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[G.R. NO. 169570 : March 2, 2007]

RICARDO PORTUGUEZ,Petitioner, v.GSIS FAMILY BANK (Comsavings Bank) andTHE HON. COURT OF APPEALS,Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

For resolution is a Petition for Review by Certiorari under Rule 45 of the Revised Rules ofCourt, of the Decision1dated 25 April 2005 and the Resolution2dated 25 August 2005 of theCourt of Appeals. The assailed Decision and Resolution reversed the findings of both the

National Labor Relations Commission (NLRC) and the Labor Arbiter, in their Decisions dated30 January 2004 and 30 June 2003, respectively, that respondent GSIS Family Bank is guilty ofthe illegal dismissal of petitioner Ricardo Portuguez. The dispositive portion of the assailed

decision of the appellate court reads:

IN VIEW OF ALL THE FOREGOING, the instant petition is herebyGRANTED, the assailedNLRC Decision dated January 30, 2004, together with the Resolution dated June 22, 2004,

are RECALLED and SET ASIDE, and a new one entered DISMISSING NLRC NCR CA No.037015-03 (NLRC NCR Case. No. 07-05075-2002). No pronouncement as to costs.3

The factual and procedural antecedents of this instant petition are as follows:

Petitioner was employed by the respondent bank as utility clerk on 1 February 1971. Later, he

rose from the ranks and was promoted as branch manager of the Gen. Trias Branch, and wassubsequently assigned to other branches of respondent bank within the Province of Cavite.Eventually, he was appointed as Business Development and Public Relations (BDPR) Officer ofthe entire respondent bank.4

In addition to his regular duties as BDPR Officer, petitioner was designated as a member of theProcurement Bidding and Awards Committee (PBAC), Oversight Committee and InvestigatingCommittee of the respondent bank.5

On 23 October 1997, petitioner was temporarily assigned as caretaker of respondent bank.Finally, he was designated as Acting Assistant Vice-President and at the same time Officer-In-Charge of the respondent bank on 15 June 1998.6

Respondent bank, on the other hand, is a banking institution duly authorized and existing as suchunder the Philippine laws. It was originally known as Royal Savings Bank. In 1983 and the earlypart of 1984, respondent bank underwent serious liquidity problems and was placed by theCentral Bank of the Philippines (Central Bank) under receivership. However, due to the
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continued inability to maintain a state of liquidity, the Central Bank ordered its closure on 9 July1984. After two months, the respondent bank was reopened under the control and managementof the Commercial Bank of Manila and was then renamed as Comsavings Bank.7

In 1987, the Government Service Insurance System (GSIS) acquired the interest of the

Commercial Bank of Manila in the respondent bank and together with the Central Bank and thePhilippine Deposit Insurance Corporation (PDIC), GSIS infused a substantial amount of freshcapital into respondent bank in order to ensure its effective rehabilitation. Resultantly, GSIS tookover the control and management of the respondent bank that was renamed as GSIS FamilySavings Bank.8

Accordingly, Amando Macalino (Macalino) was appointed as President of the respondent bankon 21 December 1998. In view of Macalino's appointment, the designation of petitioner asOfficer-In-Charge and caretaker of respondent bank was recalled; however, his appointment asActing Assistant Vice-President, was retained.9

In line with its policy to attain financial stability, respondent bank adopted measures directed tocut down administrative overhead expenses through streamlining. Thus, respondent bank cameup with an early voluntary retirement program. On 15 April 2001, petitioner opted to availhimself of this retirement package, supposedly, under protest, and received the amount of P1.324Million as retirement pay.10

On 11 July 2002, petitioner filed a complaint against the respondent bank and Macalino forconstructive dismissal and underpayment of wages, 13th month pay and retirement benefits

before the Labor Arbiter.

11

In his Position Paper,

12

petitioner alleged that due to discrimination,unfair treatment, and intense pressure he had received from the new management throughMacalino, he was forced to retire at the prime of his life.

