WAGES THAT SHOULD BE RECOVERED BY AN ILLEGALLY DISMISSED OVERSEAS WORKER SHOULD BE FOR THE UNEXPIRED PORTION OF THE CONTRACT AND NOT BE LIMITED TO THREE MONTHS

Illegally dismissed overseas worker should be paid the unexpired portion of their contract. Limiting the wages that should be recovered to three months is both a violation of due process and the equal protection clauses of the Constitution.

Thus, the SC held as follows:

Aldovino vs. Gold and Green Manpower Management and Development Services, Inc.
G.R. No. 200811, June 19, 2019

Compromise agreement; Quitclaim; Quitclaims do not bar employees from filing labor complaints and demanding benefits to which they are legally entitled; Compromise agreement for the payment of salaries and benefits should not be construed as a restriction on right to prosecute other legitimate claims; Unexpired portion of the contract; Section 7 of R.A. 10022 is unconstitutional

Facts:

Julita M. Aldovino and her co-applicants (Aldovino, et al.) applied for work at Gold and Green Manpower Management and Development Services, Inc. (Gold and Green Manpower), a local manning agency whose foreign principal is Sage International Development Company, Ltd. (Sage Intemational).

Eventually, they were hired as sewers for Dipper Semi-Conductor Company, Ltd. (Dipper Semi-Conductor), a Taiwan-based company. Their respective employment contracts provided an eight (8)-hour working day, a fixed monthly salary, and entitlement to overtime pay, among others.

Before Aldovino, et al. could be deployed for work, Gold and Green Manpower required each applicant to pay a P72,000.00 placement fee. But since the applicants were unable to produce the amount on their own, Gold and Green Manpower referred them to E-Cash Paylite and Financing, Inc. (E-Cash Paylite), where they loaned their placement fees.

Once Aldovino and her co-workers arrived in Taiwan, Gold and Green Manpower took all their travel documents, including their passports. They were then made to sign another contract that provides that they would be paid on a piece-rate basis instead of a fixed monthly salary.

During their employment, Aldovino and her co-workers toiled from 8:00 a.m. to 9:00 p.m. for six (6) days a week. At times, they were forced to work on Sundays without any overtime premium. Because they were paid on a piece-rate basis, they received less than the fixed monthly salary stipulated in their original contract. When Aldovino and her co-workers inquired, Dipper Semi-Conductor refused to disclose the schedule of payment on a piece-rate basis. Eventually, they defaulted on their loan obligations with E-Cash Paylite.

As a result, Aldovino and her co-workers, except De Jesus, filed before a local court in Taiwan a Complaint against their employers, Dipper Semi-Conductor and Sage International. The parties met before the Bureau of Labor Affairs for a dialogue. There, Dipper Semi-Conductor ordered Aldovino and her co-workers to return to the Philippines as it was no longer interested in their services. They were then made to immediately pack their belongings, after which they were dropped off at a train station in Taipei. After a few hours, a friend brought them to the Manila Economic and Cultural Office, where they stayed for a week. They were then transferred to Hope Shelter, where they remained for four (4) months while the case was pending.

Eventually, the parties entered into a Compromise Agreement. Based on the Compromise Agreement, Aldovino and her co-workers, except De Jesus, executed an Affidavit of Quitclaim and Release. Subsequently, all of them returned to the Philippines. They eventually filed before the Labor Arbiter a case for illegal termination, underpayment of salaries, human trafficking, illegal signing of papers, and other money claims such as overtime pay, return of placement fees, and moral and exemplary damages.

LA Ruling:

The Labor Arbiter (LA) dismissed the Complaint for illegal dismissal but ordered Gold and Green Manpower and Sage International to pay each of the workers P20,000.00 as financial assistance.

NLRC Ruling:

On appeal, the National Labor Relations Commission (NLRC) affirmed the LA’s Decision.

The NLRC found that Aldovino and her co-workers were not illegally dismissed and that they voluntarily returned to the Philippines. Moreover, the Compromise Agreement barred any further claims arising from their employment.

Additionally, the NLRC deleted the award of financial assistance for lack of factual and legal bases. Aldovino and her co-workers moved for reconsideration, but their Motion was denied for lack of merit.

Hence, they filed before the Court of Appeals a Petition for Certiorari.

CA Ruling:

The Court of Appeals (CA) reversed the labor tribunals’ rulings.

