. 8042 does not apply in the present case, since the termination of respondent was due to a just, valid or authorized cause. At best, respondent is only entitled to separation pay in accordance with Article 283 of the Labor Code, i.e., one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. On his part, respondent maintains that the CA committed no reversible error in rendering the assailed decision. The petition is partly meritorious. Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages.22 It is one of the economic grounds to dismiss employees and is resorted by an employer primarily to avoid or minimize business losses.23 Retrenchment programs are purely business decisions within the purview of a valid and reasonable exercise of management prerogative. It is one way of downsizing an employers workforce and is often resorted to by the employer during periods of business recession, industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or introduction of new methods or more efficient machinery or automation. It is a valid management prerogative, provided it is done in

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good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence.24 In the case at bar, despite the fact that respondent was employed by Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to the provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations.25 In the case of Royal Crown Internationale v. NLRC,26 this Court has made the policy pronouncement, thus: x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. x x x 27 Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker under Article 283 of the Labor Code, which provides: Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. Thus, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence, to wit: (1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of service, whichever is higher; (4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure; and (5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers.28 Applying the above-stated requisites for a valid retrenchment in the case at bar, it is apparent that the first, fourth and fifth requirements were complied with by respondents employer. However, the second and third requisites were absent when Petrocon terminated the services of respondent. As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to retrench its employees in good faith and the considerable reduction of work allotments of Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its personnel, thus: Moreover, from the standard form of employment contract relied upon by the Labor Arbiter, it is clear that unilateral cancellation (sic) may be effected for "legal, just and valid cause or causes." Clearly, contrary to the Labor Arbiters perception, the enumerated causes for employment termination by the employer in the standard form of employment contract is not exclusive in the same manner that the listed grounds for termination by the employer is not exclusive. As pointed out above, under Sec. 10 of RA 8042, it is clear that termination of employment may be for just, valid or authorized cause as defined by law or contract. Retrenchment being indubitably a legal and authorized cause may be availed of by the respondent. From the records, it is clearly shown that there was a drastic reduction in Petrocons 1998 work allocation from 250,000 man-hours to only 80,000 man-hours. Under these circumstances over which respondents principal, Petrocon had no control, it was clearly a valid exercise of management prerogative to reduce personnel particularly those without projects to work on. To force Petrocon to continue maintaining all its workers even those without projects is tantamount to oppression. "The determination to cease operation is a prerogative of management which the state does not usually interfere with as no business or undertaking must be required to continue at a loss simply because it has to maintain its employees in employment. Such an act would be tantamount to a taking of property without due process of law. (Industrial Timber Corp. vs. NLRC, 273 SCRA 200)29 As to complying with the fifth requirement, the CA was correct when it ruled that: As to the fifth requirement, the NLRC considered the following criteria fair and reasonable in ascertaining who would be dismissed and who would be retained among the employees; (i) less preferred status; (ii) efficiency rating; (iii) seniority; and (iv) proof of claimed financial losses. The primary reason for respondents termination is lack of work project specifically related to his expertise as piping designer. Due to the highly specialized nature of Logartas job, we find that the availability of work and number of allocated man-hours for pipeline projects are sufficient and reasonable criteria in determining who would be dismissed and who would be retained among the employees. Consequently, we find the criterion of less preferred status and efficiency rating not applicable. The list of terminated employees submitted by Petrocon, shows that other employees, with the same designation as Logartas (Piping Designer II), were also dismissed. Terminated, too, were employees designated as Piping Designer I and Piping Designer. Hence, employees whose job designation involves pipeline works were without bias terminated.