In a Decision13dated 30 June 2003, the Labor Arbiter adjudged the respondent bank guilty ofillegal dismissal, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered, finding complainant to have been illegallydismissed. Concomitantly, Respondents are jointly and solidarily liable to pay RICARDOPORTUGUEZ the following:

P1,148,333.33 ' representing backwages;

1,280,000.00 ' representing separation pay;

443,884.32 ' representing salary differentials;

500,000.00 ' representing moral damages;
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400,000.00 ' representing exemplary damages;

Ten percent of the total award as attorney's fees.

Other claims are dismissed for lack of merit.

The detailed computation of the Computation & Examination Unit, National Capital Region ismade part of this Decision.14

Aggrieved, respondent bank appealed the adverse decision to the NLRC which adopted intotothe findings of the Labor Arbiter. In a Decision15dated 30 January 2004, the NLRCdismissed the appeal and found the decision of the Labor Arbiter to be sufficiently supported bythe facts on record and law on the matter.

Respondent bank's Motion for Reconsideration was likewise denied by the NLRC in itsResolution16dated 22 June 2004 for failing to show that patent or palpable errors have beencommitted in the assailed decision.

The NLRC Resolution dated 22 June 2004, denying respondent bank's motion forreconsideration, was prematurely declared final and executory and was entered into judgment on6 August 2004.17

Shortly thereafter, on 16 August 2004, respondent bank timely elevated the matter to the Courtof Appeals through a Special Civil Action forCertiorari18under Rule 65 of the Revised Rules of

Court. Incorporated with its petition was the Urgent Application for the Issuance of TemporaryRestraining Order (TRO) and/or Writ of Preliminary Injunction.

Pending resolution of its petition and application for the issuance of TRO and/or writ ofpreliminary injunction before the appellate court, the Labor Arbiter, on 16 September 2004,issued a Writ of Execution19for the satisfaction of the NLRC decision dated 30 January 2004.On the same date, a Notice of Garnishment20was served on the manager/cashier of respondentbank in the Pamplona Uno, Las Pias City Branch.

Acting on the application for TRO, the Court of Appeals enjoined the implementation of the

NLRC decision dated 30 January 2004 and therefore, the satisfaction of the Writ of Executiondated 16 September 2004 issued by the Labor Arbiter was tolled for a period of 60 days.21

Eventually, the appellate court issued a Writ of Preliminary Injunction22permanently enjoiningthe execution of the NLRC decision dated 30 January 2004 until the final resolution of the case.
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On 25 April 2005, the Court of Appeals resolved the controversy by reversing the judgment ofthe Labor Arbiter and the NLRC and ruling out constructive dismissal considering thatpetitioner's separation from service was voluntary on his part when he chose to avail himself ofthe respondent bank's early retirement program and received the amount ofP1.324 Million asretirement pay.23

Similarly ill-fated was Petitioner's Motion for Reconsideration which was denied by the Court ofAppeals in its Resolution24dated 25 August 2005.

Hence, this instant Petition for Review on Certiorari.25

For the resolution of this Court are the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THATPETITIONER WAS NOT CONSTRUCTIVELY DISMISSED FROM EMPLOYMENT.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THATPETITIONER IS NOT ENTITLED TO SALARY DIFFERENTIAL.

Before we delve into the merits of the case, it is best to underscore that the factual findings of theNLRC affirming those of the Labor Arbiter, who are deemed to have acquired expertise on the

matters within their jurisdiction, when sufficiently supported by evidence on record, are accordedrespect if not finality, and are considered binding on this Court.26It is equally true, however, thatwhen the findings of the Labor Arbiter and the NLRC are inconsistent with that of the Court ofAppeals, there is a need to review the records to determine which of them should be preferred asmore conformable to evidentiary facts.27

As borne by the records, it appears that there is a divergence between the findings of the LaborArbiter as affirmed by the NLRC, and those of the Court of Appeals. For the purpose of clarity

and intelligibility, therefore, this Court will make an infinitesimal scrunity of the records andrecalibrate and reevaluate the evidence presented by the parties all over again.

