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Unexpired portion of the OFW contract should be granted if he is illegally dismissed. The phrase “or for three months for every year of the unexpired term, whichever is less” under Sec. 7 of R.A. 10022 has been struck down as being unconstitutional.

Thus, the SC held as follows:

Gutierrez vs. Nawras Manpower Services, Inc.
G.R. No. 234296, November 27, 2019

Unexpired portion of the contract; The phrase “or for three months for every year of the unexpired term, whichever is less” under Sec. 7 of R.A. 10022 has been struck down as being unconstitutional; Attorney’s fees; Attorney’s fees under the extraordinary concept; In unlawful withholding of wages the culpable party may be assessed attorney’s fees; Placement fee; An illegally dismissed migrant worker is entitled to a full reimbursement of placement fee


Petitioner Ernesto P. Gutierrez (Gutierrez) was hired by respondent NAWRAS Manpower Services, Inc. (NAWRAS) to work as respondent Al Adhamain Co. Ltd.’s (Al-Adhamain) “driver vehicle road” in Saudi Arabia for two years. He was deployed to Saudi Arabia on July 31, 2013.

Upon arrival, Gutierrez claimed that he was initially placed on floating status. On February 15, 2014, the workshop, the workshop supervisor informed him that he would be transferred to another site and was made to report to Al-Adhamain’s administrator. At the administrator’s office, he was only given a clearance form.

In a meeting with Al-Adhamain’s owner, Gutierrez was told that his contract would be terminated and he would be repatriated as soon as he completes his clearance. He then called NAWRAS about the pre-termination of his contract but was refrained from filing a complaint with the Philippine Overseas Labor Office in order to allow NAWRAS to talk to Al-Adhamain. Thus, he proceeded to submit the requirementsfor his clearance in the last week of Feburary 2014.

Thereafter, Gutierrez was given his remaining salary (sans one-month salary) and a refund of his two months’ salary bond. He was then told to book his own flight back to the Philippines and that he would be reimbursed later on. However, of the SR3,100.00 that he spent for the airfare, Al-Adhamain’s owner only reimbursed him for SR2,000.00.

Upon repatriation, Gutierrez filed a complaint for actual illegal dismissal with money claims against NAWRAS and Al-Adhamain (NAWRAS, et al.).

NAWRAS, et al. averred that Gutierrez was validly dismissed because of his poor performance. After his three-month probationary period, Al-Adhamain informed him of his unsatisfactory performance. He was thus transferred to a different site to afford him a chance to change his working attitude. They claimed that he was given several chances to change his work attitude to no avail. Despite extending several opportunities for him to improve, Gutierrez opted to request for his last salary, benefits, termination pay, and return tickets. They also alleged that they complied with the notice and hearing requirements before terminating his employment.

LA Ruling:

The Labor Arbiter (LA) rendered a Decision finding Gutierrez illegally dismissed.

The LA rejected NAWRAS, et al.’s claim that Gutierrez was dismissed for just cause. It noted that NAWRAS, et al.  failed to produce any evidence supporting their claim. NAWRAS, et al. failed to give any detail on how they measured his performance to conclude that his work was unsatisfactory.

The LA granted Gutierrez’s claim for refund of his SR2,300.00 placement fee due to NAWRAS, et al.’s failure to rebut such claim. On the amount of unpaid salary, the LA awarded him 17.5 months’ worth of salary because he was only able to work for six months and two weeks of his two-year contract. His request for refund of the excess airfare ticket of SR1,100.00 was likewise granted.

Aggrieved, NAWRAS, et al. appealed with the National Labor Relations Commission (NLRC).

NLRC Ruling:

The NLRC affirmed in toto the Decision of the LA.

The NLRC found Gutierrez illegally dismissed because of NAWRAS, et al.’s unsubstantiated claim of his poor performance. The NLRC clarified that poor performance does not necessarily equate to gross and habitual neglect of duties.

NAWRAS, et al.’s Motion for Reconsideration was denied. Unfazed, NAWRAS, et al. elevated the matter to the Court of Appeals (CA) via a Petition for Certiorari.

CA Ruling:

The CA affirmed the finding of illegal dismissal.

However, the CA modified the monetary awards in order to conform to paragraph 5, Section 7 of Republic Act (R.A.) No. 10022. Thus, the CA affirmed Gutierrez’s entitlement to a refund of his placement fee with 12% annual legal interest but reduced the amount of his remaining salary to SR13,800. The CA deleted the award of SR1,100.00 representing excess airfare for Gutierrez’s repatriation.

Gutierrez files the petition for review before the Supreme Court seeking reinstatement of the LA’s decision. He argued that Section 7 of R.A. 10022 should not have been applied because it was declared unconstitutional in Sameer Overseas Placement Agency, Inc. vs. Cabiles.


Whether or not the phrase “or for three months for every year of the unexpired term, whichever is less” under Sec. 7 of R.A. 10022 should be applied

Whether or not an illegally dismissed employee is entitled to full reimbursement of placement fee

SC Ruling:

The SC found the petition partly meritorious.

The SC held that in Sameer, it already struck down the phrase “or for three months for every year of the unexpired term, whichever is less” under Sec. 7 of R.A. 10022 because the same phrase was already declared unconstitutional in R.A. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995. Gutierrez is, thus, entitled to “his salaries for the unexpired portion of his employment contract.”

Gutierrez was able to substantiate his claim of paying SR3,100.00 for his airplane ticket. Aside from the fact that NAWRAS, et al. kept silent on the matter in their appeal before the NLRC< the latter pointed out that Gutierrez presented a ticket receipt as proof that he paid for the airplane ticket. NAWRAS, et al. failed to present any proof of payment for the ticket.

Gutierrez is also entitled to 10% attorney’s fees. Citing Kaisahan at kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union vs. Manila Water Co., Inc., the SC held that the Court differentiated the ordinary and extraordinary concepts of attorney’s fees. Attorney’s fees under the extraordinary concept refer to those awarded by the Court to the losing party. These may be awarded in specific instances enumerated under Art. 2208 of the Civil Code.

Under paragraph 7 of Article 2208, attorney’s fees may be recovered in actions for recovery of wages. Article 111(a) of the Labor Code provides also that in cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered.

The SC held that it construed the Labor Code as an exception to the general rule of strict construction inthe award of attorney’s fees. Although an express finding of acts and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld wages. The findings of fact required to prove entitlement to attorney’s fees in labor cases refer to the unjustified withholding of lawful wages.

Here, it is undisputed that Gutierrez was not paid lawful wages corresponding to the unexpired portion of the contract.

Gutierrez was not given his November 2013 salary because Al-Adhamain withheld it as his placement fee. The said salary deduction was improper because an illegally dismissed migrant worker is entitled to a full reimbursement of placement fee.

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