Unexpired portion of the contract should be paid to an illegally dismissed OFW. The three-month cap has already been declared unconstitutional.

Thus, the SC held as follows:

Cuartocruz vs. Active Works, Inc.
G.R. No. 209072, July 24, 2019

Unexpired portion of the contract; Solidary liability of recruitment agency and foreign principal


On June 4, 2007, Petitioner Arlene A. Cuartocruz (Cuartocruz) and Cheng Chi Ho, a Hong Kong national, entered into a contract of employment whereby Cuartocruz shall work as the latter’s domestic helper for a period of two years.

Cuartocruz was tasked to do household chores and baby-sitting, among others, for a monthly salary of HK$3,400.00 and other emoluments and benefits provided under the contract. Respondent Active Works, Inc. (AWI), a Philippine corporation engaged in the recruitment of domestic helpers in Hong Kong, is Cuartocruz’s agency, and respondent Ma. Isabel Hermosa is its Branch Manager.

On August 3, 2007, Cuartocruz arrived in Hong Kong. The following day, she proceeded to the residence of her employer. On August 11, 2007, Cuartocruz received a warning letter from her employer, stating that she is required to improve her attentiveness in performing her work within one month, failing which the letter shall serve as a written notice of the termination of her employment contract effective September 11, 2007. On the same day, Cuartocruz wrote a reply, apologizing for giving false information by stating in her bio-data that she is single when in fact she is a single parent. She also asked for a chance to improve so she can continue with her work.

However, in a letter dated August 16, 2007, Cheng Chi Ho informed the Immigration Department of Wangchai, Hong Kong that he is terminating the contract with Cuartocruz effective immediately for the following reasons: “disobey order (sic), unmatch the contract which she submit before (sic), [and] refuse to care my baby (sic).”

Cuartocruz filed a case against her employer before the Minor Employment Claims Adjudication Board, but it was eventually dismissed and Cuartocruz was repatriated at the instance of AWI. Consequently, Cuartocruz filed a complaint against Respondents AWI and Hermosa (AWI, et al.) before the Labor Arbiter (LA) for illegal dismissal, payment of unpaid salaries and salaries corresponding to the unexpired portion of the contract of employment, reimbursement of placement fee and other fees incident to Cuartocruz’s deployment to Hong Kong, and moral and exemplary damages.

Cuartocruz denied committing the acts imputed to her by Cheng Chi Ho, and claimed that those were baseless and fabricated. Further, at no time was her attention called with respect to those acts that she allegedly committed.

LA Ruling:

The Executive LA (ELA) rendered a Decision finding the termination of Cuartocruz’s employment contract without notice as valid and legal.

The ELA held that Cuartocruz was already warned by her employer to improve her work, yet she did not show improvement in her work performance and attitude. She also misrepresented herself to be single, but later on admitted that she was separated with a child. This information does not match with the information stated in her employment contract and constitutes dishonesty on her part. Moreover, the termination of her employment contract was in accordance with Hong Kong’s Employment Ordinance Chapter 57, Section 9 of which states that “[a]n employer may terminate a contract of employment without notice or payment in lieu x x x if an employee, in relation to his employment x x x wilfully disobeys a lawful and reasonable order; x   x   x misconducts himself such conduct being inconsistent with the due and faithful discharge of his duties; xx xis guilty of fraud or dishonesty.” This provision being part of Cuartocruz’s employment contract, it must be respected as the law between the parties.

The ELA held that Cuartocruz is not entitled to salaries corresponding to the unexpired portion of her contract since she was dismissed for cause. However, she is entitled to be paid salaries for the six days that she has rendered service to her employer, or the total amount of HK$679.98. Since Cuartocruz was dismissed for cause, this amount shall be set off against the repatriation expenses incurred by A WI in the amount of HK$750.00.

Cuartocruz appealed the Decision with the National Labor Relations Commission (NLRC).

NLRC Ruling:

The NLRC issued a Resolution nullifying and setting aside the ELA Decision.

It held that there is insufficient proof of Cuartocruz’s alleged poor work performance. The August 11, 2017 warning letter that Cuartocruz received from her employer did not even specify what work needs improvement. It was only on August 16, 2007, when Cuartocruz’s employment contract was terminated, that she was criticized for disobeying orders.

