Placewell International Services Corporation vs. Camote

An unauthorized alteration of an overseas Filipino worker's employment contract that reduces the worker's salary below the POEA-approved rate is void for violating Section 10 of R.A. No. 8042, and the recruitment agency remains jointly and severally liable with the foreign employer for the worker's money claims throughout the entire duration of the employment contract.

Petitioner Placewell International Services Corporation (PISC) is a recruitment and placement agency that deployed respondent Ireneo B. Camote to work as a building carpenter for SAAD Trading and Contracting Co. (SAAD) in the Kingdom of Saudi Arabia. The deployment was governed by a POEA-approved employment contract providing for a two-year term at US$370.00 per month. The dispute arose from the modification of that contract at the job site, implicating Section 10 of Republic Act No. 8042 (the Migrant Workers and Overseas Filipinos Act of 1995), which prohibits the substitution or alteration of overseas employment contracts to the prejudice of the worker and imposes joint and several liability on the recruitment agency and the foreign employer for money claims.

On August 15, 1999, petitioner Placewell International Services Corporation (PISC) deployed respondent Ireneo B. Camote to work as a building carpenter for SAAD Trading and Contracting Co. (SAAD) at the Kingdom of Saudi Arabia under a contract duration of two years and a salary of US$370.00 per month. Upon arrival at the job site, Camote and his fellow Filipino workers were required to sign another employment contract written in Arabic, under the threat of losing their jobs if they refused. Under the new contract, Camote's salary was reduced to SR 800.00 per month, though he actually received only SR 590.00 per month. He was likewise not given overtime pay despite rendering nine hours of work every day.

According to petitioner, SAAD had found Camote incompetent and decided to terminate his services, but Camote pleaded for retention and consented to accept the lower salary of SR 800.00 per month. SAAD retained him until his return to the Philippines two years later. Camote and his co-workers sought assistance from the Philippine Embassy but did not succeed because of difficulties in communication.

On November 27, 2001, Camote filed a sworn complaint for monetary claims against PISC. The Labor Arbiter found that the modification of the employment contract was not allowed under Section 10 of R.A. No. 8042, and that Camote should have received the original contracted salary of US$370.00 per month. The Labor Arbiter noted that Camote did not refute PISC's allegation regarding non-payment of placement and processing fees prior to deployment, and found no overtime pay differential because the overtime pay Camote received based on the new rate was roughly equivalent to what he would have received under the original rate for 18 months of one-hour daily overtime. The Labor Arbiter awarded P215,424.00 for underpayment of wages and 10% attorney's fees. The NLRC vacated this decision and dismissed the case for lack of cause of action. The Court of Appeals reinstated the Labor Arbiter's decision with modifications, computing the salary differential based on the original POEA-approved rate, awarding unauthorized deductions of P171,780.00, and reducing attorney's fees to 5% of the total unpaid salary.

• Voluntariness of the New Contract: Petitioner argued that respondent failed to substantiate his allegation that he was forced to enter into the new employment contract with SAAD, proving that the new contract was voluntarily entered into and agreed upon by the parties.
• Laches: Petitioner contended that if respondent was indeed forced to sign the new contract, his claims are barred by laches because respondent never informed petitioner of any problem at the job site until two years after his deployment.
• Unauthorized Deductions: Petitioner asserted that the appellate court's award for unauthorized deductions in the amount of P171,780.00 should be deleted for lack of legal or factual basis.
• Attorney's Fees: Petitioner argued that respondent is not entitled to attorney's fees.

• Validity of Contract Modification: Whether the unauthorized alteration of respondent's employment contract, particularly the reduction of his salary from US$370.00 to SR 800.00 per month, is valid and enforceable.
• Joint and Several Liability: Whether petitioner remains jointly and severally liable with SAAD for respondent's money claims despite the alleged new agreement.
• Laches: Whether respondent's claims are barred by laches for failing to assert his rights within a reasonable time.
• Unauthorized Deductions: Whether the award for unauthorized deductions in the amount of P171,780.00 has factual and legal basis.
• Attorney's Fees: Whether respondent is entitled to attorney's fees.

• Validity of Contract Modification: No. The unauthorized alteration reducing respondent's salary below the POEA-approved rate is void for violating Section 10 of R.A. No. 8042, which prohibits the substitution or alteration of overseas employment contracts to the prejudice of the worker without DOLE approval.
• Joint and Several Liability: Yes. Petitioner's solidary liability with SAAD for respondent's money claims continues throughout the entire period of the employment contract pursuant to Section 10 of R.A. No. 8042, notwithstanding any substitution, amendment, or modification made locally or abroad.
• Laches: No. The doctrine of laches does not apply because respondent filed his claim within the three-year prescriptive period under Article 291 of the Labor Code from the time the cause of action accrued.
• Unauthorized Deductions: No. The award of P171,780.00 for unauthorized deductions is deleted because the Court of Appeals did not state any basis for the award.
• Attorney's Fees: Yes. In actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and interests, an award of attorney's fees is proper.

• Validity of Contract Modification: R.A. No. 8042 explicitly prohibits the substitution or alteration, to the prejudice of the worker, of employment contracts already approved and verified by DOLE from the time of actual signing up to the expiration of the contract without DOLE approval. In Chavez vs. Bonto-Perez, a subsequently executed side agreement that reduced an overseas contract worker's salary below the POEA-approved amount was held void for being contrary to law, morals, and public policy, and could not supersede the standard employment contract approved by the POEA. Applying that rule, the diminution of respondent's salary from US$370.00 to SR 800.00 per month was void for violating the POEA-approved contract that set the minimum standards, terms, and conditions of his employment. The purported "termination" of respondent by SAAD was a ploy to pressure him into accepting a lower wage rate, so the original POEA-approved contract subsists despite the so-called new agreement.