We have already repeatedly held that this Court is not a trier of facts. Rule 45 of the RevisedRules of Court limits the office of a Petition for Review to questions of law and leaves thefactual issues as found by the quasi-judicial bodies, as long as they are supported byevidence.28We never fail to stress as well that when the rulings of the labor tribunal and theappellate court are in conflict, we are constrained to analyze and weigh the evidence again.29
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Substantively, petitioner alleges that respondent bank, through Macalino, subjected him to allforms of unbearable harassment that can be mustered in order to force him to resign. Petitionerspecifically claims that he was deprived of his salary and other benefits and privilegesappurtenant to his position as the Acting Assistant Vice-President, including his office.Respondent bank allegedly granted much higher salary to the newly hired bank officers

compared to what he was receiving during his tenure.

In contrast, respondent bank maintains that petitioner was not coerced to resign but voluntarilyopted to avail himself of the early retirement program and was duly paid his retirement benefits.It posits that petitioner was merely holding the position of Assistant Vice-President in actingcapacity subject to the ratification of the respondent bank's Board of Directors and since hisappointment has never been ratified by the Board, respondent bank cannot therefore grant himthe salary and benefits accorded to such position.

In finding that petitioner was not constructively dismissed from employment, the Court ofAppeals stressed that there was no showing that petitioner's separation from employment wasdue to involuntary resignation or forced severance. Neither was it shown that there was adecrease in salary and privileges or downgrading of petitioner's rank. What can be clearlydeduced from the evidence was that until his voluntary retirement in 2001, petitioner washolding the position of Acting Assistant Vice-President and was receiving the salary and benefitsaccorded thereto.

After scrupulously examining the contrasting positions of the parties, and the conflictingdecisions of the Labor Arbiter and the NLRC, on one hand, and the appellate court, on the other,

we find the records of the case bereft of evidence to substantiate the conclusions reached by boththe Labor Arbiter and the NLRC that petitioner was constructively dismissed from employment.

Constructive dismissal or constructive discharge has been defined as quitting because continuedemployment is rendered impossible, unreasonable or unlikely, as an offer involving a demotionin rank and a diminution in pay.30In the case at bar, a demotion in rank or diminution in pay wasnever raised as an issue. Settled then is the fact that petitioner suffered no demotion in rank ordiminution in pay that could give rise to a cause of action against respondent bank forconstructive dismissal under this definition.

Worthy to stress, however, is that constructive dismissal does not always take the form ofdemotion in rank or diminution in pay. In several cases, we have ruled that the act of a clear

discrimination, insensibility or disdain by an employer may become so unbearable on the part ofthe employee so as to foreclose any choice on his part except to resign from such employment.31

It is upon the aforementioned legal tenet that petitioner anchored his case. Petitioner strenuouslyargues that while the newly hired bank officers were given higher salaries and fat allowances, he
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was merely paid the amount of P15,000 basic pay and P4,000 allowance for the position ofActing Assistant Vice-President which, according to him, was way below what the newly hiredbank officers were enjoying. Stated differently, petitioner avers that he was discriminated againstby the respondent bank in terms of payment of salary and grant of benefits and allowances.

We do not agree.

Upon careful perusal of the position papers, memoranda and other pleadings submitted bypetitioner from the Labor Arbiter up to this Court, including the evidence appended thereon, wefind that no evidence, substantial or otherwise, was ever submitted by petitioner to buttress thevery premise of his position that there was discrimination.

Discrimination has been defined as the failure to treat all persons equally when no reasonabledistinction can be found between those favored and those not favored.32Thus, before a claim for

discrimination can prosper, it must be established that, first, there is no reasonable distinction or

classification that can be obtained between persons belonging to the same class, and second,persons belonging to the same class have not been treated alike.33

Apropos thereto, petitioner failed to establish that he possessed the same skills, competenciesand expertise as those of the newly hired bank officers so as to eliminate any possibility ofsubstantial distinction that may warrant the unequal treatment between them. No proof waslikewise presented by petitioner to show that the functions, duties and responsibilities he wasperforming are the same as those of the newly hired bank officers.

