SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v.

NLRC
G.R. No. 161757; January 25, 2006
Ponente: J. Carpio-Morales

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

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

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

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

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

Furthermore, as Sunace correctly points out, there was an implied revocation of its agency relationship with its
foreign principal when, after the termination of the original employment contract, the foreign principal directly
negotiated with Divina and entered into a new and separate employment contract in Taiwan.
 SUNACE INTERNATIONAL MANAGEMENT SERVICES vs NLRC Case Digest
SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v. NATIONAL LABOR RELATIONS
COMMISSION et al.
480 SCRA 146 (2006)

FACTS: Respondent Divina Montehermozo is a domestic helper deployed to Taiwan by Sunace International
Management Services (Sunace) under a 12-month contract. Such employment was made with the assistance
of Taiwanese broker Edmund Wang. After the expiration of the contract, Montehermozo continued her
employment with her Taiwanese employer for another 2 years.

When Montehermozo returned to the Philippines, she filed a complaint against Sunace, Wang, and her
Taiwanese employer before the National Labor Relations Commission (NLRC). She alleges that she was
underpaid and was jailed for three months in Taiwan. She further alleges that the 2-year extension of her
employment contract was with the consent and knowledge of Sunace. Sunace, on the other hand, denied all the
allegations.

The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable thereof. The National Labor Relations
Commission and Court of Appeals affirmed the labor arbiters decision. Hence, the filing of this appeal.

ISSUE: Whether or not the 2-year extension of Montehermozos employment was made with the knowledge and
consent of Sunace

HELD: There is an implied revocation of an agency relationship when after the termination of the original
employment contract, the foreign principal directly negotiated with the employee and entered into a new and
separate employment contract.

Contrary to the Court of Appeals finding, the alleged continuous communication was with the Taiwanese broker
Wang, not with the foreign employer.

The finding of the Court of Appeals solely on the basis of the telefax message written by Wang to Sunace, that
Sunace continually communicated with the foreign "principal" (sic) and therefore was aware of and had
consented to the execution of the extension of the contract is misplaced. The message does not provide evidence
that Sunace was privy to the new contract executed after the expiration on February 1, 1998 of the original
contract. That Sunace and the Taiwanese broker communicated regarding Montehermozos allegedly withheld
savings does not necessarily mean that Sunace ratified the extension of the contract.

As can be seen from that letter communication, it was just an information given to Sunace that Montehermozo
had taken already her savings from her foreign employer and that no deduction was made on her salary. It
contains nothing about the extension or Sunaces consent thereto.
Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume that it was sent to
enlighten Sunace who had been directed, by Summons issued on February 15, 2000, to appear on February 28,
2000 for a mandatory conference following Montehermozos filing of the complaint on February 14, 2000.

Respecting the decision of Court of Appeals following as agent of its foreign principal, [Sunace] cannot profess
ignorance of such an extension as obviously, the act of its principal extending [Montehermozos] employment
contract necessarily bound it, it too is a misapplication, a misapplication of the theory of imputed knowledge.

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer, not
the other way around. The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent
Sunace.

There being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment
contract extension, it cannot be said to be privy thereto. As such, it and its "owner" cannot be held solidarily liable
for any of Montehermozos claims arising from the 2-year employment extension. As the New Civil Code
provides, Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights
and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of
law. Furthermore, as Sunace correctly points out, there was an implied revocation of its agency relationship with
its foreign principal when, after the termination of the original employment contract, the foreign principal directly
negotiated with Montehermozo and entered into a new and separate employment contract in Taiwan. Article
1924 of the New Civil Code states that the agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons.
\
 ANTONIO M. SERRANO
VS. GALLANT MARITIME SERVICES, INC. AND MARLOW NAVIGATION CO., INC.
GR No. 167614 - March 24, 2009
En banc

FACTS:

Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow Navigation Co.,
Inc., under a POEA-approved contract of employment for 12 months, as Chief Officer, with the basic monthly
salary of US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per month.

On March 19, 1998, the date of his departure, Serrano was constrained to accept a downgraded employment
contract for the position of Second Officer with a monthly salary of US$1,000 upon the assurance and
representation of respondents that he would be Chief Officer by the end of April 1998.

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

Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for
payment of his money claims in the total amount of US$26,442.73 (based on the computation of $2590/month
from June 1998 to February 199, $413.90 for March 1998, and $1640 for March 1999) as well as moral and
exemplary damages.