• Joint and Several Liability: Section 10 of R.A. No. 8042 provides that the liability of the principal/employer and the recruitment/placement agency for any and all claims shall be joint and several, and that such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment, or modification made locally or in a foreign country. Because the original contract subsisted, petitioner's solidary liability with SAAD for respondent's money claims continued.

• Laches: Laches is the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence could or should have been done earlier, warranting a presumption that the party entitled to a right has abandoned or declined to assert it. The doctrine presumes the party had the opportunity to do what should have been done but failed to do so; if the party did not have the occasion to assert the right, he cannot be adjudged guilty of laches. Laches is not concerned with the mere lapse of time but requires that the party was afforded an opportunity to pursue the claim. It is an equitable doctrine controlled by equitable considerations and cannot be worked to defeat justice or perpetrate fraud and injustice. Here, respondent filed his claim within the three-year prescriptive period for money claims under Article 291 of the Labor Code from the time the cause of action accrued, so laches finds no application.

• Unauthorized Deductions: The Court of Appeals did not state any basis for the award of P171,780.00 for unauthorized deductions. Absent any factual or legal support, the award was deleted.

• Attorney's Fees: It is settled that in actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and interests, the employee is entitled to an award of attorney's fees. The Labor Arbiter and the Court of Appeals did not err in awarding attorney's fees to respondent.

• Prohibition Against Contract Substitution (R.A. No. 8042) — Section 10 of R.A. No. 8042 explicitly prohibits the substitution or alteration, to the prejudice of the worker, of employment contracts already approved and verified by DOLE from the time of actual signing up to and including the period of expiration, without DOLE approval. A side agreement executed abroad that reduces an overseas worker's salary below the POEA-approved rate is void as contrary to law, morals, and public policy, and cannot supersede the POEA-approved standard employment contract. The recruitment agency and foreign employer are jointly and severally liable for all money claims, and this liability continues during the entire period of the employment contract and is not affected by any substitution, amendment, or modification made locally or abroad.

• Doctrine of Laches — Laches is the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence could or should have been done earlier, or to assert a right within a reasonable time, warranting a presumption that the party entitled thereto has either abandoned it or declined to assert it. The doctrine presumes the party guilty of negligence had the opportunity to do what should have been done but failed to do so; if the party did not have the occasion to assert the right, he cannot be adjudged guilty of laches. Laches is not concerned with mere lapse of time but requires that the party was afforded an opportunity to pursue the claim. It is an equitable doctrine that cannot be worked to defeat justice or perpetrate fraud and injustice. Where a claim is filed within the prescriptive period set by law, laches does not apply.

• Attorney's Fees in Wage Recovery Actions — In actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and interests, the employee is entitled to an award of attorney's fees.

• "The unauthorized alteration in the employment contract of respondent, particularly the diminution in his salary from US$370.00 to SR 800.00 per month, is void for violating the POEA-approved contract which set the minimum standards, terms, and conditions of his employment." — This passage states the ratio decidendi: that salary reductions below the POEA-approved rate in overseas employment contracts are void under R.A. No. 8042.

• "Laches is not concerned with the mere lapse of time, rather, the party must have been afforded an opportunity to pursue his claim in order that the delay may sufficiently constitute laches." — This passage defines the controlling formulation of the laches doctrine as applied to labor claims, distinguishing it from prescription and emphasizing the element of opportunity to assert the right.

• "Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract." — This passage, quoting Section 10 of R.A. No. 8042, establishes the continuing joint and several liability of the recruitment agency and foreign employer notwithstanding contract modifications made abroad.

• Chavez vs. Bonto-Perez, 312 Phil. 88 (1995) — Controlling precedent followed. Held that a subsequently executed side agreement reducing an overseas contract worker's salary below the POEA-approved amount is void for being contrary to law, morals, and public policy, and cannot supersede the standard employment contract approved by the POEA. Applied directly to invalidate the salary reduction in the present case.

• Juco vs. Heirs of Tomas Siy Chung Fu, G.R. No. 150233, February 16, 2005, 451 SCRA 464 — Cited for the definition and elements of the doctrine of laches, particularly the requirement that the party must have had the opportunity to pursue a claim for delay to constitute laches.

• Rasonable vs. National Labor Relations Commission, 324 Phil. 191 (1996) — Cited for the rule that attorney's fees are properly awarded in actions for recovery of wages or where an employee was forced to litigate to protect his rights and interests.

• Section 10, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) — Governs money claims of overseas Filipino workers. Provides that the liability of the principal/employer and the recruitment/placement agency for any and all claims shall be joint and several, and that such liabilities shall continue during the entire period of the employment contract and shall not be affected by any substitution, amendment, or modification made locally or abroad. Applied to uphold petitioner's solidary liability with SAAD and to void the salary reduction.

• Section 6(i), Republic Act No. 8042 — Prohibits the substitution or alteration, to the prejudice of the worker, of employment contracts already approved and verified by DOLE from the time of actual signing up to and including the period of expiration without DOLE approval. Applied to invalidate the new Arabic-language contract that reduced respondent's salary.

• Article 291, Labor Code — Sets the three-year prescriptive period for the filing of money claims from the time the cause of action accrued. Applied to hold that respondent's claim was timely filed and that the doctrine of laches did not apply.

Chief Justice Artemio V. Panganiban (Chairperson), Associate Justice Ma. Alicia Austria-Martinez, Associate Justice Romeo J. Callejo, Sr., and Associate Justice Minita V. Chico-Nazario concurred.