Petitioner likewise failed to present any proof tending to show that he was discriminated againstby the respondent bank. While he vigorously cried that the newly hired bank officers wereafforded higher salaries and benefits compared to what he was earning, petitioner, however,

miserably failed to substantiate his claim. No evidence was ever offered by petitioner to provethe amount of salaries and bonuses actually enjoyed by the newly hired bank officers, except forhis bare allegations contained in his demand letter34dated 20 February 2001, to wit:

Mr. Portuguez has reliably learned that Bank records could show that your newly hired officersare being paid the basic salaries in the range ofP25,000 to P30,000.35

Such bare and sweeping statement contains nothing but empty imputation of a fact that couldhardly be given any evidentiary weight by this Court. It is indeed true that the demand letter

made reference to bank records upon which petitioner purportedly derived his allegation but nosuch bank records were ever presented as evidence at any stage of the proceedings.

Indubitably, such self-serving and unsubstantiated declaration is insufficient to establish a casebefore quasi-judicial bodies. Well-entrenched is the rule that the quantum of evidence required to
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establish a fact in quasi-judicial bodies is substantial evidence. Substantial evidence is suchamount of relevant evidence which a reasonable mind might accept as adequate to support aconclusion, even if other equally reasonable minds might opine otherwise.36

It is beyond question that the evidence presented by petitioner cannot be considered as

substantial evidence. Verily, petitioner's case is devoid of substance to convince even theunreasonable minds, for evidently the records are stripped of supporting proofs to, at the veryleast, even just verify his claim.

In addition, petitioner asseverates that in cases of constructive dismissal, the burden of proofrests on the employer to show that the employee was dismissed on a valid and just cause .37Andfailing to discharge such presumption, as in the case at bar, respondent bank should be adjudgedguilty of illegal dismissal.

Again, we are not persuaded. We are not unaware of the statutory rule that in illegal dismissal

cases, the employer has the onus probandi to show that the employee's separation fromemployment is not motivated by discrimination, made in bad faith, or effected as a form ofpunishment or demotion without sufficient cause.38It bears stressing, however, that this legalprinciple presupposes that there is indeed an involuntary separation from employment and thefacts attendant to such forced separation was clearly established.

This legal principle has no application in the instant controversy for as we have succinctlypointed above, petitioner failed to establish that indeed he was discriminated against and onaccount of such discrimination, he was forced to sever his employment from the respondent

bank. What is undisputed is the fact that petitioner availed himself of respondent bank'searly voluntary retirement program and accordingly received his retirement pay in the amountof P1.324 Million under such program. Consequently, the burden of proof will not vest onrespondent bank to prove the legality of petitioner's separation from employment but aptlyremains with the petitioner to prove his allegation that his availment of the early voluntaryretirement program was, in fact, done involuntarily.

As we have explicitly ruled inMachica v. Roosevelt Service Center, Inc.39:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were

burdened to prove their allegation that respondents dismissed them from their employment. Itmust be stressed that the evidence to prove this fact must be clear, positive and

convincing.The rule that the employer bears the burden of proof in illegal dismissal cases findsno application here because the respondents deny having dismissed the petitioners. (Emphasessupplied.)
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Verily, petitioner did not present any clear, positive or convincing evidence in the present case tosupport his claims. Indeed, he never presented any evidence at all other than his own self-servingdeclarations. We must bear in mind the legal dictum that, "he who asserts, not he who denies,must prove."40

In the same breath, we are constrained to deny petitioner's claim for salary differentials. We arenot unmindful that the amount of P19,000 a month may not be commensurate compensation tothe position of Acting Assistant Vice-President, but in the case at bar, the facts and the evidencedid not establish even at least a rational basis for how much the standard compensation for thesaid position must be. It is not enough that petitioner perceived that he was receiving a very lowsalary in the absence of a comparative standard upon which he can peg his supposedcommensurate compensation.