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

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

Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the last
clause in the 5th paragraph of Section 10 of RA 8042, which reads:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee
with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.
The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with the Court of Appeals (CA),
reiterating the constitutional challenge against the subject clause. The CA affirmed the NLRC ruling on the
reduction of the applicable salary rate, but skirted the constitutional issue raised by herein petitioner Serrano.

ISSUES:

1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-impairment of
contracts;
2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and
Section 3, Article XIII on labor as a protected sector.

HELD:

On the first issue.

The answer is in the negative. Petitioner's claim that the subject clause unduly interferes with the stipulations in
his contract on the term of his employment and the fixed salary package he will receive is not tenable.
Section 10, Article III of the Constitution provides: No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation,
and cannot affect acts or contracts already perfected; however, as to laws already in existence, their provisions
are read into contracts and deemed a part thereof. Thus, the non-impairment clause under Section 10, Article II
is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts
by enlarging, abridging or in any manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the
employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No.
8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties
executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of
R.A. No. 8042.

But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on
the ground that it impinges on the impairment clause, for the law was enacted in the exercise of the police power
of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs,
with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be
employed. Police power legislations adopted by the State to promote the health, morals, peace, education, good
order, safety, and general welfare of the people are generally applicable not only to future contracts but even to
those already in existence, for all private contracts must yield to the superior and legitimate measures taken by
the State to promote public welfare.
On the second issue.

The answer is in the affirmative.

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

Section 18, Article II and Section 3, Article XIII accord all members of the labor sector, without distinction as to
place of deployment, full protection of their rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic
security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all
monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws
which is enjoyed by, or spared the burden imposed on, others in like circumstances.

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a
system of classification into its legislation; however, to be valid, the classification must comply with these
requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not
limited to existing conditions only; and 4) it applies equally to all members of the class.

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in
a law: a) the deferential or rational basis scrutiny in which the challenged classification needs only be shown to
be rationally related to serving a legitimate state interest; b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state interest and that the
classification is at least substantially related to serving that interest; and c) strict judicial scrutiny in which a
legislative classification which impermissibly interferes with the exercise of a fundamental right or operates to
the peculiar disadvantage of a suspect class is presumed unconstitutional, and the burden is upon the
government to prove that the classification is necessary to achieve a compelling state interest and that it is the
least restrictive means to protect such interest.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer
examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on,
OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one
year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally
discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to
their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042,
specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year
or more in their employment contract have since been differently treated in that their money claims are subject
to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment.

The Court concludes that the subject clause contains a suspect classification in that, in the computation of the
monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim
of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs
or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and
burdens it with a peculiar disadvantage.

There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now
subjects the classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest
through the least restrictive means.

What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the
Constitution and calibrated by history. It is akin to the paramount interest of the state for which some individual
liberties must give way, such as the public interest in safeguarding health or maintaining medical standards, or
in maintaining access to information on matters of public concern.

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

In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest
that would justify the perpetuation of the discrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment of
OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier rationale will have to
be rejected. There can never be a justification for any form of government action that alleviates the burden of
one sector, but imposes the same burden on another sector, especially when the favored sector is composed of
private businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose
protection no less than the Constitution commands. The idea that private business interest can be elevated to
the level of a compelling state interest is odious.

Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-
a-vis their foreign principals, there are mechanisms already in place that can be
employed to achieve that purpose without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas
Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring foreign employers
who default on their contractual obligations to migrant workers and/or their Philippine agents. These disciplinary
measures range from temporary disqualification to preventive suspension. The POEA Rules and Regulations
Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar administrative
disciplinary measures against erring foreign employers.

Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement
agencies in enforcing the solidary liability of their foreign principals.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner
and other OFWs to equal protection.

The subject clause or for three months for every year of the unexpired term, whichever is less in the 5th
paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL

Note:

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; (2) that the constitutional question is raised by a proper
party and at the earliest opportunity; and (3) that the constitutional question is the very lis mota of the case,
otherwise the Court will dismiss the case or decide the same on some other ground.
----
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally
dismissed OFWs was in place. This uniform system was applicable even to local workers with fixed-term
employment.

Article 605 of the Code of Commerce provides:

Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite period
or voyage, they cannot be discharged until the fulfillment of their contracts, except for reasons of insubordination
in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by
malice or manifest or proven negligence.

Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, in which the Court held the shipping
company liable for the salaries and subsistence allowance of its illegally dismissed employees for the entire
unexpired portion of their employment contracts.

While Article 605 has remained good law up to the present, Article 299 of the Code of Commerce was replaced
by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain work
cannot leave or be dismissed without sufficient cause, before the fulfillment of the contract.
 SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,
vs.
JOY C. CABILES, Respondent.
G.R. No. 170139 August 5, 2014

PONENTE: Leonen

TOPIC: Section 10 of RA 8042 vis-a-vis Section 7 of RA 10022

FACTS:
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.