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As to seniority, at the time the notice of termination was given to him, Logartas employment was eight (8) months, clearly, he has not accumulated sufficient years to claim seniority. As to proof of claimed financial losses, the NLRC itself has recognized the drastic reduction of Petrocons work allocation, thereby necessitating the retrenchment of some of its employees. 30 As for the notice requirement, however, contrary to petitioners contention, proper notice to the DOLE within 30 days prior to the intended date of retrenchment is necessary and must be complied with despite the fact that respondent is an overseas Filipino worker. In the present case, although respondent was duly notified of his termination by Petrocon 30 days before its effectivity, no allegation or proof was advanced by petitioner to establish that Petrocon ever sent a notice to the DOLE 30 days before the respondent was terminated. Thus, this requirement of the law was not complied with. Also, petitioners contention that respondent freely consented to his dismissal is unsupported by substantial evidence. Respondents recourse of finding a new employer during the 30-day period prior to the effectivity of his dismissal and eventual return to the Philippines is but logical and reasonable under the circumstances. Faced with the eventuality of his termination from employment, it is understandable for respondent to seize the opportunity to seek for other employment and continue working in Saudi Arabia. Moreover, petitioners insistence that the case of Jariol v. IMS should be applied in the present case is untenable. Being a mere decision of the NLRC, it could not be considered as a precedent warranting its application in the case at bar. Suffice it to state that although Article 8 of the Civil Code 31 recognizes judicial decisions, applying or interpreting statutes as part of the legal system of the country, such level of recognition is not afforded to administrative decisions. 32 Anent the proper amount of separation pay to be paid to respondent, petitioner maintains that respondent was paid the appropriate amount as separation pay. However, a perusal of his Payroll Check Details, 33 clearly reveals that what he received was his compensation for the month prior to his departure, and hence, was justly due to him as his salary. Furthermore, the amounts which he received as his "End of Contract Benefit" and "Other Earning/Allowances: for July 1998"34 form part of his wages/salary, as such, cannot be considered as constituting his separation pay. 1wphi1 Verily, respondent is entitled to the payment of his separation pay. However, this Court disagrees with the conclusion of the Labor Arbiter, the NLRC and the CA, that respondent should be paid his separation pay in accordance with the provision of Section 10 of R.A. No. 8042. A plain reading of the said provision clearly reveals that it applies only to an illegally dismissed overseas contract worker or a worker dismissed from overseas employment without just, valid or authorized cause, the pertinent portion of which provides: 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, x x x In the case at bar, notwithstanding the fact that respondents termination from his employment was procedurally infirm, having not complied with the notice requirement, nevertheless the same remains to be for a just, valid and authorized cause, i.e., retrenchment as a valid exercise of management prerogative. To stress, despite the employers failure to comply with the one-month notice to the DOLE prior to respondents termination, it is only a procedural infirmity which does not render the retrenchment illegal. In Agabon v. NLRC,35 this Court ruled that when the dismissal is for a just cause, the absence of proper notice should not nullify the dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for violation of his statutory rights.36 Consequently, it is Article 283 of the Labor Code and not Section 10 of R.A. No. 8042 that is controlling. Thus, respondent is entitled to payment of separation pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher. Considering that respondent was employed by Petrocon for a period of eight (8) months, he is entitled to receive one (1) month pay as separation pay. In addition, pursuant to current jurisprudence, 37 for failure to fully comply with the statutory due process of sufficient notice, respondent is entitled to nominal damages in the amount P50,000.00.
WHEREFORE, premises considered, the petition is DENIED. The Decision dated January 8, 2004 and the Resolution dated May 12, 2004 of the Court of Appeals are AFFIRMED with MODIFICATIONS. Petitioner is ORDERED to pay Roel P. Logarta one (1) month salary as separation pay and P50,000.00 as nominal damages. SO ORDERED.

