labor standars cases.docx

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G.R. No. 169472 January 20, 2009

FRANCISCO LANDICHO, FEDERICO LANDICHO AND BUENAVENTURA LANDICHO,Petitioners, vs.FELIXSIA,Respondent.

PUNO, C.J.:

At bar is a Petition for Review on Certiorari of the Decision1and Resolution

2of the Court of Appeals in CA

G.R. SP No. 61554, dated February 23, 2005 and July 6, 2005, respectively, reversing the decision of the

Department of Agrarian Reform (DAR), Adjudication Board (DARAB), in DARAB Case No. 4599. TheDARAB decision affirmed with modification the Decision of the Provincial Adjudicator of Region IV,

Quezon, in PARAD Case No. IV-QUI-0343-94 dated October 24, 1995, awarding the petitioners

disturbance compensation, a home lot consisting of 200 square meters, and damages. The appellate

court found that the complaint against the respondent is dismissible for lack of cause of action on the

ground of prescription.

The instant case involves three parcels of agricultural land located in Barangay Mateona, Tayabas,

Quezon, covered by Transfer Certificate of Title (TCT) No. 135953 - Lot No. 9297,3TCT No. 135952 - Lot

No. 9856,4and TCT No. 135929 - Lot No. 9895,

5with an aggregate area of approximately 27,287 square

meters. The subject parcels of land were originally owned by Loreanne Z. Aragon, Alberto Z. Aragon, Jr.,

and Alberto Z. Aragon III (Aragons).6The agricultural land was tenanted by the late Arcadio Landicho

from 1949 until his death in 19727after which his tenancy rights were succeeded by his son, petitioner

Francisco Landicho.8 The other petitioners, Buenaventura Landicho, Francisco Landichos son, and

Federico Landicho, Franciscos brother, helped him cultivate the land.9

On January 31, 1976, Francisco Landicho voluntarily surrendered his tenancy rights over the three

parcels of land to Eloisa Zolota, married to Alberto Aragon, through a notarized "Kasulatan sa Pagsasauli

ng Gawaing Palayan" (1976 Kasulatan),10

for a consideration of PhP1,000.00. The 1976 Kasulatan

provides, viz.:

KASULATAN SA PAGSASAULI NG GAWAING PALAYAN

HAYAG SA SINUMANG MAKABABASA:

Ako, Francisco,[sic] Landicho, may sapat na gulang, may asawa, filipino, at sa ngayon ay naninirahan sa

nayon ng Mationa, bayan ng Tayabas, lalawigan ng Quezon, sa bisa ng Kasulatang itoy

NAGSASAYSAY:

Na ako ang tunay at rehistradong mangagawa ng tatlong (3) parcelang palayan na may kasamang niogan,

na natatayo sa nayon ng Mationa, bayan ng Tayabas, lalawigan ng Quezon, na ang mga sukat, at

hangganan nito ay lalong makikilala at matutonton sa mga palatandaang sumusunod: (emphasis

supplied)

TRANSFER CERTIFICATE OF TITLE No. T-135953

"A parcel of land (Lot 9297 of the Cad. Survey of Tayabas), with the improvements thereon, situated in

the Barrio of Mationa, Municipality of Tayabas, Quezon. x x x containing an area of Four Thousand Three

Hundred Eighty Three (4,383) square meters more or less, x x x."


"A parcel of land (Lot 9856 of the Cad. Survey of Tayabas) with the improvements thereon, situated in

the Barrio of Mationa, Municipality of Tayabas. x x x containing an area of Nineteen Thousand Thirty Two

(19,032) square meters, more or less, x x x."


"A parcel of land (Lot 9895 of the Cadastral Survey of Tayabas), with the improvements thereon, situated

in the Barrio of Mationa, Municipality of Tayabas, x x x containing an area of Three Thousand EightHundred Seventy Two (3,872) square meters, more or less, x x x."

Na sapagkat ako ay mayroon pang ilang palayang ginagawa at alang-alang din sa halagang ISANG LIBONG

PISO (P1,000.00), salaping umiiral na ibinayad at tinanggap ko naman ng buong kasiyahan buhat kay

Eloisa Zolota, may sapat na gulang, Filipino [sic] kasal kay Alberto Aragon at sa ngayon ay naninirahan din

dito sa bayan ng Tayabas, lalawigan ng Quezon, ay aking kusang loob na ISASAULI AT IBABALIK sa may-ari

nito ang tatlong (3) parcelang palayan na binabanggit sa itaas nito x x x. (emphasis supplied)

SA KATUNAYAN NG LAHAT, ay nilalagdaan ko ito ngayong ika-31 ng Enero, taong 1976, dito sa bayan ng

Tayabas, lalawigan ng Quezon.

DIGPI NG KANANG HINLALAKI

FRANCISCO LANDICHOManggagawax x x x

Notwithstanding the execution of the 1976 Kasulatan, the petitioners continued cultivating the subject

landholdings11

until 1987 when another notarized "Kasulatan ng Pagsasauli ng Gawaing Palayan" (1987

Kasulatan)12

was executed on July 2, 1987 by Francisco Landicho through which he surrendered his

tenancy rights to the Aragons for a consideration of PhP3,000.00.13

The 1987 Kasulatan provides, viz.:

KASULATAN NG PAGSASAULI NG GAWAIN

TANTUIN ANG SINUMANG MAKAKABASA NITO:

Ako, FRANCISCO LANDICHO, asawa ni Lucia Reyes, may sapat na gulang, filipino,[sic] at naninirahan sa

bayan ng Tayabas, lalawigan ng Quezon, dito ay nagsasalaysay ng mga sumusunod: (emphasis supplied)

Na ako ang siyang gumagawa at nagaalaga ng tatlong palagay na lupa na mayroong pagkakaayos gaya ng

sumusunod: (emphasis supplied)

TRANSFER CERTIFICATE OF TITLE NO. T-135953

A parcel of land (Lot 9897 of the Cad. Survey of Tayabas), with the improvements thereon, situated in the

Barrio of Mationa, Municipality of Tayabas, Quezon. x x x containing an area of Four Thousand Eight

Hundred Three [sic] (4,383) square meters


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A parcel of land (Lot 9856) of the Cadastral Survey of Tayabas), with the improvements thereon, situated

in the Barrio of Mationa, Municipality of Tayabas. x x x containing an area of Nineteen Thousand Thirty

Two (19,032) square meters, more or less

A parcel of land (Lot 9895 of the Cad. Survey of Tayabas), with the improvements thereon, situated in the

Barrio of Mationa, Municipality of Tayabas x x x containing an area of Three Thousand Eight Hundred

Seventy Two (3,872) square meters, more or less

Naitong [sic] naulit na lupa ay pagaari nila Loreanne Z. Aragon, Alberto Aragon, Jr., Alberto Aragon III,

gayondin sapagkat ako ay matanda na at gayondin hindi ko na kayang gumawa sa naulit na lupa, kayaitong naulit na lupa ay aking ISINASAULI at IBINABALIK sa naulit na mayaring nasasabi sa taas nito;

(emphasis supplied)

Na simula ngayon ay mayroong karapatan na sila na kumuha o humanap ng ibang gagawa sa naulit na

lupa at hindi na akong makikiaalam dito, at gayondin mayroong laya silang ipagbili ang naulit na lupa, at

hindi ako makikialam dito; na ito ay binasa sa akin at naunawaan ko naman ang nilalaman nito;(emphasis

supplied)

SA KATUNAYAN ng lahat, *sic+ ng ito akoy lumagda sa kasulatang ito ngayong ika 2 ng Hulyo, /*sic+1987

dito sa Tayabas, Quezon.