Petitioner's incessant reliance on the findings of the Labor Arbiter and the NLRC is equallyunavailing. At the outset, we have already laid down that findings of fact of quasi-judicial bodiesare conclusive and are not subject to review by the Court. However, this rule does not apply ifsuch findings are tainted with mistake or not supported by evidence.41

In finding that respondent bank is guilty of constructive dismissal, the Labor Arbiter mainlyhinges its ruling on the Constitutional dogma that due to the lopsided power of capital over labor,the State shall intervene as an equalizer consistent with the social justice policy affordingprotection to labor.42

While we agree with the Labor Arbiter that in light of this Constitutional mandate, we must be

vigilant in striking down any attempt of the management to exploit or oppress the working class,it does not mean, however, that we are but bound to uphold the working class in every labordispute brought before this Court for our resolution.

While our laws endeavor to give life to the constitutional policy on social justice and on theprotection of labor, it does not mean that every labor dispute will be decided in favor of theworkers. The law also recognizes that management has rights which are also entitled to respectand enforcement in the interest of fair play.43

It should be remembered that the Philippine Constitution, while inexorably committed towards

the protection of the working class from exploitation and unfair treatment, nevertheless mandatesthe policy of social justice so as to strike a balance between an avowed predilection for labor, onthe one hand, and the maintenance of the legal rights of capital, the proverbial hen that lays thegolden egg, on the other. Indeed, we should not be unmindful of the legal norm that justice is inevery case for the deserving, to be dispensed with in light of established facts, the applicable law,and existing jurisprudence.44
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The presumption in favor of labor cannot defeat the very purpose for which our labor laws exist:to balance the conflicting interest of labor and management and to guaranty that labor andmanagement stand on equal footing when bargaining in good faith with each other, not to tilt thescale to favor one over the other.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The Decision dated25 April 2005, and the Resolution dated 25 August 2005, both rendered by the Court of Appealsin CA-G.R. SP No. 85723, are hereby AFFIRMED.No costs.

SO ORDERED.

G.R. No. 167614 March 24, 2009

ANTONIO M. SERRANO, Petitioner,

vs.

Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO.,

INC., Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift entire families and communities out ofpoverty. Their earnings have built houses, provided health care, equipped schools and planted theseeds of businesses. They have woven together the world by transmitting ideas and knowledge

from country to country. They have provided the dynamic human link between cultures, societiesand economies. Yet, only recently have we begun to understand not only how much internationalmigration impacts development, but how smart public policies can magnify this effect.

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

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

Sec. 10.Money Claims. - x x x In case of termination of overseas employment without just, validor authorized cause as defined by law or contract, the workers shall be entitled to the fullreimbursement of his placement fee with interest of twelve percent (12%) per annum, plus hissalaries for the unexpired portion of his employment contract or f or th ree (3) months for every

year of the unexpi red term, whi chever i s less.
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x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to nationaldevelopment, but exacerbates the hardships borne by them by unduly limiting their entitlement incase of illegal dismissal to their lump-sum salary either for the unexpired portion of their

employment contract "or for three months for every year of the unexpired term, whichever isless" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutionalrights in that it impairs the terms of their contract, deprives them of equal protection and deniesthem due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails theDecember 8, 2004 Decision3and April 1, 2005 Resolution4of the Court of Appeals (CA), whichapplied the subject clause, entreating this Court to declare the subject clause unconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.

(respondents) under a Philippine Overseas Employment Administration (POEA)-approvedContract of Employment with the following terms and conditions:

Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month

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

Respondents did not deliver on their promise to make petitioner Chief Officer.7Hence, petitioner

refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.8

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to

March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2)months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months andtwenty-three (23) days.
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Petitioner filed with the Labor Arbiter (LA) a Complaint9against respondents for constructivedismissal and for payment of his money claims in the total amount of US$26,442.73, brokendown as follows:

May27/31,1998 (5days)

incl.Leavepay

US$ 413.90

June01/30,1998

2,590.00

July01/31,1998

2,590.00

August01/31,1998

2,590.00

Sept.

01/30,

1998

2,590.00

Oct.01/31,1998

2,590.00

Nov.01/30,1998

2,590.00

Dec.