G.R. No. 197528 September 5, 2012 PERT/CPM MANPOWER EXPONENT CO., INC., Petitioner, vs. ARMANDO A. VINUY A, LOUIE M. ORDOVEZ, ARSENIO S. LUMANTA,. JR., ROBELITO S. ANIPAN, VIRGILIO R. ALCANTARA, MARINO M. ERA, SANDY 0. ENJAMBRE and NOEL T. LADEA, Respondents. D E C I S I O N BRION, J.: We resolve the present petition for review on certiorari1 assailing the decision2 dated May 9, 2011 and the resolution3dated June 23, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 114353. The Antecedents On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez, Arsenio S. Lumanta, Jr., Robelito S. Anipan, Virgilio R. Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T. Ladea (respondents) filed a complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co., Inc. (agency), and its President Romeo P. Nacino. The respondents alleged that the agency deployed them between March 29, 2007 and May 12, 2007 to work as aluminum fabricator/installer for the agencys principal, Modern Metal Solution LLC/MMS Modern Metal Solution LLC (Modern Metal) in Dubai, United Arab Emirates. The respondents employment contracts,4 which were approved by the Philippine Overseas Employment Administration (POEA), provided for a two-year employment, nine hours a day, salary of 1,350 AED with overtime pay, food allowance, free and suitable housing (four to a room), free transportation, free laundry, and free medical and dental services. They each paid a P 15,000.00 processing fee.5 On April 2, 2007, Modern Metal gave the respondents, except Era, appointment letters 6 with terms different from those in the employment contracts which they signed at the agencys office in the Philippines. Under the letters of appointment, their employment was increased to three years at 1,000 to 1,200 AED and food allowance of 200 AED. The respondents claimed that they were shocked to find out what their working and living conditions were in Dubai. They were required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half hours. When they

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rendered overtime work, they were most of the time either underpaid or not paid at all. Their housing accommodations were cramped and were shared with 27 other occupants. The lodging house was in Sharjah, which was far from their jobsite in Dubai, leaving them only three to four hours of sleep a day because of the long hours of travel to and from their place of work; there was no potable water and the air was polluted. When the respondents received their first salaries (at the rates provided in their appointment letters and with deductions for placement fees) and because of their difficult living and working conditions, they called up the agency and complained about their predicament. The agency assured them that their concerns would be promptly addressed, but nothing happened. On May 5, 2007, Modern Metal required the respondents to sign new employment contracts, 7 except for Era who was made to sign later. The contracts reflected the terms of their appointment letters. Burdened by all the expenses and financial obligations they incurred for their deployment, they were left with no choice but to sign the contracts. They raised the matter with the agency, which again took no action. On August 5, 2007, despondent over their unbearable living and working conditions and by the agencys inaction, the respondents expressed to Modern Metal their desire to resign. Out of fear, as they put it, that Modern Metal would not give them their salaries and release papers, the respondents, except Era, cited personal/family problems for their resignation.8 Era mentioned the real reason "because I dont (sic) want the company policy" 9 for his resignation. It took the agency several weeks to repatriate the respondents to the Philippines. They all returned to Manila in September 2007. Except for Ordovez and Enjambre, all the respondents shouldered their own airfare. For its part, the agency countered that the respondents were not illegally dismissed; they voluntarily resigned from their employment to seek a better paying job. It claimed that the respondents, while still working for Modern Metal, applied with another company which offered them a higher pay. Unfortunately, their supposed employment failed to materialize and they had to go home because they had already resigned from Modern Metal. The agency further alleged that the respondents even voluntarily signed affidavits of quitclaim and release after they resigned. It thus argued that their claim for benefits, under Section 10 of Republic Act No. (R.A.) 8042, damages and attorneys fees is unfounded. The Compulsory Arbitration Rulings On April 30, 2008, Labor Arbiter Ligerio V. Ancheta rendered a Decision 10 dismissing the complaint, finding that the respondents voluntarily resigned from their jobs. He also found that four of them Alcantara, Era, Anipan and Lumanta even executed a compromise agreement (with quitclaim and release) before the POEA. He considered the POEA recourse a case of forum shopping. The respondents appealed to the National Labor Relations Commission (NLRC). They argued that the labor arbiter committed serious errors in (1) admitting in evidence the quitclaims and releases they executed in Dubai, which were mere photocopies of the originals and which failed to explain the circumstances behind their execution; (2) failing to consider that the compromise agreements they signed before the POEA covered only the refund of their airfare and not all their money claims; and (3) ruling that they violated the rule on non-forum shopping. On May 12, 2009, the NLRC granted the appeal.11 It ruled that the respondents had been illegally dismissed. It anchored its ruling on the new employment contracts they were made to sign in Dubai. It stressed that it is illegal for an employer to require its employees to execute new employment papers, especially those which provide benefits that are inferior to the POEA-approved contracts. The NLRC rejected the quitclaim and release executed by the respondents in Dubai. It believed that the respondents executed the quitclaim documents under duress as they were afraid that they would not be allowed to return to the Philippines if they did not sign the documents. Further, the labor tribunal disagreed with the labor arbiters opinion that the compromise agreement they executed before the POEA had effectively foreclosed the illegal dismissal complaint before the NLRC and that the respondents had been guilty of forum shopping. It pointed out that the POEA case involved predeployment issues; whereas, the complaint before the NLRC is one for illegal dismissal and money claims arising from employment. Consequently, the NLRC ordered the agency, Nacino and Modern Metal to pay, jointly and severally, the respondents, as follows:
WHEREFORE, the Decision dated 30 April 2008 is hereby REVERSED and SET ASIDE, a new Decision is hereby issued ordering the respondents PERT/CPM MANPOWER EXPONENTS CO., INC., ROMEO NACINO, and MODERN METAL SOLUTIONS, INC. to jointly and severally, pay the complainants the following: Salary for the unexpired Placement portion of Exemplary fee the Damages contract (1350 x 6 months) USD 400 8100 AED P 20,000.00 USD 400 8100 AED P 20,000.00 Era, MARINO Ladea, NOEL Ordovez, LOUIE 350 x 4 = 1400 USD 400 8100 AED P 20,000.00 AED 150 x 5 = 750 AED 250 X 3 = 750 AED USD 400 8100 AED P 20,000.00 USD 400 8100 AED P 20,000.00 USD 400 8100 AED P 20,000.00 USD 400 8100 AED P 20,000.00