Diin ng Kgg. Hinki

FRANCISCO LANDICHOManggagawax x x x

On the same day as the execution of the 1987 Kasulatan, the three parcels of land were sold to

respondent Felix L. Sia by the spouses Alberto P. Aragon and Eloisa Zolota Aragon by virtue of a general

power of attorney executed in their favor by their children, the Aragons. A "Deed of Absolute Sale"14

was

executed, whereby the three parcels of land mentioned above were sold, transferred and conveyed by

way of an absolute sale for and in consideration of PhP50,000.00.

Upon the sale of the subject land to respondent Felix Sia, he converted the same to a residential

subdivision without a DAR Clearance and ejected the petitioners from the subject land.15

Aggrieved, the

petitioners first sought the assistance of Barangay Agrarian Reform Committee (BARC) Chairman Rosalio

Cabuyao,16

who in turn brought the matter to the Provincial Agrarian Reform Office (PARO) of Quezon.

Petitioners Federico Landicho and Buenaventura Landicho then filed a protest before the DAR PARO,

Legal Division of Lucena City17

alleging that they are the tenants of the parcels of land owned by

respondent Felix Sia and claimed that they are entitled to a disturbance compensation. During the

mediation conference held at the DAR Provincial Agrarian Reform Office on July 22, 1992, it was

admitted by Francisco Landicho that he voluntarily surrendered his tenancy rights over the subject

parcels of land in consideration of PhP3,000.00.18

Thus, in the Report and Recommendation19

of DAR

Provincial Legal Officer III, Ernesto M. Arro, Jr., dated October 1, 1992, it was found that the petitioners

had no claim for tenancy rights over the subject parcels of land. It was held by the DAR Provincial Legal

Officer that Francisco Landicho is the legal and bona fide tenant of the parcels of land but he cannot be

awarded disturbance compensation because he voluntarily surrendered his tenancy rights over the said

properties twice, through the 1976 and the 1987 Kasulatan. In the case of Buenaventura and Federico

Landicho, it was found that they are merely farm helpers of Francisco Landicho and are not entitled to

disturbance compensation.

Dissatisfied with the ruling of the DAR PARO of Lucena City, petitioners Buenaventura and Federico

Landicho filed another Protest before the DAR Legal Division, Region IV, Pasig, Metro Manila. On

February 15, 1993, a Memorandum20

was issued by Legal Officer II, Dandumum D. Sultan, Jr., which also

dismissed the protest of the petitioners. It was likewise found that Federico and Buenaventura are not

tenants of the land in question but are merely farm helpers of the legitimate tenant, Francisco Landicho,

who surrendered his tenancy rights to the former owner, the Aragons. During an interview with

Buenaventura Landicho conducted by Legal Officer II Dandumum Sultan, Jr. it was affirmed by

Buenaventura that it was only Francisco Landicho, his father, who was allowed and permitted to work on

the subject land and that both he and Federico had not secured the permission of the landowner to farm

the land.21

In response to the complaint of BARC Chairman Rosalio Cabuyao, DAR Region IV Director Percival C.

Dalugdug wrote a letter, dated April 25, 1994, stating that the results of an investigation conducted by

their representatives revealed that Buenaventura Landicho and Federico Landicho are not tenants of the

subject land and are thus not entitled to disturbance compensation. It was also stated in the letter that it

is only Francisco Landicho who is the legitimate tenant of the land owned by the Aragons. However, he

surrendered his tenancy rights by virtue of the 1976 and 1987 Kasulatan.22

The letter23

states:

Ika-25 ng Abril 1994

G. Rosalio J. Cabuyao BARC Chairman Brgy. Mationa, Tayabas, Quezon

Mahal na G. Cabuyao,

Kami po ay lumiham sa inyo upang ipaabot sa inyo ang pinakahuling ulat mula sa aming PARO sa Quezon

I [sic] hinggil sa inyong iniharap na reklamo na ayon po sa inyo ay hindi binibigyang pansin ni Atty.

Rolando Roldan.

x x x x

Hinggil naman sa pagbibigay ng disturbance compensation kina G. Buenaventura at Federico Landicho,

ikinalulungkot po naming ipaalam sa inyo na wala tayong sapat na batayan upang magawa ito. Ayon sa

pagsisiyasat na isinagawa ng aming kawani, ang magkapatid na Buenaventura at Federico ay hindi

kasama o walang ugnayang kasama (tenancy relationship) sa may-ari ng lupa sapagkat ang kanilang amaang siyang may karapatan at lehitimong kasama. Ayon din sa ulat, sa pamamagitan ng kasulatan sa

pagsasauli ng gawaing palayan ay isinuko na ni G. Francisco Landicho ang kanyang mga karapatan bilang

kasama at magsasaka sa lupang pinaguusapan. x x x.

Maraming salamat po sa inyong pagsulat at sana ay nabigyang linaw namin ang inyong hinaing.

Sumasainyo,

(Sgd.)Percival C. DalugdugDirektor PangrehiyonOn June 10, 1994, petitioners Francisco Landicho, Federico Landicho and Buenaventura Landicho filed a

Complaint24

against Alberto Aragon, Jr., Alberto Aragon III and Felix Sia before the DARAB for fixing and

payment of disturbance compensation and awarding of home lot. The petitioners allege that they are

tenants of the subject land since January 31, 1976 and that they were unlawfully ejected from the


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subject land by virtue of the 1976 and 1987 Kasulatan which they allege to be invalid, since they were

executed by Francisco through the insidious words, undue influence and strategy employed by the

Aragons, in connivance with respondent Sia.

In their Answer25

dated July 7, 1994, the Aragons recognized only Francisco as their former tenant until

he surrendered his tenancy rights through the 1976 Kasulatan and finally surrendered the land upon the

execution of the 1987 Kasulatan. They assert that there was no undue advantage exerted over petitioner

Francisco Landicho since the 1976 and the 1987 Kasulatan were written in Tagalog, a language

understood by Francisco.26

They raised the defense that the petitioners have no cause of action on the

grounds of prescription, laches, and estoppel, that the claim is barred by prior judgment, and that the

claim has been abandoned or otherwise extinguished.27On the other hand, respondent Felix Sia, in his

Answer with Counterclaim28

dated July 11, 1994, alleged that when he bought the subject parcels of

land, they were free from tenants since Francisco had already relinquished his tenancy rights therein

through the execution of public documents.