01/31,1998

2,590.00

Jan.01/31,1999

2,590.00

Feb. 2,590.00
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01/28,1999

Mar.1/19,

1999(19days)incl.

leavepay

1,640.00

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

25,382.23

Amountadjusted

to chiefmate'ssalary

(March19/31,1998 to

April

1/30,1998) +

1,060.50

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

TOTAL

CLAIM

US$ 26,442.73

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

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner

illegal and awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring that thedismissal of the complainant (petitioner) by the respondents in the above-entitled casewas illegal and the respondents are hereby ordered to pay the complainant [petitioner],

jointly and severally, in Philippine Currency, based on the rate of exchange prevailing atthe time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED
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SEVENTY U.S. DOLLARS (US $8,770.00), representi ng the complainants salary for

three (3) months of the unexpired portion of the aforesaid contract of

employment.1avvphi1

The respondents are likewise ordered to pay the complainant [petitioner], jointly and

severally, in Philippine Currency, based on the rate of exchange prevailing at the time ofpayment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),12representing thecomplainants claim for a salary differential. In addition, the respondents are herebyordered to pay the complainant, jointly and severally, in Philippine Currency, at theexchange rate prevailing at the time of payment, the complainants (petitioner's) claim for

attorneys fees equivalent to ten percent (10%) of the total amount awarded to theaforesaid employee under this Decision.

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

All other claims are hereby DISMISSED.

SO ORDERED.13(Emphasis supplied)

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computationon the salary period of three months only -- rather than the entire unexpired portion ofnine months and 23 days of petitioner's employment contract - applying the subject

clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's"[b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, +US$490.00/month, vacation leave pay = US$2,590.00/compensation per month."14

Respondents appealed15to the National Labor Relations Commission (NLRC) to questionthe finding of the LA that petitioner was illegally dismissed.

Petitioner also appealed16to the NLRC on the sole issue that the LA erred in not applyingthe ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations

Commission17that in case of illegal dismissal, OFWs are entitled to their salaries for the

unexpired portion of their contracts.18

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

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are herebyordered to pay complainant, jointly and severally, in Philippine currency, at theprevailing rate of exchange at the time of payment the following:
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1. Three (3) months salary

$1,400 x 3 US$4,200.00

2. Salary differential 45.00

US$4,245.00

3. 10% Attorneys fees 424.50

TOTAL US$4,669.50

The other findings are affirmed.

SO ORDERED.19

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

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

Petitioner filed a Petition for Certiorari23with the CA, reiterating the constitutional challengeagainst the subject clause.24After initially dismissing the petition on a technicality, the CA

eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003which granted the petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.

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

His Motion for Reconsideration26having been denied by the CA,27petitioner brings his cause tothis Court on the following grounds:

I

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

II
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In the alternative that the Court of Appeals and the Labor Tribunals were merely applying theirinterpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appealsgravely erred in law when it failed to discharge its judicial duty to decide questions of substancenot theretofore determined by the Honorable Supreme Court, particularly, the constitutionalissues raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly

and arbitrarily limits payment of the award for back wages of overseas workers to three (3)months.

III

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

On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old

and sickly, and he intends to make use of the monetary award for his medical treatment andmedication.29Required to comment, counsel for petitioner filed a motion, urging the court toallow partial execution of the undisputed monetary award and, at the same time, praying that theconstitutional question be resolved.30

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

On the fi rst and second issues

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

Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner

at the monthly rate of US$1,400.00 covering the period of three months out of the unexpiredportion of nine months and 23 days of his employment contract or a total of US$4,200.00.

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

The Arguments of Petitioner
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Petitioner contends that the subject clause is unconstitutional because it unduly impairs thefreedom of OFWs to negotiate for and stipulate in their overseas employment contracts adeterminate employment period and a fixed salary package.32It also impinges on the equalprotection clause, for it treats OFWs differently from local Filipino workers (local workers) byputting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal

dismissal, while setting no limit to the same monetary award for local workers when theirdismissal is declared illegal; that the disparate treatment is not reasonable as there is nosubstantial distinction between the two groups;33and that it defeats Section 18,34Article II of theConstitution which guarantees the protection of the rights and welfare of all Filipino workers,whether deployed locally or overseas.35

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

of affected OFWs.