Employee

Underpaid Salary

Anipan, 150 x 4 = 600 ROBELITO AED Enjambre, SANDY Lumanta, ARSENIO 150 x 4 = 600 AED

Vinuya, 150 x 6 = 900 ARMANDO AED Alcantara VIRGILIO 150 X 4 = 600 AED

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

TOTAL:6,850 AEDUS$3,20064,800 AEDP 400,000.00 or their peso equivalent at the time of actual payment plus attorneys fees equivalent to 10% of the judgment award.12

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

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The NLRC denied the agencys motion for reconsideration, but granted the respondents motion. 14 It sustained the respondents argument that the award needed to be adjusted, particularly in relation to the payment of their salaries, consistent with the Courts ruling in Serrano. The ruling declared unconstitutional the clause, "or for three (3) months for every year of the unexpired term, whichever is less," in Section 10, paragraph 5, of R.A. 8042, limiting the entitlement of illegally dismissed overseas Filipino workers to their salaries for the unexpired term of their contract or three months, whichever is less. Accordingly, it modified its earlier decision and adjusted the respondents salary entitlement based on the following matrix: Employee Duration Unexpired Departure Date of portion of date dismissed Contract contract 8 August 2007 8 August 2007 8 August 2007 8 August 2007 19 months and 21 days 20 months and 5 days 21 months and 4 days 19 months and 21 days Ordovez, LOUIE 2 years 3 April 2007 26 July 2007 8 August 2007 26 July 2007 8 August 2007 21 months and 23 days 20 months and 5 days 20 months and 3 days 19 months and 21 days15

Vinuya, 29 March 2 years ARMANDO 2007 Alcantara, 3 April 2 years VIRGILIO 2007 Era, MARINO Ladea, NOEL 2 years 2 years 12 May 2007 29 March 2007

Anipan, 3 April 2 years ROBELITO 2007 Enjambre, 29 March 2 years SANDY 2007 Lumanta, 29 March 2 years ARSENIO 2007