After the filing of the parties respective position papers, the DAR Provincial Adjudicator of Region IV

rendered a decision in PARAD Case No. IV-QUI-0343-94,29

dated October 24, 1995, in favor of the

petitioners. Provincial Adjudicator Oscar C. Dimacali ruled that against their will, the petitioners were

dispossessed of the land that they have been cultivating. He also ruled that it is not necessary to decide

on the issue of whether Federico and Buenaventura are merely farm helpers of Francisco, nor is it

essential to determine whether the 1976 and 1987 Kasulatan are valid. The dispositive portion30

of the

decision reads:

WHEREFORE, premises considered, the following are hereby ordered:

1. defendant Felix Sia to pay each of the plaintiffs a disturbance compensation equivalent to five (5)

years based from the average normal harvest to be determined by the MARO concerned who is hereby

required to make a report to this Office within one (1) month from receipt hereof;

2. defendant Felix Sia to provide each plaintiff a homelot [sic] of 200 square meters in the subject

landholdings; and,

3. defendants to pay the plaintiffs jointly and severally the sum of P10,000.00 as moral damages and

P5,000.00 as exemplary damages.

No pronounce [sic] as to cost.

SO ORDERED.

The Aragons and respondent Sia appealed the foregoing decision to the DARAB,31

which issued a

decision32

on September 18, 2000 that affirmed in part the decision of the Provincial Adjudicator, and

deleted the award of disturbance compensation on the basis of the finding that the petitioners are still

bona fide tenants in their respective landholdings. The DARAB did not give credit to the report and

recommendation of Legal Officer III Ernesto M. Arro and Legal Officer II Dandumum D. Sultan, Jr. that

Francisco Landicho voluntarily surrendered his tenancy rights.33

The DARAB found that a tenancy

relationship exists between the petitioners and the Aragons and that when Felix Sia became the owner

of the subject land, he assumed to exercise the rights and obligations that pertain to the previous

owners. The dispositive portion34

of the DARAB decision provides:

WHEREFORE, premises considered, the appealed decision dated October 24, 1995, is hereby affirmed

with MODIFICATION in so far as the disturbance compensation which is not obtaining in the case at bar

considering that plaintiffs-appellees are still bona fide tenants in their respective landholdings.

Furthermore, the DAR-BALA of Quezon Province in coordination with the Office of the DAR Secretary, is

hereby directed to file criminal charges for illegal conversion against defendants-appellants, if

circumstances may still warrant.

No Pronouncement as to Costs.

SO ORDERED.

Felix Sia then filed a Petition for Review35

under Rule 43 with the Court of Appeals, which rendered a

decision36

on February 23, 2005 that set aside the decision of the DARAB and dismissed the complaint.

The Court of Appeals found that the essential requisites are not present to establish a tenancy

relationship between petitioners Buenaventura and Federico Landicho and the Aragons, and that the

tenant-landlord relationship between Francisco Landicho and the Aragons also ended upon the

surrender of his tenancy rights through the 1976 and 1987 Kasulatan; consequently, no tenancy

relationship also exists between the petitioners and respondent Felix Sia. The Court of Appeals also ruled

that even assuming that the petitioners have a cause of action, the same had already prescribed since

the complaint was only filed seven years from the time the cause of action accrued.37

On March 22, 2005, the petitioners filed a Motion for Reconsideration38

of the Court of Appeals decision.

The Court of Appeals issued a Resolution39

on July 6, 2005, denying the motion for reconsideration.

Hence, this Petition for Review on Certiorari40

of the Decision and Resolution of the Court of Appeals

with the following assignment of errors:41

The Honorable Court of Appeals erred:

1. When it gave due course to the petition and consequently granted the same; and

2. When it disregarded the finding of facts [sic] of the DARAB that petitioners are bonafide [sic] tenants

of the land purchased by herein respondent and therefore entitled to security of tenure.

The parties filed their respective Memoranda42

which both raised the following issues:43

(1) whether ornot the petitioners are bona fide tenants of the land purchased by the respondent; and (2) whether or

not the cause of action of the petitioners already prescribed at the time of the filing of the complaint.

We deny the petition.

The case before us involves the determination of whether the petitioners are tenants of the land

purchased by the respondent, which is essentially a question of fact. As a general rule, questions of fact

are not proper in a petition under Rule 45.44

But, since the findings of facts of the DARAB and the Court

of Appeals contradict each other, it is crucial to go through the evidence and documents on record as a

matter of exception to the rule.45

In determining the existence of a tenancy relationship between the petitioners and the respondent, it is

necessary to make a distinction between petitioner Francisco Landicho and petitioners Buenaventuraand Federico Landicho.


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in question and that Federico and Buenaventura were just farm helpers of Francisco, as part of his

immediate farm household.65

This is supported by the evidence on record where, in the Memorandum of

DAR Region IV Legal Officer II Dandumum Sultan, Jr., it is stated that during an interview conducted with

Buenaventura Landicho, he disclosed that it was only Francisco Landicho, his father, who was allowed

and permitted to work on the subject land and that both he and Federico had not secured the

permission of the landowner to farm the land.66

There was also no evidence presented to show that Federico and Buenaventura gave a share of their

harvest to the Aragons. Independent evidence, such as receipts, must be presented to show that there

was a sharing of the harvest between the landowner and the tenant.67

And, assuming the landowners

received a share of the harvest, it was held in the case of Cornelio de Jesus, et al. v. Moldex Realty, Inc.68

that "[t]he fact of receipt, without an agreed system of sharing, does not ipso facto create a tenancy."69

There is no tenancy relationship between the Aragons and petitioners Federico and Buenaventura

without the essential elements of consent and sharing of agricultural produce.70

Neither can we give any weight to the petitioners contention that there was an implied tenancy by

reason alone of their continuous cultivation of the land. Acquiescence by the landowner of their

cultivation of the land does not create an implied tenancy if the landowners have never considered

petitioners Federico and Buenaventura as tenants of the land and if the essential requisites of a tenancy

relationship are lacking. There was no intention to institute the petitioners as agricultural tenants. In the

case of Epitacio Sialana v. Mary Y. Avila, et al.71

it was held that "x x x for an implied tenancy to come

about, the actuations of the parties taken in their entirety must be demonstrative of an intent to

continue a prior lease established by the landholder x x x."72

With respect to petitioner Francisco Landicho, the Court of Appeals also correctly held that although

Francisco was the legal tenant of the subject land, he voluntarily surrendered his tenancy rights when he

knowingly and freely executed the 1987 Kasulatan.73

This conclusion finds basis in the investigation

conducted by the PARO, where during the mediation conference, petitioner Francisco Landicho admitted

that he voluntarily surrendered his tenancy rights over the subject parcels of land in consideration of

PhP3,000.00.74

The tenancy relationship was validly extinguished through the execution of the 1987

Kasulatan and upon the voluntary surrender of the landholdings pursuant to Section 8 of Republic Act

No. 3844, otherwise known as the Agricultural Land Reform Code, to wit:

SECTION 8. Extinguishment of Agricultural Leasehold Relation. The agricultural leasehold relation

established under this Code shall be extinguished by:

(1) Abandonment of the landholding without the knowledge of the agricultural lessor;

(2) Voluntary surrender of the landholding by the agricultural lessee, written notice of which shall be

served three months in advance; or

(3) Absence of the persons under Section nine to succeed to the lessee, in the event of death or

permanent incapacity of the lessee.75

The petitioners also failed to support their claim that the Aragons took advantage of Franciscos old age

and illiteracy and employed fraudulent schemes in order to deceive him into signing the Kasulatan. It has

been held that "[a] person is not incapacitated to contract merely because of advanced years or by

reason of physical infirmities. It is only when such age or infirmities impair the mental faculties to such

extent as to prevent one from properly, intelligently, and fairly protecting her property rights, is sheconsidered incapacitated."