The CA only ruled that Aldovino and her co-workers had been illegally dismissed from service, but also declared that the Compromise Agreement did not bar them from filing an illegal dismissal case.

Accordingly, the CA ordered Gold and Green Manpower and Sage International to pay the workers their salaries “for the unexpired portion of their contract in accordance with Section 7 of [Republic Act No.] 10022 and pursuant to Serrano vs. Gallant Maritime Services, Inc.”

Aldovino and her co-workers moved for partial reconsideration, praying that the three (3)-month cap stated in the Decision’s dispositive portion be annulled, pursuant to Serrano. However, their Motion was denied.

Thus, Aldovino and her co-workers filed a Petition for Review on Certiorari before the SC.

Issue/s:

Whether or not the a 3-month cap be observed in the contract of the overseas workers

Whether or not Section 7 of R.A. 10022 putting a 3-month salary cap is unconstitutional and that the overseas workers who were illegally dismissed are entitled to the unexpired portion of their employment contracts

Whether or not a compromise agreement that settles the payment of salaries and overtime premiums restrict the right to prosecute other legitimate claims by employees

SC Ruling:

The SC found the petition meritorious.

The SC held that this case is governed by the Philippine laws. Both the Constitution and the Labor Code guarantee the security of tenure.” It is not stripped off when Filipinos work in a different jurisdiction. We follow the lex loci contractus principle, which means that the law of the place where the contract is executed governs the contract.

Further, it held that indeed, because Aldovino, et al.’s employment contracts were executed in the Philippines, Philippine laws govern them. Gold and Green Manpower, then, must answer and be held liable under our laws.

Waivers and quitclaims executed by employees are generally frowned upon for being contrary to public policy. This is based on the recognition that employers and employees do not stand on equal footing.

Quitclaims do not bar employees from filing labor complaints and demanding benefits to which they are legally entitled. They are “ineffective in barring recovery of the full measure of a worker’s rights, and the acceptance of benefits therefrom does not amount to estoppel.” The law does not recognize agreements that result in compensation less than what is mandated by law. These quitclaims do not prevent employees from subsequently claiming benefits to which they are legally entitled.

In Am-Phil Food Concepts, Inc. vs. Padilla, this Court held that quitclaims do not negate charges for illegal dismissal. Here, the parties entered into the Compromise Agreement to terminate the case for underpayment of wages, which Aldovino, et al. had previously filed against Gold and Green Manpower in Taiwan. The object and foundation of the Compromise Agreement was to settle the payment of salaries and overtime premiums to which Aldovino, et al. were legally entitled. Hence, it should not be construed as a restriction on Aldovino, et al.’s right to prosecute other legitimate claims they may have against Gold and Green Manpower.

Besides, at the time the parties’ Compromise Agreement was executed, Gold and Green Manpower had just terminated Aldovino, et al. from employment. Aldovino, et al., therefore, had no other choice but to accede to the terms and conditions of the agreement to recover the difference in their salaries and overtime pay. With no means of livelihood, they signed the Compromise Agreement out of dire necessity.

Further, the SC held that in Serrano, it ruled that the clause “or for three (3) months for every year of the unexpired term, whichever is less” under Section 10 of the Migrant Workers and Overseas Filipinos Act is unconstitutional for violating the equal protection and substantive due process clauses. Later, however, this clause was kept when the law was amended by Republic Act No. 10022 in 2010. Section 7 of the new law mirrors the same clause.

The SC held that in Sameer Overseas Placement Agency, Inc. vs. Cabiles, the Court was confronted with the question of the constitutionality of the reinstated clause in Republic Act No. 10022. Reiterating its finding in Serrano, it ruled that “limiting wages that should be recovered by an illegally dismissed overseas worker to three months is both a violation of due process and the equal protection clauses of the Constitution.”

This case should be no different from Serrano and Sameer. A statute declared unconstitutional “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.” Incorporating a similarly worded provision in a subsequent legislation does not cure its unconstitutionality. Without any discernible change in the circumstances warranting a reversal, this Court will not hesitate to strike down the same provision.

As such, the SC reiterated its ruling in Sameer that the reinstated clause in Section 7 of Republic Act No. 10022 has no force and effect of law. It is unconstitutional. Hence, Aldovino, et al. are entitled to the award of salaries based on the actual unexpired portion of their employment contracts. The award of Aldovino, et al.’s salaries, in relation to the three (3)-month cap, must be modified accordingly.