36

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

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

protect them and to promote their continued helpful contribution in deploying Filipino migrantworkers, liability for money claims was reduced under Section 10 of R.A. No. 8042.

37(Emphasissupplied)

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

In terms of practical application, the local employers are not limited to the amount of backwages

they have to give their employees they have illegally dismissed, following well-entrenched andunequivocal jurisprudence on the matter. On the other hand, foreign employers will only belimited to giving the illegally dismissed migrant workers the maximum of three (3) monthsunpaid salaries notwithstanding the unexpired term of the contract that can be more than three(3) months.38
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Lastly, petitioner claims that the subject clause violates the due process clause, for it depriveshim of the salaries and other emoluments he is entitled to under his fixed-period employmentcontract.39

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the constitutional issue should

not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA,and not at the earliest opportunity, which was when he filed an appeal before the NLRC.40

The Arguments of the Solicitor General

The Solicitor General (OSG)41points out that as R.A. No. 8042 took effect on July 15, 1995, itsprovisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No.8042 having preceded petitioner's contract, the provisions thereof are deemed part of the

minimum terms of petitioner's employment, especially on the matter of money claims, as thiswas not stipulated upon by the parties.42

Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of

their employment, such that their rights to monetary benefits must necessarily be treateddifferently. The OSG enumerates the essential elements that distinguish OFWs from localworkers: first, while local workers perform their jobs within Philippine territory, OFWs performtheir jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or

against whom it is almost impossible to enforce judgment; and second, as held in Coyoca v.National Labor Relations Commission43and Millares v. National Labor RelationsCommission,44OFWs are contractual employees who can never acquire regular employmentstatus, unlike local workers who are or can become regular employees. Hence, the OSG posits

that there are rights and privileges exclusive to local workers, but not available to OFWs; thatthese peculiarities make for a reasonable and valid basis for the differentiated treatment under thesubject clause of the money claims of OFWs who are illegally dismissed. Thus, the provisiondoes not violate the equal protection clause nor Section 18, Article II of the Constitution.45

Lastly, the OSG defends the rationale behind the subject clause as a police power measureadopted to mitigate the solidary liability of placement agencies for this "redounds to the benefit

of the migrant workers whose welfare the government seeks to promote. The survival oflegitimate placement agencies helps [assure] the government that migrant workers are properlydeployed and are employed under decent and humane conditions."46

The Court's Ruling

The Court sustains petitioner on the first and second issues.
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When the Court is called upon to exercise its power of judicial review of the acts of its co-equals,such as the Congress, it does so only when these conditions obtain: (1) that there is an actual caseor controversy involving a conflict of rights susceptible of judicial determination;47(2) that theconstitutional question is raised by a proper party48and at the earliest opportunity;49and (3) thatthe constitutional question is the very lis mota of the case,50otherwise the Court will dismiss the

case or decide the same on some other ground.51

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

The constitutional challenge is also timely. It should be borne in mind that the requirement that aconstitutional issue be raised at the earliest opportunity entails the interposition of the issue in thepleadings before acompetent court, such that, if the issue is not raised in the pleadings beforethat competent court, it cannot be considered at the trial and, if not considered in the trial, itcannot be considered on appeal.52Records disclose that the issue on the constitutionality of thesubject clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion forPartial Reconsideration with said labor tribunal,53and reiterated in his PetitionforCertioraribefore the CA.54Nonetheless, the issue is deemed seasonably raised because it isnot the NLRC but the CA which has the competence to resolve the constitutional issue. The

NLRC is a labor tribunal that merely performs a quasi-judicial function its function in thepresent case is limited to determining questions of fact to which the legislative policy of R.A.No. 8042 is to be applied and to resolving such questions in accordance with the standards laiddown by the law itself;55thus, its foremost function is to administer and enforce R.A. No. 8042,

and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with thepower of judicial review or the power to declare unconstitutional a law or a provision thereof,such as the subject clause.56Petitioner's interposition of the constitutional issue before the CAwas undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in itsdecision.