76

The petitioners contention that the Aragons employed fraud, aside from being unsubstantiated, is also

contrary to the records of the case. Both the 1976 and the 1987 Kasulatan were also written in Tagalog,

which is the language understood by Francisco Landicho. They were written in an uncomplicated manner

and clearly stated that he is returning the land that he has been cultivating to the landowners because he

is already old and could no longer work on the land.77

The 1987 Kasulatan also states that the contents of

the document were read to him and that he understands the same.

It is also important to note that both the 1976 and 1987 Kasulatan are duly notarized and are considered

as public documents evidencing the surrender of Franciscos tenancy rights over the subject

landholdings. They were executed with all the legal formalities of a public document and thus the legal

presumption of the regularity and validity of the Kasulatan are retained in the absence of full, clear and

convincing evidence to overcome such presumption.78

Strong evidence is required to prove a defect of a

public instrument,79

and since such strong and convincing evidence was not presented in the instant

case, the 1976 and the 1987 Kasulatan are presumed valid.

Coming now to the second issue of prescription, the petitioners argue that they did not sleep on their

rights because although the Complaint with the DARAB was filed on June 10, 1994, they already filed a

protest before the DAR Legal Division of Lucena prior to their Complaint before the DARAB.80

This contention cannot be sustained.

An action to enforce rights as an agricultural tenant is barred b y prescription if not filed within three (3)

years.81

Section 38 of Republic Act No. 3844, otherwise known as the Agricultural Land Reform Code,

specifically provides that:

SECTION 38. Statute of Limitations. An action to enforce any cause of action under this Code shall be

barred if not commenced within three years after such cause of action accrued.82

The records of the case show that the protest before the DAR Legal Division of Lucena was filed

sometime in 1992 when the case was set for a mediation conference.83

Even assuming that they have a

cause of action, this arose in 1987 when they were ejected from the landholdings they were cultivating

which means that it took them about five (5) years to file a protest before the DAR Legal Division of

Lucena, and it took them seven (7) years to file a Complaint before the DARAB. Clearly, their cause of

action has already prescribed.

Accordingly, the petitioners complaint against the respondent is dismissible on the ground of

prescription and for lack of cause of action.

IN VIEW WHEREOF, the Decision and Resolution of the Court of Appeals under review are hereby

AFFIRMED without pronouncement as to costs.

SO ORDERED.


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G.R. No. 169570 March 2, 2007

RICARDO PORTUGUEZ,Petitioner, vs.GSIS FAMILY BANK (Comsavings Bank) and THE HON. COURTOF APPEALS,Respondents.

CHICO-NAZARIO,J.:

For resolution is a Petition for Review by Certiorari under Rule 45 of the Revised Rules of Court, of the

Decision1dated 25 April 2005 and the Resolution

2dated 25 August 2005 of the Court of Appeals. The

assailed Decision and Resolution reversed the f indings of both the National Labor Relations Commission(NLRC) and the Labor Arbiter, in their Decisions dated 30 January 2004 and 30 June 2003, respectively,

that respondent GSIS Family Bank is guilty of the 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 hereby GRANTED, the assailed NLRC 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 u tility clerk on 1 February 1971. Later, he rose from

the ranks and was promoted as branch manager of the Gen. Trias Branch, and was subsequentlyassigned to other branches of respondent bank within the Province of Cavite. Eventually, he was

appointed as Business Development and Public Relations (BDPR) Officer of the entire respondent bank.4

In addition to his regular duties as BDPR Officer, petitioner was designated as a member of the

Procurement Bidding and Awards Committee (PBAC), Oversight Committee and Investigating Committee

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 such under

the Philippine laws. It was originally known as Royal Savings Bank. In 1983 and the early part of 1984,

respondent bank underwent serious liquidity problems and was placed by the Central Bank of the

Philippines (Central Bank) under receivership. However, due to the continued inability to maintain a

state of liquidity, the Central Bank ordered its closure on 9 July 1984. After two months, the respondent

bank was reopened under the control and management of 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 the Philippine Deposit

Insurance Corporation (PDIC), GSIS infused a substantial amount of fresh capital into respondent bank in

order to ensure its effective rehabilitation. Resultantly, GSIS took over the control and management of

the respondent bank that was renamed as GSIS Family Savings Bank.8

Accordingly, Amando Macalino (Macalino) was appointed as President of the respondent bank on 21December 1998. In view of Macalinos appointment, the designation of petitioner as Officer -In-Charge

and caretaker of respondent bank was recalled; however, his appointment as Acting Assistant Vice-

President, was retained.9

In line with its policy to attain financial stability, respondent bank adopted measures directed to cut

down administrative overhead expenses through streamlining. Thus, respondent bank came up with an

early voluntary retirement program. On 15 April 2001, petitioner opted to avail himself of this retirement

package, supposedly, under protest, and received the amount of P1.324 Million as retirement pay.10

On 11 July 2002, petitioner filed a complaint against the respondent bank and Macalino for constructive

dismissal and underpayment of wages, 13th month pay and retirement benefits before the LaborArbiter.

11 In his Position Paper,

12petitioner alleged that due to discrimination, unfair treatment, and

intense pressure he had received from the new management through Macalino, he was forced to retire

at the prime of his life.

In a Decision13

dated 30 June 2003, the Labor Arbiter adjudged the respondent bank guilty of illegal

dismissal, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered, finding complainant to have been illegally dismissed.

Concomitantly, Respondents are jointly and solidarily liable to pay RICARDO PORTUGUEZ 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;

400,000.00 representing exemplary damages;

Ten percent of the total award as attorneys fees.

Other claims are dismissed for lack of merit.

The detailed computation of the Computation & Examination Unit, National Capital Region is made part

of this Decision.14

Aggrieved, respondent bank appealed the adverse decision to the NLRC which adopted in toto the

findings of the Labor Arbiter. In a Decision15

dated 30 January 2004, the NLRC dismissed the appeal and

found the decision of the Labor Arbiter to be sufficiently supported by the facts on record and law on the

matter.

Respondent banks Motion for Reconsideration was likewise deni ed by the NLRC in its Resolution16

dated

22 June 2004 for failing to show that patent or palpable errors have been committed in the assailed

decision.

The NLRC Resolution dated 22 June 2004, denying respondent banks motion for reconsideration, was

prematurely declared final and executory and was entered into judgment on 6 August 2004.17

Shortly thereafter, on 16 August 2004, respondent bank timely elevated the matter to the Court of

Appeals through a Special Civil Action for Certiorari18

under Rule 65 of the Revised Rules of Court.