Again, the agency moved for reconsideration, reiterating its earlier arguments and, additionally, questioning the application of the Serrano ruling in the case because it was not yet final and executory. The NLRC denied the motion, prompting the agency to seek recourse from the CA through a petition for certiorari. The CA Decision 16 The CA dismissed the petition for lack of merit. It upheld the NLRC ruling that the respondents were illegally dismissed. It found no grave abuse of discretion in the NLRCs rejection of the respondents resignation letters, and the accompanying quitclaim and release affidavits, as proof of their voluntary termination of employment. The CA stressed that the filing of a complaint for illegal dismissal is inconsistent with resignation. Moreover, it found nothing in the records to substantiate the agencys contention that the respondents resignation was of their own accord; on the contrary, it considered the resignation letters "dubious for having been lopsidedly-worded to ensure that the petitioners (employers) are free from any liability." 17 The appellate court likewise refused to give credit to the compromise agreements that the respondents executed before the POEA. It agreed with the NLRCs conclusion that the agreements pertain to the respondents charge of recruitment violations against the agency distinct from their illegal dismissal complaint, thus negating forum shopping by the respondents. Lastly, the CA found nothing legally wrong in the NLRC correcting itself (upon being reminded by the respondents), by adjusting the respondents salary award on the basis of the unexpired portion of their contracts, as enunciated in the Serrano case. The agency moved for, but failed to secure, a reconsideration of the CA decision. 18 The Petition The agency is now before the Court seeking a reversal of the CA dispositions, contending that the CA erred in: 1. affirming the NLRCs finding that the respondents were illegally dismissed; 2. holding that the compromise agreements before the POEA pertain only to the respondents charge of recruitment violations against the agency; and 3. affirming the NLRCs award to the respondents of their salaries for the unexpired portion of their employment contracts, pursuant to the Serrano ruling. The agency insists that it is not liable for illegal dismissal, actual or constructive. It submits that as correctly found by the labor arbiter, the respondents voluntarily resigned from their jobs, and even executed affidavits of quitclaim and release; the respondents stated family concerns for their resignation. The agency posits that the letters were duly proven as they were written unconditionally by the respondents. It, therefore, assails the conclusion that the respondents resigned under duress or that the resignation letters were dubious. The agency raises the same argument with respect to the compromise agreements, with quitclaim and release, it entered into with Vinuya, Era, Ladea, Enjambre, Ordovez, Alcantara, Anipan and Lumanta before the POEA, although it submitted evidence only for six of them. Anipan, Lumanta, Vinuya and Ladea signing one document; 19 Era20 and Alcantara21 signing a document each. It points out that the agreement was prepared with the assistance of POEA Conciliator Judy Santillan, and was duly and freely signed by the respondents; moreover, the agreement is not conditional as it pertains to all issues involved in the dispute between the parties. On the third issue, the agency posits that the Serrano ruling has no application in the present case for three reasons. First, the respondents were not illegally dismissed and, therefore, were not entitled to their money claims. Second, the respondents filed the complaint in 2007, while the Serrano ruling came out on March 24, 2009. The ruling cannot be given retroactive application. Third, R.A. 10022, which was enacted on March 8, 2010 and which amended R.A. 8042, restored the subject clause in Section 10 of R.A. 8042, declared unconstitutional by the Court. The Respondents Position In their Comment (to the Petition) dated September 28, 2011, 22 the respondents ask the Court to deny the petition for lack of merit. They dispute the agencys insistence that they resigned voluntarily. They stand firm on their submission that because of their unbearable living and working conditions in Dubai, they were left with no choice but to resign. Also, the agency never refuted their detailed narration of the reasons for giving up their employment.