The third condition that the constitutional issue be critical to the resolution of the case likewise

obtains because the monetary claim of petitioner to his lump-sum salary for the entire unexpiredportion of his 12-month employment contract, and not just for a period of three months, strikes atthe very core of the subject clause.

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

Does the subject clause violate Section 10,

Article III of the Constitution on non-impairment

of contracts?
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The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract onthe term of his employment and the fixed salary package he will receive57is 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 aprospective operation,58and cannot affect acts or contracts already perfected;59however, as tolaws already in existence, their provisions are read into contracts and deemed a part

thereof.60Thus, the non-impairment clause under Section 10, Article II is limited in applicationto laws about to be enacted that would in any way derogate from existing acts or contracts byenlarging, 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 executionof the employment contract between petitioner and respondents in 1998. Hence, it cannot beargued 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 deemedto 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 declaredunconstitutional on the ground that it impinges on the impairment clause, for the law was enactedin 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 ensuringrespect for the dignity and well-being of OFWs wherever they may be employed .61Police powerlegislations 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 buteven to those already in existence, for all private contracts must yield to the superior andlegitimate measures taken by the State to promote public welfare.62

Does the subject clause violate Section 1,

Article III of the Constitution, and Section 18,

Article II and Section 3, Article XIII on laboras a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:
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No person shall be deprived of life, liberty, or property without due process of law nor shall anyperson be denied the equal protection of the law.

Section 18,63Article II and Section 3,64Article 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 ofsimilar category, while all monetary obligations should be borne by them in equal degree; noneshould be denied the protection of the laws which is enjoyed by, or spared the burden imposedon, others in like circumstances.65

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when itsees 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 allmembers of the class.66

There are three levels of scrutiny at which the Court reviews the constitutionality of aclassification embodied in a law: a) the deferential or rational basis scrutiny in which thechallenged classification needs only be shown to be rationally related to serving a legitimate stateinterest;67b) the middle-tier or intermediate scrutiny in which the government must show that thechallenged classification serves an important state interest and that the classification is at leastsubstantially related to serving that interest;68and c) strict judicial scrutiny69in which a

legislative classification which impermissibly interferes with the exercise of a fundamentalright70or operates to the peculiar disadvantage of a suspect class71is presumed unconstitutional,and the burden is upon the government to prove that the classification is necessary to achievea compell ing state interestand that it is theleast restr ictive meansto protect such interest.72

Under American jurisprudence, strict judicial scrutiny is triggered by suspectclassifications73based on race74or gender75but not when the classification is drawn alongincome categories.76

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)

Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77

the constitutionality of a provisionin the charter of theBangko Sentral ng Pilipinas(BSP), a government financial institution (GFI),was challenged for maintaining its rank-and-file employees under the Salary StandardizationLaw (SSL), even when the rank-and-file employees of other GFIs had been exempted from theSSL by their respective charters. Finding that the disputed provision contained a suspectclassification based on salary grade, the Court deliberately employed the standard of strict
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judicial scrutiny in its review of the constitutionality of said provision. More significantly, it wasin this case that the Court revealed the broad outlines of its judicial philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification, and its policies shouldbe accorded recognition and respect by the courts of justice except when they run afoul of the

Constitution. The deference stops where the classification violates a fundamental right,orprejudices persons accorded special protection by the Constitution. When these violationsarise, this Court must discharge its primary role as the vanguard of constitutional guaranties, andrequire a stricter and more exacting adherence to constitutional limitations. Rational basis shouldnot suffice.

Admittedly, the view that prejudice to persons accorded special protection by the Constitutionrequires a stricter judicial scrutiny finds no support in American or English jurisprudence.Nevertheless, these foreign decisions and authorities are not per se controlling in thisjurisdiction. At best, they are persuasive and have been used to support many of our decisions.We should not place undue and fawning reliance upon them and regard them as indispensablemental crutches without which we cannot come to our own decisions through the employment ofour own endowments. We live in a different ambience and must decide our own

lab stand cases rn l and ll

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