Incorporated with its petition was the Urgent Application for the Issuance of Temporary Restraining

Order (TRO) and/or Writ of Preliminary Injunction.

Pending resolution of its petition and application for the issuance of TRO and/or writ of preliminary


7/24

injunction before the appellate court, the Labor Arbiter, on 16 September 2004, issued a Writ of

Execution19

for the satisfaction of the NLRC decision dated 30 January 2004. On the same date, a Notice

of Garnishment20

was served on the manager/cashier of respondent bank 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 Execution dated 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 Injunction

22

permanently enjoining theexecution of the NLRC decision dated 30 January 2004 until the final resolution of the case.

On 25 April 2005, the Court of Appeals resolved the controversy by reversing the judgment of the Labor

Arbiter and the NLRC and ruling out constructive dismissal considering that petitioners separation from

service was voluntary on his part when he chose to avail himself of the respondent banks early

retirement program and received the amount of P1.324 Million as retirement pay.23

Similarly ill-fated was Petitioners Motion for Reconsideration whichwas denied by the Court of Appeals

in its Resolution24

dated 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 THAT PETITIONER WAS NOT

CONSTRUCTIVELY DISMISSED FROM EMPLOYMENT.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT PETITIONER 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 the NLRCaffirming 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 accorded respect if not finality,

and are considered binding on this Court.26

It is equally true, however, that when the findings of the

Labor Arbiter and the NLRC are inconsistent with that of the Court of Appeals, there is a need to review

the records to determine which of them should be preferred as more conformable to evidentiary facts.27

As borne by the records, it appears that there is a d ivergence between the findings of the Labor Arbiter

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 and recalibrate 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 Revised Rules of

Court limits the office of a Petition for Review to questions of law and leaves the factual issues as foundby the quasi-judicial bodies, as long as they are supported by evidence.

28We never fail to stress as well

that when the rulings of the labor tribunal and the appellate court are in conflict, we are constrained to

analyze and weigh the evidence again.29

Substantively, petitioner alleges that respondent bank, through Macalino, subjected him to all forms of

unbearable harassment that can be mustered in order to force him to resign. Petitioner specifically

claims that he was deprived of h is salary and other benefits and privileges appurtenant 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 voluntarily opted toavail 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 acting capacity subject to the

ratification of the respondent banks Board of Directors and since his appointment has never been

ratified by the Board, respondent bank cannot therefore grant him the salary and benefits accorded to

such position.

In finding that petitioner was not constructively dismissed from employment, the Court of Appeals

stressed that there was no showing that petitioners separation from employment was due to

involuntary resignation or forced severance. Neither was it shown that there was a decrease in salary

and privileges or downgrading of petitioners rank. What can be clearly deduced from the evidence was

that until his voluntary retirement in 2001, petitioner was holding the position of Acting Assistant Vice-

President and was receiving the salary and benefits accorded thereto.

After scrupulously examining the contrasting positions of the parties, and the conflicting decisions 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 both the Labor Arbiter and the

NLRC that petitioner was constructively dismissed from employment.

Constructive dismissal or constructive discharge has been defined as quitting because continued

employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank

and a diminution in pay.30

In the case at bar, a demotion in rank or diminution in pay was never raised as

an issue. Settled then is the fact that petitioner suffered no demotion in rank or diminution in pay that

could give rise to a cause of action against respondent bank for constructive dismissal under this

definition.

Worthy to stress, however, is that constructive dismissal does not always take the form of demotion 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 of the 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 strenuously

argues that while the newly hired bank officers were given higher salaries and fat allowances, he was

merely paid the amount of P15,000 basic pay and P4,000 allowance for the position of Acting Assistant

Vice-President which, according to him, was way below what the newly hired bank officers were

enjoying. Stated differently, petitioner avers that he was discriminated against by 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 by petitionerfrom the Labor Arbiter up to this Court, including the evidence appended thereon, we find that no


8/24

evidence, substantial or otherwise, was ever submitted by petitioner to buttress the very premise of his

position that there was discrimination.

Discrimination has been defined as the failure to treat all persons equally when no reasonable distinction

can be found between those favored and those not favored.32

Thus, 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, competencies andexpertise as those of the newly hired bank officers so as to eliminate any possibility of substantial

distinction that may warrant the unequal treatment between them. No proof was likewise presented by

petitioner to show that the functions, duties and responsibilities he was performing 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 against by the

respondent bank. While he vigorously cried that the newly hired bank officers were afforded 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 prove the amount of salaries and

bonuses actually enjoyed by the newly hired bank officers, except for his bare allegations contained in

his demand letter34

dated 20 February 2001, to wit:

Mr. Portuguez has reliably learned that Bank records could show that your newly hired officers are being

paid the basic salaries in the range of P25,000 to P30,000.35

Such bare and sweeping statement contains nothing but empty imputation of a fact that could hardly 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 no such 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 case before

quasi-judicial bodies. Well-entrenched is the rule that the quantum of evidence required to establish a

fact in quasi-judicial bodies is substantial evidence. Substantial evidence is such amount of relevant

evidence which a reasonable mind might accept as adequate to support a conclusion, 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, petitioners case is devoid of substance to convince even the unreasonable minds, for

evidently the records are stripped of supporting proofs to, at the very least, even just verify his claim.

In addition, petitioner asseverates that in cases of constructive dismissal, the burden of proof rests on

the employer to show that the employee was dismissed on a valid and just cause.37

And failing to

discharge such presumption, as in the case at bar, respondent bank should be adjudged guilty 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 employees separation from employment is not

motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion

without sufficient cause.38

It bears stressing, however, that this legal principle presupposes that there is

indeed an involuntary separation from employment and the facts attendant to such forced separationwas clearly established.

This legal principle has no application in the instant controversy for as we have succinctly pointed above,

petitioner failed to establish that indeed he was discriminated against and on account 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 banks early voluntary retirement program and

accordingly received his retirement pay in the amount of P1.324 Million under such program.

Consequently, the burden of proof will not vest on respondent bank to prove the legality of petitioners

separation from employment but aptly remains with the petitioner to prove his allegation that his

availment of the early voluntary retirement program was, in fact, done involuntarily.

As we have explicitly ruled in Machica 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. It must 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 finds no application here because the respondents deny

having dismissed the petitioners. (Emphases supplied.)

Verily, petitioner did not present any clear, positive or convincing evidence in the present case to

support his claims. Indeed, he never presented any evidence at all other than his own self-serving

declarations. 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 petitioners claim for salary differentials. We are not

unmindful that the amount of P19,000 a month may not be commensurate compensation to the position

of Acting Assistant Vice-President, but in the case at bar, the facts and the evidence did not establish

even at least a rational basis for how much the standard compensation for the said position must be. It is

not enough that petitioner perceived that he was receiving a very low salary in the absence of a

comparative standard upon which he can peg his supposed commensurate compensation.