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The respondents maintain that the quitclaim and release affidavits, 23 which the agency presented, betray its desperate attempt to escape its liability to them. They point out that, as found by the NLRC, the affidavits are ready-made documents; for instance, in Lumantas24 and Eras25 affidavits, they mentioned a certain G & A International Manpower as the agency which recruited them a fact totally inapplicable to all the respondents. They contend that they had no choice but to sign the documents; otherwise, their release papers and remaining salaries would not be given to them, a submission which the agency never refuted. On the agencys second line of defense, the compromise agreement (with quitclaim and release) between the respondents and the agency before the POEA, the respondents argue that the agreements pertain only to their charge of recruitment violations against the agency. They add that based on the agreements, read and considered entirely, the agency was discharged only with respect to the recruitment and pre-deployment issues such as excessive placement fees, non-issuance of receipts and placement misrepresentation, but not with respect to post-deployment issues such as illegal dismissal, breach of contract, underpayment of salaries and underpayment and nonpayment of overtime pay. The respondents stress that the agency failed to controvert their contention that the agreements came about only to settle their claim for refund of their airfare which they paid for when they were repatriated. Lastly, the respondents maintain that since they were illegally dismissed, the CA was correct in upholding the NLRCs award of their salaries for the unexpired portion of their employment contracts, as enunciated in Serrano. They point out that the Serrano ruling is curative and remedial in nature and, as such, should be given retroactive application as the Court declared in Yap v. Thenamaris Ships Management. 26 Further, the respondents take exception to the agencys contention that the Serrano ruling cannot, in any event, be applied in the present case in view of the enactment of R.A. 10022 on March 8, 2010, amending Section 10 of R.A. 8042. The amendment restored the subject clause in paragraph 5, Section 10 of R.A. 8042 which was struck down as unconstitutional in Serrano. The respondents maintain that the agency cannot raise the issue for the first time before this Court when it could have raised it before the CA with its petition for certiorari which it filed on June 8, 2010;27 otherwise, their right to due process will be violated. The agency, on the other hand, would later claim that it is not barred by estoppel with respect to its reliance on R.A. 10022 as it raised it before the CA in CA-G.R. SP No. 114353. 28 They further argue that RA 10022 cannot be applied in their case, as the law is an amendatory statute which is, as a rule, prospective in application, unless the contrary is provided.29 To put the issue to rest, the respondents ask the Court to also declare unconstitutional Section 7 of R.A. 10022. Finally, the respondents submit that the petition should be dismissed outright for raising only questions of fact, rather than of law. The Courts Ruling The procedural question We deem it proper to examine the facts of the case on account of the divergence in the factual conclusions of the labor arbiter on the one hand, and, of the NLRC and the CA, on the other. 30 The arbiter found no illegal dismissal in the respondents loss of employment in Dubai because they voluntarily resigned; whereas, the NLRC and the CA adjudged them to have been illegally dismissed because they were virtually forced to resign. The merits of the case We find no merit in the petition. The CA committed no reversible error and neither did it commit grave abuse of discretion in affirming the NLRCs illegal dismissal ruling. The agency and its principal, Modern Metal, committed flagrant violations of the law on overseas employment, as well as basic norms of decency and fair play in an employment relationship, pushing the respondents to look for a better employment and, ultimately, to resign from their jobs. First. The agency and Modern Metal are guilty of contract substitution. The respondents entered into a POEA-approved two-year employment contract,31 with Modern Metal providing among others, as earlier discussed, for a monthly salary of 1350 AED. On April 2, 2007, Modern Metal issued to them appointment letters 32 whereby the respondents were hired for a longer three-year period and a reduced salary, from 1,100 AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they were required to sign new employment contracts 33 reflecting the same terms contained in their appointment letters, except that this time, they were hired as "ordinary laborer," no longer aluminum fabricator/installer. The respondents complained with the agency about the contract substitution, but the agency refused or failed to act on the matter. The fact that the respondents contracts were altered or substituted at the workplace had never been denied by the agency.1wphi1 On the contrary, it admitted that the contract substitution did happen when it argued, "as to their claim for underpayment of salary, their original contract mentioned 1350 AED monthly salary, which includes allowance while in their Appointment Letters, they were supposed to receive 1,300 AED. While there was a difference of 50 AED monthly, the same could no longer be claimed by virtue of their Affidavits of Quitclaims and Desistance." 34 Clearly, the agency and Modern Metal committed a prohibited practice and engaged in illegal recruitment under the law. Article 34 of the Labor Code provides: Art. 34. Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder of authority: xxxx (i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor. Further, Article 38 of the Labor Code, as amended by R.A. 8042, 35 defined "illegal recruitment" to include the following act: (i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment. Second. The agency and Modern Metal committed breach of contract. Aggravating the contract substitution imposed upon them by their employer, the respondents were made to suffer substandard (shocking, as they put it) working and living arrangements. Both the original contracts the respondents signed in the Philippines and the appointment letters issued to them by Modern Metal in Dubai provided for free housing and transportation to and from the jobsite. The original