Cuartocruz was not given notice of specific violations that she allegedly committed and a chance to explain her side. She was also denied due process when the warning letter gave her one month to improve her work performance, but she was dismissed five days after. With respect to Cuartocruz’s alleged dishonesty in concealing her civil status, jurisprudence has settled that this is a form of dishonesty so trivial that it will not warrant the penalty of dismissal. Consequently, the NLRC found Cuartocruz to have been illegally dismissed and awarded her full reimbursement of her placement fee of P45,000.00 with 12% interest per annum pursuant to RA 8042, reimbursement of P2,500.00 medical examination fee, and unpaid salaries equivalent to three months for every year of the unexpired portion of the contract, or a total period of six months.

AWI, et al. filed a motion for reconsideration, but it was denied. Hence, they filed a petition for certiorari with the Court of Appeals (CA).

CA Ruling:

The CA rendered its Decision affirming with modification the NLRC Resolution.

The CA held that AWI cannot evade responsibility for the money claims of overseas Filipino workers (OFWs) whom it deploys abroad by the mere expediency of claiming that its foreign principal is a government agency clothed with immunity from suit, or that such foreign principal’s liability must be established first before it, as agent, can be held jointly and solidarily liable.

Moreover, the contention that Hong Kong law governs Cuartocruz’s employment contract lacks merit since AWI, et al. failed to prove Hong Kong law. Thus, Philippine law should apply in resolving the issues in the case. Finally, Cuartocruz was not afforded due process. The notice of termination was not properly served on her and did not properly inform her of the grounds for termination. In fact, Cuartocruz was given one month from the date of the warning letter to improve her work but her employment was terminated just four days thereafter.

The CA consequently awarded Cuartocruz three-months’ salary, refund of her placement fee with 12% interest per annum, and attorney’s fees which shall be 10% of the total monetary award.

Cuartocruz filed a partial motion for reconsideration pertaining to the award of three-months’ salary.


Whether or not an employee can be validly dismissed for disobeying the employer even if the latter failed to present particular instances of such disobedience

Whether or not the employee can be dismissed for representing that she was single when in fact she was a single parent and there is no showing how this affected her work as a domestic helper

Whether or not the foreign employer and the recruitment or placement agency are jointly liable for money claims arising from the employment relationship or any contract involving overseas Filipino workers

Whether or not the OFW who is illegally dismissed is entitled to unexpired portion of employment contract

SC Ruling:

AWI, et al. failed to prove by substantial evidence that there was just or authorized cause for the termination of Cuartocruz’s employment. About a week into her job, Cuartocruz received a warning letter from her employer requiring her “to improve her attentiveness on [her] performance within one month xx x” failing which the letter shall serve “as a written notice x x x that the x x x contract will be terminated with immediate effect on 11 September, 2007.” Nonetheless, after five days, Cuartocruz’s contract was terminated for the following reasons: “(1) disobey order (sic); (2) unmatch the contract which she submit before (sic); and (3) refuse to care my baby (sic).”

The grounds cited for the termination of Cuartocruz’s employment contract are considered just causes under Article 282 of the Labor Code, but only if AWI, et al. were able to prove them. The burden of proving that there is just cause for termination is on the employer, who must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. Failure to show that there was valid or just cause for termination would necessarily mean that the dismissal was illegal.

Here, no evidence was presented to substantiate the employer’s accusations. There was no showing of particular instances when Cuartocruz supposedly disobeyed her employer and refused to take care of his baby. With respect to Cuartocruz’s alleged misrepresentation that she was single when in fact she was a single parent, there is also no showing how this affected her work as a domestic helper. In fact, being a mother herself puts Cuartocruz in a better position to care for her employer’s child. Where there is no showing of a clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal.

AWI, et al. cannot escape liability from Cuartocruz’s money claims. Section 10 of RA 8042 provides that the employer and the recruitment or placement agency are jointly liable for money claims arising from the employment relationship or any contract involving overseas Filipino workers. If the recruitment or placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. In providing for the joint and solidary liability of private recruitment agencies with their foreign principals, RA 8042 precisely affords OFW s with a recourse and assures them of immediate and sufficient payment of what is due them.

The proviso “for three months for every year of the unexpired term [of the employment contract], whichever is less” has been declared unconstitutional by this Court for violating the equal protection clause and substantive due process. In Serrano v. Gallant Maritime Services, Inc., we explained that the said 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 three-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment.

The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. Moreover, there is no compelling state interest that the subject clause may possibly serve. Thus, following Serrano, we rule that Cuartocruz is entitled to her monthly salary of HK$3,400.00, or its Philippine peso equivalent, for the entire unexpired portion of her employment contract.

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