Petitioners incessant reliance on the findings of the Labor Arbiter and the NLRC is equally unavailing. At

the outset, we have already laid down that findings of fact of quasi-judicial bodies are conclusive and are

not subject to review by the Court. However, this rule does not apply if such findings are tainted with

mistake or not supported by evidence.41

In finding that respondent bank is guilty of constructive dismissal, the Labor Arbiter mainly hinges 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 affording protection 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 labor dispute brought before this

Court for our resolution.

While our laws endeavor to give life to the constitutional policy on social justice and on the protection of

labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also

recognizes that management has rights which are also entitled to respect and 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 u nfair treatment, nevertheless mandates the policyof social justice so as to strike a balance between an avowed predilection for labor, on the one hand, and


9/24

the maintenance of the legal rights of capital, the proverbial hen that lays the golden egg, on the other.

Indeed, we should not be unmindful of the legal norm that justice is in every case for the deserving, to be

dispensed with in light of established facts, the applicable law, and existing jurisprudence.44

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 and management

stand on equal footing when bargaining in good faith with each other, not to tilt the scale to favor one

over the other.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The Decision dated 25 April 2005,and the Resolution dated 25 August 2005, both rendered by the Court of Appeals in CA-G.R. SP No.

85723, are hereby AFFIRMED.No costs.

SO ORDERED.


10/24

G.R. No. 167614 March 24, 2009

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

AUSTRIA-MARTINEZ,J.:

For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty.

Their earnings have built houses, provided health care, equipped schools and planted the seeds of

businesses. They have woven together the world by transmitting ideas and knowledge from country tocountry. They have provided the dynamic human link between cultures, societies and economies. Yet,

only recently have we begun to understand not only how much international migration impacts

development, but how smart public policies can magnify this effect.

United Nations Secretary-General Ban Ki-MoonGlobal Forum on Migration and DevelopmentBrussels,July 10, 2007

1

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 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, 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 unexpiredportion of his employment contract or for three (3) months for every year of the unexpired term,

whichever is less.

x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but

exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal

to their lump-sum salary either for the unexpired portion of their employment contract "or for three

months for every year of the unexpired term, whichever is less" (subject clause). Petitioner claims that

the last clause violates the OFWs' constitutional rights in that it impairs the terms of their contract,

deprives them of equal protection and denies them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8,2004 Decision

3 and April 1, 2005 Resolution

4of the Court of Appeals (CA), which applied the subject

clause, entreating this Court to declare the subject clause unconstitutional.

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

under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with

the following terms and conditions:

Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded

employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the

assurance and representation of respondents that he would be made Chief Officer by the end of April

1998.6

Respondents did not deliver on their promise to make petitioner Chief Officer.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 h is repatriation on May 26, 1998, he had served only two (2) months and seven

(7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint9against respondents for constructive dismissal

and for payment of his money claims in the total amount of US$26,442.73, broken down as follows:

May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90

June 01/30, 1998 2,590.00

July 01/31, 1998 2,590.00

August 01/31, 1998 2,590.00

Sept. 01/30, 1998 2,590.00

Oct. 01/31, 1998 2,590.00

Nov. 01/30, 1998 2,590.00

Dec. 01/31, 1998 2,590.00

Jan. 01/31, 1999 2,590.00

Feb. 01/28, 1999 2,590.00

Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00

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

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

25,382.23

Amount adjusted to chief mate's salary

(March 19/31, 1998 to April 1/30, 1998) + 1,060.5010

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

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

TOTAL CLAIM US$ 26,442.7311

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

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

him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the

complainant (petitioner) by the respondents in the above-entitled case was illegal and the respondents

are hereby ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency,

based on the rate of exchange prevailing at the time of payment, the amount of EIGHT THOUSAND

SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the complainants salary for

three (3) months of the unexpired portion of the aforesaid contract of employment.1avvphi1

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

Philippine Currency, based on the rate of exchange prevailing at the time of payment, the amount of

FORTY FIVE U.S. DOLLARS (US$ 45.00),12

representing the complainants claim for a salary differential. In

addition, the respondents are hereby ordered to pay the complainant, jointly and severally, in Philippine

Currency, at the exchange rate prevailing at the time of payment, the complainants (petitioner's) claim

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


11/24


12/24

contract, computed at the monthly rate of US$2,590.00.31

The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of

OFWs to negotiate for and stipulate in their overseas employment contracts a determinate employment

period and a fixed salary package.32

It also impinges on the equal protection clause, for it treats OFWs

differently from local Filipino workers (local workers) by putting a cap on the amount of lump-sum salary

to which OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary award

for local workers when their dismissal is declared illegal; that the disparate treatment is not reasonableas there is no substantial distinction between the two groups;33

and that it defeats Section 18,34

Article II

of the Constitution which guarantees the protection of the rights and welfare of all Filipino workers,

whether deployed locally or overseas.35

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with

existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though there are

conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected

OFWs.36

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other

purpose but to benefit local placement agencies. He marks the statement made by the Solicitor General

in his Memorandum, viz.:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the

event that jurisdiction over the foreign employer is not acquired by the court or if the foreign employer

reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their

obligations are unnecessarily penalized for the acts of the foreign employer. To protect them and to

promote their continued helpful contribution in deploying Filipino migrant workers, liability for money

claims was reduced under Section 10 of R.A. No. 8 042.37

(Emphasis supplied)

Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause

sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers b etter off than

local employers because in cases involving the illegal dismissal of employees, foreign employers are

liable for salaries covering a maximum of only three months of the unexpired employment contract while

local employers are liable for the full lump-sum salaries of their employees. As petitioner puts it:

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

have to give their employees they have illegally dismissed, following well-entrenched and unequivocal

jurisprudence on the matter. On the other hand, foreign employers will only be limited to giving the

illegally dismissed migrant workers the maximum of three (3) months unpaid salaries notwithstanding

the unexpired term of the contract that can be more than three (3) months.38

Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the

salaries and other emoluments he is entitled to under his fixed-period employment contract.39

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the constitutional issue should not be

entertained, for this was belatedly interposed by petitioner in his appeal before the CA, and not at the

earliest opportunity, which was when he filed an appeal before the NLRC.40

The Arguments of the Solicitor General

The Solicitor General (OSG)41

points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions

could not have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having preceded

petitioner's contract, the provisions thereof are deemed part of the minimum terms of petitioner's

employment, especially on the matter of money claims, as this was not stipulated upon by the parties.42

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

employment, such that their rights to monetary benefits must necessarily be treated differently. The

OSG enumerates the essential elements that distinguish OFWs from local workers: first, while localworkers perform their jobs within Philippine territory, OFWs perform their jobs for foreign employers,

over whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost impossible to

enforce judgment; and second, as held in Coyoca v. National Labor Relations Commission43

and Millares

v. National Labor Relations Commission,44

OFWs are contractual employees who can never acquire

regular employment status, unlike local workers who are or can become regular employees. Hence, the

OSG posits that there are rights and privileges exclusive to local workers, but not available to OFWs; that

these peculiarities make for a reasonable and valid basis for the differentiated treatment under the

subject clause of the money claims of OFWs who are illegally dismissed. Thus, the provision does not

violate the equal protection clause nor Section 18, Article II of the Constitution.45

Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to

mitigate the solidary liability of placement agencies for this "redounds to the benefit of the migrant

workers whose welfare the government seeks to p romote. The survival of legitimate placement agencies

helps [assure] the government that migrant workers are properly deployed and are employed underdecent and humane conditions."