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contract mentioned free and suitable housing.36 Although no description of the housing was made in the letters of appointment except: "Accommodation: Provided by the company," it is but reasonable to think that the housing or accommodation would be "suitable." As earlier pointed out, the respondents were made to work from 6:30 a.m. to 6:30 p.m., with a meal break of one to one and a half hours, and their overtime work was mostly not paid or underpaid. Their living quarters were cramped as they shared them with 27 other workers. The lodging house was in Sharjah, far from the jobsite in Dubai, leaving them only three to four hours of sleep every workday because of the long hours of travel to and from their place of work, not to mention that there was no potable water in the lodging house which was located in an area where the air was polluted. The respondents complained with the agency about the hardships that they were suffering, but the agency failed to act on their reports. Significantly, the agency failed to refute their claim, anchored on the ordeal that they went through while in Modern Metals employ. Third. With their original contracts substituted and their oppressive working and living conditions unmitigated or unresolved, the respondents decision to resign is not surprising. They were compelled by the dismal state of their employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or discharge is "a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in pay."37 Without doubt, the respondents continued employment with Modern Metal had become unreasonable. A reasonable mind would not approve of a substituted contract that pays a diminished salary from 1350 AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior terms, or a "free and suitable" housing which is hours away from the job site, cramped and crowded, without potable water and exposed to air pollution. We thus cannot accept the agencys insistence that the respondents voluntarily resigned since they personally prepared their resignation letters38 in their own handwriting, citing family problems as their common ground for resigning. As the CA did, we find the resignation letters "dubious," 39 not only for having been lopsidedly worded to ensure that the employer is rendered free from any liability, but also for the odd coincidence that all the respondents had, at the same time, been confronted with urgent family problems so that they had to give up their employment and go home. The truth, as the respondents maintain, is that they cited family problems as reason out of fear that Modern Metal would not give them their salaries and their release papers. Only Era was bold enough to say the real reason for his resignation to protest company policy. We likewise find the affidavits40of quitclaim and release which the respondents executed suspect. Obviously, the affidavits were prepared as a follow through of the respondents supposed voluntary resignation. Unlike the resignation letters, the respondents had no hand in the preparation of the affidavits. They must have been prepared by a representative of Modern Metal as they appear to come from a standard form and were apparently introduced for only one purpose to lend credence to the resignation letters. In Modern Metals haste, however, to secure the respondents affidavits, they did not check on the model they used. Thus, Lumantas affidavit 41 mentioned a G & A International Manpower as his recruiting agency, an entity totally unknown to the respondents; the same thing is true for Eras affidavit. 42 This confusion is an indication of the employers hurried attempt to avoid liability to the respondents. The respondents position is well-founded. The NLRC itself had the same impression, which we find in order and hereunder quote: The acts of respondents of requiring the signing of new contracts upon reaching the place of work and requiring employees to sign quitclaims before they are paid and repatriated to the Philippines are all too familiar stories of despicable labor practices which our employees are subjected to abroad. While it is true that quitclaims are generally given weight, however, given the facts of the case, We are of the opinion that the complainants-appellants executed the same under duress and fear that they will not be allowed to return to the Philippines. 43 Fourth. The compromise agreements (with quitclaim and release) 44 between the respondents and the agency before the POEA did not foreclose their employer-employee relationship claims before the NLRC. The respondents, except Ordovez and Enjambre, aver in this respect that they all paid for their own airfare when they returned home 45 and that the compromise agreements settled only their claim for refund of their airfare, but not their other claims. 46 Again, this submission has not been refuted or denied by the agency. On the surface, the compromise agreements appear to confirm the agencys position, yet a closer examination of the documents would reveal their true nature. Copy of the compromise agreement is a standard POEA document, prepared in advance and readily made available to parties who are involved in disputes before the agency, such as what the respondents filed with the POEA ahead (filed in 2007) of the illegal dismissal complaint before the NLRC (filed on March 5, 2008). Under the heading "Post-Deployment," the agency agreed to pay Era 47 and Alcantara48 P 12,000.00 each, purportedly in satisfaction of the respondents claims arising from overseas employment, consisting of unpaid salaries, salary differentials and other benefits, including money claims with the NLRC. The last document was signed by (1) Anipan, (2) Lumanta, (3) Ladea, (4) Vinuya, (5) Jonathan Nangolinola, and (6) Zosimo Gatchalian (the last four signing on the left hand side of the document; the last two were not among those who filed the illegal dismissal complaint). 49 The agency agreed to pay them a total of P 72,000.00. Although there was no breakdown of the entitlement for each of the six, but guided by the compromise agreement signed by Era and Alcantara, we believe that the agency paid them P 12,000.00 each, just like Era and Alcantara. The uniform insubstantial amount for each of the signatories to the agreement lends credence to their contention that the settlement pertained only to their claim for refund of the airfare which they shouldered when they returned to the Philippines. The compromise agreement, apparently, was intended by the agency as a settlement with the respondents and others with similar claims, which explains the inclusion of the two (Nangolinola and Gatchalian) who were not involved in the case with the NLRC. Under the circumstances, we cannot see how the compromise agreements can be considered to have fully settled the respondents claims before the NLRC illegal dismissal and monetary benefits arising from employment. We thus find no reversible error nor grave abuse of discretion in the rejection by the NLRC and the CA of said agreements.

