Aldovino v. Gold and Green Manpower Management and Development Services, Inc.
REITERATIONFacts
The Antecedents: Petitioners Julita M. Aldovino, Joan B. Lagrimas, Winnie B. Lingat, Chita A. Sales, Sherly L. Guinto, Revilla S. De Jesus, and Laila V. Orpilla applied for overseas employment as sewers with Gold and Green Manpower Management and Development Services, Inc., whose foreign principal was Sage International Development Company, Ltd. Before deployment to Taiwan, they were required to pay a P72,000.00 placement fee, which they financed through loans. Upon arrival in Taiwan, their passports were confiscated, and they were forced to sign new contracts stipulating a piece-rate basis for payment instead of a fixed monthly salary. Their working hours were extended, and they were often made to work on Sundays without overtime pay, resulting in earnings less than their original contract and default on their loans. They filed a complaint in Taiwan, and subsequently, a compromise agreement was reached, after which they returned to the Philippines and filed a case for illegal termination, underpayment, human trafficking, and other money claims. Procedural History: The Labor Arbiter dismissed the illegal dismissal complaint but ordered the respondents to pay financial assistance. The National Labor Relations Commission affirmed this decision, finding no illegal dismissal and deeming the compromise agreement a bar to further claims, also deleting the financial assistance award. Petitioners appealed via certiorari to the Court of Appeals, which reversed the NLRC's ruling, declaring the dismissal illegal and the compromise agreement not a bar to their claims. The Court of Appeals ordered reimbursement of placement fees and payment of salaries for the unexpired portion of their contracts or three months for every year of the unexpired term, whichever was less, citing Section 7 of Republic Act No. 10022 and the Serrano case. Petitioners sought reconsideration to remove the three-month cap, but it was denied, leading to the present petition. The Petition: Petitioners filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, primarily assailing the Court of Appeals' decision and resolution. They argue that the three-month salary cap provision in Section 7 of Republic Act No. 10022, which was reinstated from Section 10 of Republic Act No. 8042, has been declared unconstitutional by this Court in Serrano v. Gallant Maritime Services, Inc. and Sameer Overseas Placement Agency, Inc. v. Cabiles. They contend that this unconstitutional clause should not be applied and that they are entitled to their full salaries for the unexpired portion of their employment contracts. Respondents, conversely, argue that the compromise agreement validly released them from further liability and that the Court of Appeals erred in nullifying it.
Issue(s)
Whether or not the Compromise Agreement barred all other claims against respondents. Whether or not petitioners were illegally dismissed and consequently entitled to reimbursement of placement fees, moral and exemplary damages, and attorney's fees. Whether or not Section 7 of Republic Act No. 10022, which reinstated the three-month cap on salaries for the unexpired portion of employment contracts, is constitutional; and the proper computation of salaries for the unexpired portion of employment contracts.
Ruling
The Petition is meritorious. The Court affirmed the Court of Appeals' Decision with modification. Respondents Gold and Green Manpower Management and Development Services, Inc., Sage International Development Company, Ltd., and Alberto C. Alvina are ordered to pay petitioners their salaries for the unexpired portion of their employment contract, reimbursement of placement fees with 12% interest per annum, moral damages of ₱50,000.00 each, exemplary damages of ₱25,000.00 each, attorney's fees equivalent to 10% of their respective monetary awards, and legal interest of 6% per annum on the total monetary awards (except for placement fees).
Ratio Decidendi
On the issue of whether the Compromise Agreement barred all other claims: The Court held that waivers and quitclaims executed by employees are generally frowned upon as contrary to public policy because employers and employees do not stand on equal footing. The Compromise Agreement in this case was executed to settle claims for underpayment of wages and overtime premiums, and thus should not be construed as a restriction on petitioners' right to prosecute other legitimate claims. Paragraph 7 of the Compromise Agreement, stipulating that petitioners shall give up other rights of compensation, cannot bar them from filing this case and being indemnified, as blanket waivers exonerating employers from liability are ineffective. Furthermore, at the time of execution, petitioners had no choice but to accede to the terms due to dire necessity, lacking means of livelihood. On the issue of whether petitioners were illegally dismissed and entitled to damages: The Court ruled that employers may only terminate employment for just or authorized causes and after complying with procedural due process. The burden of proof rests on the employer. In this case, the termination was effected merely because respondents no longer wanted petitioners' services, which is not an authorized or just cause. Petitioners were not accorded due process, as they were verbally dismissed without notice or opportunity to be heard. Their claim that they voluntarily severed employment is untenable, as they were left with no choice but to accept the Compromise Agreement and return to the Philippines. The Court found that petitioners were illegally dismissed. As a consequence of illegal dismissal, petitioners are entitled to moral and exemplary damages. Moral damages are recoverable when dismissal is attended by bad faith or fraud, or is oppressive, while exemplary damages are for wanton, oppressive, or malevolent dismissal. The Court found that respondents acted in bad faith by making petitioners sign a piece-rate contract, underpaying them, depriving them of overtime premiums, and unilaterally terminating their employment without due process. Attorney's fees are also awarded under Article 2208 of the Civil Code due to the award of exemplary damages, respondents' gross bad faith, and the nature of the case as a recovery of wages. The Court also sustained the award of reimbursement of placement fees with interest at 12% per annum, in accordance with Section 7 of Republic Act No. 10022, as they were terminated without just, valid, or authorized cause. On the constitutionality of the three-month cap on salaries for the unexpired portion of employment contracts: The Court reiterated its rulings in Serrano v. Gallant Maritime Services, Inc. and Sameer Overseas Placement Agency, Inc. v. Cabiles, holding that the clause "or for three (3) months for every year of the unexpired term, whichever is less" under Section 7 of Republic Act No. 10022 is unconstitutional. This clause violates due process and equal protection clauses by limiting the recovery of illegally dismissed overseas workers. A statute declared unconstitutional confers no rights and is inoperative. Therefore, petitioners are entitled to the award of salaries based on the actual unexpired portion of their employment contracts, and the three-month cap must be modified accordingly.
Main Doctrine
The clause "or for three (3) months for every year of the unexpired term, whichever is less" as reinstated in Section 7 of Republic Act No. 10022 is unconstitutional and has no force and effect of law, as it violates due process by depriving overseas workers of their monetary claims without any discernable valid purpose.