46

The Court's Ruling

The Court sustains petitioner on the first and second issues.

When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as

the Congress, it does so only when these conditions obtain: (1) that there is an actual case or controversy

involving a conflict of rights susceptible of judicial determination;47

(2) that the constitutional question is

raised by a proper party48

and at the earliest opportunity;49

and (3) that the constitutional question is the

very lis mota of the case,50

otherwise the Court will dismiss the case or decide the same on some other

ground.51

Without a doubt, there exists in this case an actual controversy directly involving petitioner who is

personally aggrieved that the labor tribunals and the CA computed his monetary award based on the

salary period of three months only as provided under the subject clause.

The constitutional challenge is also timely. It should be borne in mind that the requirement that a

constitutional issue be raised at the earliest opportunity entails the interposition of the issue in the

pleadings before a competent court, such that, if the issue is not raised in the pleadings before that

competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot be

considered on appeal.52

Records disclose that the issue on the constitutionality of the subject clause was

first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration with

said labor tribunal,53

and reiterated in his Petition for Certioraribefore the CA.54

Nonetheless, the issue is

deemed seasonably raised because it is not the NLRC but the CA which has the competence to resolve

the constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial functionits

function in the present case is limited to determining questions of fact to which the legislative policy of


13/24

R.A. No. 8042 is to be applied and to resolving such questions in accordance with the standards laid

down by the law itself;55

thus, its foremost function is to administer and enforce R.A. No. 8042, and not

to inquire into the validity of its provisions. The CA, on the other hand, is vested with the power of

judicial review or the power to declare unconstitutional a law or a provision thereof, such as the subject

clause.56

Petitioner's interposition of the constitutional issue before the CA was undoubtedly seasonable.

The CA was therefore remiss in failing to take up the issue in its decision.

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

because the monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his

12-month employment contract, and not just for a period of three months, strikes at the very core of the

subject clause.

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

Does the subject clause violate Section 10,Article III of the Constitution on non-impairmentof contracts?The answer is in the n egative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the

term of his employment and the fixed salary package he will receive57

is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective

operation,58

and cannot affect acts or contracts already perfected;59

however, as to laws already in

existence, their provisions are read into contracts and deemed a part thereof.60

Thus, the non-

impairment clause under Section 10, Article II is limited in application to laws about to be enacted that

would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner

changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the

employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A.

No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when

the parties executed their 1998 employment contract, they were deemed to have incorporated into it allthe 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.61

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.62

Does the subject clause violate Section 1,Article III of the Constitution, and Section 18,Article II andSection 3, Article XIII on laboras a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property without due process of law nor shall any person

be denied the equal protection of the law.

Section 18,63

Article II and Section 3,64

Article XIII accord all members of the labor sector, without

distinction as to place of deployment, full protection of their rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to

economic security and parity: all monetary benefits should be equally enjoyed by workers of similar

category, while all monetary obligations should be borne by them in equal degree; none should be

denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like

circumstances.65

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees

fit, a system of classification into its legislation; however, to be valid, the classification must comply with

these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law;

3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class.66

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification

embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classificationneeds only be shown to be rationally related to serving a legitimate state interest;

67b) the middle-tier or

intermediate scrutiny in which the government must show that the challenged classification serves an

important state interest and that the classification is at least substantially related to serving that

interest;68

and c) strict judicial scrutiny69

in which a legislative classification which impermissibly

interferes with the exercise of a fundamental right70

or operates to the peculiar disadvantage of a

suspect class71

is presumed unconstitutional, and the burden is upon the government to prove that the

classification is necessary to achieve a compelling state interestand that it is the least restrictive means

to protect such interest.72

Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications73

based on

race74

or gender75

but not when the classification is drawn along income categories.76

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

77the constitutionality of a provision in the charter of the

Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was challenged for

maintaining its rank-and-file employees under the Salary Standardization Law (SSL), even when the rank-

and-file employees of other GFIs had been exempted from the SSL by their respective charters. Finding

that the disputed provision contained a suspect classification based on salary grade, the Court

deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said

provision. More significantly, it was in this case that the Court revealed the broad outlines of its judicial

philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification, and its policies should be

accorded recognition and respect by the courts of justice except when they run afoul of the Constitution.

The deference stops where the classification violates a fundamental right, or prejudices persons

accorded special protection by the Constitution. When these violations arise, this Court must discharge

its primary role as the vanguard of constitutional guaranties, and require a stricter and more exactingadherence to constitutional limitations. Rational basis should not suffice.


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Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a

stricter judicial scrutiny finds no support in American or English jurisprudence. Nevertheless, these

foreign decisions and authorities are not per se controlling in this jurisdiction. At best, they are

persuasive and have been used to support many of our decisions. We should not place undue and

fawning reliance upon them and regard them as indispensable mental crutches without which we cannot

come to our own decisions through the employment of our own endowments. We live in a different

ambience and must decide our own problems in the light of our own interests and needs, and of our

qualities and even idiosyncrasies as a people, and always with our own concept of law and justice. Our

laws must be construed in accordance with the intention of our own lawmakers and such intent may be

deduced from the language of each law and the context of other local legislation related thereto. More

importantly, they must be construed to serve our own public interest which is the be-all and the end-allof all our laws. And it need not be stressed that our public interest is distinct and different from others.

x x x x

Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of

effective judicial intervention.

Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble

proclaims "equality" as an ideal precisely in protest against crushing inequities in Philippine society. The

command to promote social justice in Article II, Section 10, in "all phases of national development,"

further explicitated in Article XIII, are clear commands to the State to take affirmative action in the

direction of greater equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal

support for a more vigorous state effort towards achieving a reasonable measure of equality.

Our present Constitution has gone further in guaranteeing vital social and economic rights to

marginalized groups of society, including labor. Under the policy of social justice, the law bends over

backward to accommodate the interests of the working class on the humane justification that those with

less privilege in life should have more in law. And the obligation to afford protection to labor is

incumbent not only on the legislative and executive branches but also on the judiciary to translate this

pledge into a living reality. Social justice calls for the humanization of laws and the equalization of social

and economic forces by the State so that justice in its rational and objectively secular conception may at

least be approximated.

x x x x

Under most circumstances, the Court will exercise judicial restraint in deciding questions ofconstitutionality, recognizing the broad discretion given to Congress in exercising its legislative power.

Judicial scrutiny would be based on the "rational basis" test, and the legislative discretion would be given

deferential treatment.