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DAEL CHURCHILL T. GERONG Labor Law Review

Fifth. The agencys objection to the application of the Serrano ruling in the present case is of no moment. Its argument that the ruling cannot be given retroactive effect, because it is curative and remedial, is untenable. It points out, in this respect, that the respondents filed the complaint in 2007, while the Serrano ruling was handed down in March 2009. The issue, as the respondents correctly argue, has been resolved in Yap v. Thenamaris Ships Management, 50 where the Court sustained the retroactive application of the Serrano ruling which declared unconstitutional the subject clause in Section 10, paragraph 5 of R.A. 8042, limiting to three months the payment of salaries to illegally dismissed Overseas Filipino Workers. Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022, entitled "An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act of 1995, As Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress, and For Other Purposes." 51 It argues that R.A. 10022, which lapsed into law (without the Signature of the President) on March 8, 2010, restored the subject clause in the 5th paragraph, Section 10 of R.A. 8042. The amendment, contained in Section 7 of R.A. 10022, reads as follows: In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant workers salary, the worker shall be entitled to the full reimbursement "of" his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.52 (emphasis ours) This argument fails to persuade us. Laws shall have no retroactive effect, unless the contrary is provided. 53 By its very nature, the amendment introduced by R.A. 10022 restoring a provision of R.A. 8042 declared unconstitutional cannot be given retroactive effect, not only because there is no express declaration of retroactivity in the law, but because retroactive application will result in an impairment of a right that had accrued to the respondents by virtue of the Serrano ruling - entitlement to their salaries for the unexpired portion of their employment contracts. All statutes are to be construed as having only a prospective application, unless the purpose and intention of the legislature to give them a retrospective effect are expressly declared or are necessarily implied from the language used. 54 We thus see no reason to nullity the application of the Serrano ruling in the present case. Whether or not R.A. 1 0022 is constitutional is not for us to rule upon in the present case as this is an issue that is not squarely before us. In other words, this is an issue that awaits its proper day in court; in the meanwhile, we make no pronouncement on it. WHEREFORE, premises considered, the petition is DENIED. The assailed Decision dated May 9, 2011 and the Resolution dated June 23, 2011 of the Court of Appeals in CA-G.R. SP No. 114353 are AFFIRMED. Let this Decision be brought to the attention of the Honorable Secretary of Labor and Employment and the Administrator of the Philippine Overseas Employment Administration as a black mark in the deployment record of petitioner Pert/CPM Manpower Exponent Co., Inc., and as a record that should be considered in any similar future violations. Costs against the petitioner. SO ORDERED.

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