People

v Panis
142 SCRA 664 (1986)

Facts:

Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a
license from the Ministry of Labor as a holder of authority to operate a fee-charging employment
agency, did then and there wilfully, unlawfully and criminally operate a private fee-charging
employment agency by charging fees and expenses (from) and promising employment in Saudi
Arabia" to four separate individuals named therein, in violation of Article 16 in relation to Article
39 of the Labor Code.

Abug filed a motion to quash on the ground that the informations did not charge an offense
because he was accused of illegally recruiting only one person in each of the four informations.
Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever
two or more persons are in any manner promised or offered any employment for a fee."

The posture of the petitioner is that the private respondent is being prosecuted under Article 39
in relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the
first two cited articles penalize acts of recruitment and placement without proper authority,
which is the charge embodied in the informations, application of the definition of recruitment
and placement in Article 13(b) is unavoidable.

Issue:

Whether or not the petitioner is guilty of violating Article 13(b) of P. D. 442, otherwise known as
the Labor Code.

Held:

Article 13(b) of P. D. 442, otherwise known as the Labor Code, states that, "(b) 'Recruitment and
placement' refers to any act of canvassing, 'enlisting, contracting, transporting, hiring, or
procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement."

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to
provide an exception thereto but merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement whenever he or it is dealing with
two or more persons to whom, in consideration of a fee, an offer or promise of employment is
made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers."

At any rate, the interpretation here adopted should give more force to the campaign against
illegal recruitment and placement, which has victimized many Filipino workers seeking a better
life in a foreign land, and investing hard-earned savings or even borrowed funds in pursuit of their
dream, only to be awakened to the reality of a cynical deception at the hands of their own
countrymen.

Lazo v. Salac

G.R. No. 152642 and G.R. No. 152710
In G.R. No. 152642, in 2002, Rey Salac et al, who are recruiters deploying workers abroad, sought
to enjoin the Secretary of Labor, Patricia Sto. Tomas, the POEA, and TESDA, from regulating the
activities of private recruiters. Salac et al invoked Sections 29 and 30 of the Republic Act 8042
or the Migrant Workers Act which provides that recruitment agency in the Philippines shall be
deregulated one year from the passage of the said law; that 5 years thereafter, recruitment
should be fully deregulated. RA 8042 was passed in 1995, hence, Salac et al insisted that as
early as 2000, the aforementioned government agencies should have stopped issuing
memorandums and circulars regulating the recruitment of workers abroad.
Sto. Tomas then questioned the validity of Sections 29 and 30.
ISSUE: Whether or not Sections 29 and 30 are valid.
HELD: The issue became moot and academic. It appears that during the pendency of this case in
2007, RA 9422 (An Act to Strengthen the Regulatory Functions of the POEA) was passed which
repealed Sections 29 and 30 of RA 8042.


SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v. NLRC
G.R. No. 161757; January 25, 2006
Ponente: J. Carpio-Morales


FACTS:

Petitioner, Sunace International Management Services (Sunace), deployed to Taiwan Divina A.
Montehermozo (Divina) as a domestic helper under a 12-month contract effective February 1,
1997. The deployment was with the assistance of a Taiwanese broker, Edmund Wang, President
of Jet Crown International Co., Ltd.
After her 12-month contract expired on February 1, 1998, Divina continued working for her
Taiwanese employer, Hang Rui Xiong, for two more years, after which she returned to the
Philippines on February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a complaint before the National
Labor Relations Commission (NLRC) against Sunace, one Adelaide Perez, the Taiwanese broker,
and the employer-foreign principal alleging that she was jailed for three months and that she was
underpaid

Reacting to Divina's Position Paper, Sunace filed on April 25, 2000 an ". . . ANSWER TO
COMPLAINANT'S POSITION PAPER" alleging that Divina's 2-year extension of her contract was
without its knowledge and consent, hence, it had no liability attaching to any claim arising
therefrom, and Divina in fact executed a Waiver/Quitclaim and Release of Responsibility and an
Affidavit of Desistance, copy of each document was annexed to said

The Labor Arbiter, rejected Sunace's claim that the extension of Divina's contract for two more
years was without its knowledge and consent.

ISSUE:
Whether the act of the foreigner-principal in renewing the contract of Divina be attributable to
Sunace


HELD:

No, the act of the foreigner-principal in renewing the contract of Divina is not attributable to
Sunace.

There being no substantial proof that Sunace knew of and consented to be bound under the 2-
year employment contract extension, it cannot be said to be privy thereto. As such, it and its
"owner" cannot be held solidarily liable for any of Divina's claims arising from the 2-year
employment extension.