Respondent Joy Cabiles was hired thus signed a one-year employment contract for a monthly salary
of NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. She alleged
that in her employment contract, she agreed to work as quality control for one year. In Taiwan, she was asked
to work as a cutter.

Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without prior
notice, that she was terminated and that she should immediately report to their office to get her salary and
passport. She was asked to prepare for immediate repatriation. Joy claims that she was told that from June
26 to July 14, 1997, she only earned a total of NT$9,000.15 According to her, Wacoal deducted NT$3,000 to
cover her plane ticket to Manila.

On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC against petitioner and
Wacoal. LA dismissed the complaint. NLRC reversed LAs decision. CA affirmed the ruling of the National Labor
Relations Commission finding respondent illegally dismissed and awarding her three months worth of salary,
the reimbursement of the cost of her repatriation, and attorneys fees

ISSUE:
Whether or not Cabiles was entitled to the unexpired portion of her salary due to illegal dismissal.

HELD:
YES. The Court held that the award of the three-month equivalent of respondents salary should be
increased to the amount equivalent to the unexpired term of the employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court ruled that the
clause or for three (3) months for every year of the unexpired term, whichever is less is unconstitutional for
violating the equal protection clause and substantive due process.
 A statute or provision which was declared unconstitutional is not a law. It confers no rights; it imposes
no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all.

The Court said that they are aware that the clause or for three (3) months for every year of the
unexpired term, whichever is less was reinstated in Republic Act No. 8042 upon promulgation of Republic Act
No. 10022 in 2010.

Ruling on the constitutional issue

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may
exercise its powers in any manner inconsistent with the Constitution, regardless of the existence of any law that
supports such exercise. The Constitution cannot be trumped by any other law. All laws must be read in light of
the Constitution. Any law that is inconsistent with it is a nullity.

Thus, when a law or a provision of law is null because it is inconsistent with the Constitution, the nullity
cannot be cured by reincorporation or reenactment of the same or a similar law or provision. A law or provision
of law that was already declared unconstitutional remains as such unless circumstances have so changed as to
warrant a reverse conclusion.

The Court observed that the reinstated clause, this time as provided in Republic Act. No. 10022,
violates the constitutional rights to equal protection and due process.96 Petitioner as well as the Solicitor General
have failed to show any compelling change in the circumstances that would warrant us to revisit the precedent.

The Court declared, once again, the clause, or for three (3) months for every year of the unexpired
term, whichever is less in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042
is declared unconstitutional and, therefore, null and void.
Domingo vs. Rayala (596 SCRA 90)
Domingo vs. Rayala
546 Scra 90

Facts:
Ma. Lourdes T. Domingo (Domingo), then Stenographic Reporter III at the NLRC, filed a Complaint for sexual
harassment against Rayala, the chairman of NLRC.
She alleged that Rayala called her in his office and touched her shoulder, part of her neck then tickled her ears.
Rayala argued that his acts does not constitute sexual harassment because for it to exist, there must be a
demand, request or requirement of sexual favor.

Issue:
Whether or not Rayala commit sexual harassment.

Rulings:
Yes.

The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof defines work-related
sexual harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual Harassment Defined. Work, education or training-related
sexual harassment is committed by an employer, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy
over another in a work or training or education environment, demands, requests or otherwise requires any sexual
favor from the other, regardless of whether the demand, request or requirement for submission is accepted by
the object of said Act.
(a) In a work-related or employment environment, sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued
employment of said individual, or in granting said individual favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the
employee which in a way would discriminate, deprive or diminish employment opportunities or otherwise
adversely affect said employee;
. (2) The above acts would impair the employees rights or privileges under existing labor laws; or
. (3) The above acts would result in an intimidating, hostile, or offensive environment for the employee.

even if we were to test Rayalas acts strictly by the standards set in Section 3, RA 7877, he would still be
administratively liable. It is true that this provision calls for a demand, request or requirement of a sexual favor.
But it is not necessary that the demand, request or requirement of a sexual favor be articulated in a categorical
oral or written statement. It may be discerned, with equal certitude, from the acts of the offender. Holding and
squeezing Domingos shoulders, running his fingers across her neck and tickling her ear, having inappropriate
conversations with her, giving her money allegedly for school expenses with a promise of future privileges, and
making statements with unmistakable sexual overtones all these acts of Rayala resound with deafening clarity
the unspoken request for a sexual favor.