But if the challenge to the statute is premised on the denial of a fundamental right, orthe perpetuation

of prejudice against persons favored by the Constitution with special protection, judicial scrutiny ought

to be more strict.A weak and watered down view would call for the abdication of this Courts solemn

duty to strike down any law repugnant to the Constitution and the rights it enshrines. This is true

whether the actor committing the unconstitutional act is a private person or the government itself or

one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of

the actor.

x x x x

In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee

status. It is akin to a distinction based on economic class and status, with the higher grades as recipients

of a benefit specifically withheld from the lower grades. Officers of the BSP now receive higher

compensation packages that are competitive with the industry, while the poorer, low-salaried employees

are limited to the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-file

employees are paid the strictly regimented rates of the S SL while employees higher in rank - possessing

higher and better education and opportunities for career advancement - are given higher compensation

packages to entice them to stay. Considering that majority, if not all, the rank-and-file employees consist

of people whose status and rank in life are less and limited, especially in terms of job marketability, it is

they - and not the officers - who have the real economic and financial need for the adjustment . This is in

accord with the policy of the Constitution "to free the people from poverty, provide adequate socialservices, extend to them a decent standard of living, and improve the quality of life for all." Any act of

Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court

before it can pass muster. (Emphasis supplied)

Imbued with the same sense of "obligation to afford protection to labor," the Court in the present case

also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a suspect

classification prejudicial to OFWs.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a

closer examination reveals that the subject clause has a discriminatory intent against, and an invidious

impact on, OFWs at two levels:

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

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

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

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

one year or more

As pointed out by petitioner,78

it was in Marsaman Manning Agency, Inc. v. National Labor Relations

Commission79

(Second Division, 1999) that the Court laid down the following rules on the application of

the periods prescribed under Section 10(5) of R.A. No. 804, to wit:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally

dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his

employment contract or three (3) months salary for every year of the unexpired term, whichever is

less, comes into play only when the employment contract concerned has a term of at least one (1) year

or more.This is evident from the words "for every year of the unexpired term" which follows the words

"salaries x x x for three months."To follow petitioners thinking that private respondent is entitled to

three (3) months salary only simply because it is the lesser amount is to completely disregard and

overlook some words used in the statute while giving effect to some. This is contrary to the well-

established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part

or word thereof be given effect since the law-making body is presumed to know the meaning of the

words employed in the statue and to have used them advisedly. Ut res magis valeat quam pereat.80

(Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was


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awarded his salaries for the remaining 8 months and 6 days of his contract.

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on

Section 10(5). One was Asian Center for Career and Employment System and Services v. National Labor

Relations Commission (Second Division, October 1998),81

which involved an OFW who was awarded a

two-year employment contract, but was dismissed after working for one year and two months. The LA

declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary covering eight months,

the unexpired portion of his contract. On appeal, the Court reduced the award to SR3,600.00 equivalent

to his three months salary, this being the lesser value, to wit:

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just, valid or

authorized cause is entitled to his salary for the unexpired portion of his employment contract or for

three (3) months for every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondents employment contract is eight (8)

months. Private respondent should therefore be paid his basic salary corresponding to three (3) months

or a total of SR3,600.82

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division,

December 1998),83

which involved an OFW (therein respondent Erlinda Osdana) who was originally

granted a 12-month contract, which was deemed renewed for another 12 months. After serving for one

year and seven-and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded

her salaries for the entire unexpired portion of four and one-half months of her contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

Case Title Contract

Period

Period of Service Unexpired

Period

Period Applied in the

Computation of the

Monetary Award

Skippers v. Maguad84

6 months 2 months 4 months 4 months

Bahia Shipping v.

Reynaldo Chua85


Centennial

Transmarine v. dela

Cruz l86


Talidano v. Falcon87


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

Oriental v. CA89

12 months more than 2 months 10 months 3 months

PCL v. NLRC90

12 months more than 2 months more or less 9

months

3 months

Olarte v. Nayona91

12 months 21 days 11 months and

9 days

3 months

JSS v.Ferrer92

12 months 16 days 11 months and

24 days

3 months

Pentagon v.

Adelantar93

12 months 9 months and 7

days

2 months and

23 days

2 months and 23 days

Phil. Employ v.

Paramio, et al.94

12 months 10 months 2 months Unexpired portion

Flourish Maritime v.

Almanzor95

2 years 26 days 23 months and

4 days

6 months or 3 months

for each year ofcontract

Athenna Manpower v.

Villanos96

1 year, 10

months

and 28 days

1 month 1 year, 9

months and 28

days

6 months or 3 months

for each year of

contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first

category includes OFWs with fixed-period employment contracts of less than one year; in case of illegal

dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second

category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal

dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired portion of

their contracts.

The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent

OFW worked for only 2 months out of his 6-month contract, but was awarded his salaries for the

remaining 4 months. In contrast, the respondent OFWs in Oriental and PCLwho had also worked for

about 2 months out of their 12-month contracts were awarded their salaries for only 3 months of the

unexpired portion of their contracts. Even the OFWs involved in Talidano and Univan who hadworked

for a longer period of 3 months out of their 12-month contracts before being illegally dismissed were

awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an

employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B

with an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both

commenced work on the same day and under the same employer, and were illegally dismissed after one

month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his

salaries for the remaining 9 months of his contract, whereas OFW- B will be entitled to only US$3,000.00,

equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00

for the unexpired portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the Court takes into account jurisprudence that,prior to

the effectivity of R.A. No. 8042 on July 14, 1995,97

illegally dismissed OFWs, no matter how long the

period of their employment contracts, were entitled to their salaries for the entire unexpired portions of

their contracts. The matrix below speaks for itself:

Case Title Contract Period Period of

Service

Unexpired

Period

Period Applied in the

Computation of the

Monetary Award

ATCI v. CA, et

al.98

2 years 2 months 22 months 22 months

Phil. Integrated

v. NLRC99

2 years 7 days 23 months

and 23 days


JGB v. NLC100


Agoy v. NLRC101


EDI v. NLRC, et

al.102


Barros v. NLRC,

et al.103


Philippine

Transmarine v.

Carilla104

12 months 6 months and

22 days

5 months

and 18 days


It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions

thereof, were treated alike in terms of the computation of their monetary benefits in case of illegal

dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries multiplied bythe entire unexpired portion of their employment contracts.


16/24

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of

the money claims of illegally dismissed OFWs based on their employment periods, in the process singling

outone category whose contracts have an unexpired portion of one year or more and subjecting them to

the peculiar disadvantage of having their monetary awards limited to their salaries for 3 months or for

the unexpired portion thereof, whichever is less, but all the while sparing the other category from such

prejudice, simply because the latter's unexpired contracts fall short of one year.

Among OFWs With Employment Contracts of More Than One Year

Upon closer examination of the terminology employed in the subject clause, the Court now has

misgivings on the accuracy of the Marsamaninterpretation.

The Court notes that the subject clause "or for three (3) months for every year of the unexpired term,

whichever is less" contains the qualifying phrases "every year" and "unexpired term." By its ordinary

meaning, the word "term" means a limited or definite extent of time.105

Corollarily, that "every year" is

but part of an "unexpired term" is significant in many ways: first, the unexpired term must be at least

one year, for if it were any shorter, there would be no occasion for such unexpired term to be measured

by every year; and second, the original term must be more than one year, for otherwise, whatever w

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