Furthermore, as Sunace correctly points out, there was an implied revocation of its agency
relationship with its foreign principal when, after the termination of the original employment
contract, the foreign principal directly negotiated with Divina and entered into a new and
separate employment contract in Taiwan.

ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC. AND MARLOW NAVIGATION
CO., INC.
GR No. 167614 - March 24, 2009
En banc


FACTS:

Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow
Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief
Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days
paid vacation leave per month.

On March 19, 1998, the date of his departure, Serrano was constrained to accept a downgraded
employment contract for the position of Second Officer with a monthly salary of US$1,000 upon
the assurance and representation of respondents that he would be Chief Officer by the end of
April 1998.

Respondents did not deliver on their promise to make Serrano Chief Officer. Hence, Serrano
refused to stay on as second Officer and was repatriated to the Philippines on May 26, 1998,
serving only two (2) months and seven (7) days of his contract, leaving an unexpired portion of
nine (9) months and twenty-three (23) days.

Serrano 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 (based on
the computation of $2590/month from June 1998 to February 199, $413.90 for March 1998, and
$1640 for March 1999) as well as moral and exemplary damages.

The LA declared the petitioner's dismissal illegal and awarded him US$8,770, representing his
salaray for three (3) months of the unexpired portion of the aforesaid contract of employment,
plus $45 for salary differential and for attorney's fees equivalent to 10% of the total amount;
however, no compensation for damages as prayed was awarded.

On appeal, the NLRC modified the LA decision and awarded Serrano $4669.50, representing three
(3) months salary at $1400/month, plus 445 salary differential and 10% for attorney's fees. This
decision was based on the provision of RA 8042, which was made into law on July 15, 1995.

Serrano filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the last clause in the 5th paragraph of Section 10 of RA 8042, which reads:
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.

The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with the Court of
Appeals (CA), reiterating the constitutional challenge against the subject clause. The CA affirmed
the NLRC ruling on the reduction of the applicable salary rate, but skirted the constitutional issue
raised by herein petitioner Serrano.

ISSUES:


1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-
impairment of contracts;
2. Whether or not 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.



HELD:


On the first issue.


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 receive 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, and cannot affect acts or contracts already perfected; however, as to laws
already in existence, their provisions are read into contracts and deemed a part thereof. 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. Police
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.



On the second issue.



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.

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.

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; 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; and c) strict judicial scrutiny in which a legislative
classification which impermissibly interferes with the exercise of a fundamental right or operates
to the peculiar disadvantage of a suspect class 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.

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

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

Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis-à-vis local workers with fixed-period employment;



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. It is akin to the paramount interest of the state for
which some individual liberties must give way, such as the public interest in safeguarding health
or maintaining medical standards, or in maintaining access to information on matters of public
concern.

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

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-vis their 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.

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.

Yap v. Thenamaris

FACTS:
Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT by Intermare Maritime
Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. The contract of employment
entered into by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare, was for
a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT and commenced his
job as electrician. However, on or about 8 November 2001, the vessel was sold. The Philippine
Overseas Employment Administration (POEA) was informed about the sale on 6 December 2001
in a letter signed by Capt. Adviento. Yap, along with the other crewmembers, was informed by
the Master of their vessel that the same was sold and will be scrapped.
Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus.
However, with respect to the payment of his wage, he refused to accept the payment of one-
month basic wage. He insisted that he was entitled to the payment of the unexpired portion of
his contract since he was illegally dismissed from employment. He alleged that he opted for
immediate transfer but none was made. He then filed a complaint for Illegal Dismissal with
Damages and Attorney’s Fees before the Labor Arbiter.
The LA rendered a decision in favor of petitioner, finding the latter to have been constructively
and illegally dismissed by respondents. The NLRC affirmed the decision but held that instead of
an award of salaries corresponding to nine months, petitioner was only entitled to salaries for
three months as provided under Section 10 of R.A. No. 8042. Petitioner however questions the
award of wages and assails Sec. 10 of R.A. 8042 as unconstitutional.

ISSUE: Is the 5th par. Sec 10 of R.A. 8042 violative of substantive due process?

RULING:

Yes.

The Court declared in Serrano vs. Gallant Maritime that the clause “or for three months for every
year of the unexpired term, whichever is less” provided in the 5th paragraph of Section 10 of R.A.
No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs)
to equal protection of the laws. In an exhaustive discussion of the intricacies and ramifications of
the said clause, this Court, in Serrano, pertinently held:

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.

Moreover, this Court held therein that the subject clause does not state or imply any definitive
governmental purpose; hence, the same violates not just therein petitioner’s right to equal
protection, but also his right to substantive due process under Section 1, Article III of the
Constitution.