G.R. No. 148407 ; November 12, 2003
MA. LUISA OLARTE, doing business under the name and style, SUNACE INTERNATIONAL MANAGEMENT SERVICES, Petitioner, vs. LEOCADIA NAYONA, Respondent.

FACTS

Respondent Leocadia Nayona executed a one-year employment contract through petitioner Sunace International Management Services for work in Taiwan. She was deployed on May 22, 1998. On June 11, 1998, the foreign agency owner pre-terminated her assignment with a promise of new employment, which was not fulfilled, leading to her repatriation on June 13, 1998. Nayona filed a complaint for illegal dismissal and monetary claims.
The Labor Arbiter ruled in Nayona’s favor, declaring her dismissal illegal and awarding unpaid salaries, salary for the unexpired contract portion, refund of placement fee, and damages. The NLRC affirmed with modification, deleting the awards for damages and overtime pay but upholding the illegal dismissal and the awards for unpaid salary, three months’ salary for the unexpired term, and placement fee refund. The Court of Appeals affirmed the NLRC decision.

ISSUE

Whether the Court of Appeals correctly applied Section 10 of Republic Act No. 8042 (The Migrant Workers Act) in determining the monetary award for the illegally dismissed overseas worker.

RULING

The Supreme Court affirmed the Court of Appeals with modification regarding the computation of the salary award. The Court upheld the finding of illegal dismissal, as petitioners failed to prove a valid cause for termination or comply with procedural due process. The core legal issue concerned the proper application of Section 10, R.A. 8042, which states that in cases of illegal termination, a worker is entitled to “salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.”
The labor tribunals and the Court of Appeals awarded Nayona her salaries for the entire unexpired portion of her one-year contract. The Supreme Court clarified that the statutory provision mandates a comparison between two amounts: the total salaries for the unexpired portion and the monetary equivalent of three months per year of the unexpired term. The award must be the lesser of the two. Here, Nayona’s contract had an unexpired term of nearly one year. The salary for three months is undoubtedly less than the salary for the entire unexpired portion. Therefore, the correct award is three months’ salary, not the full unexpired balance. The Court modified the award accordingly, ordering payment of NT$47,520 as three months’ salary and the refund of the P23,000 placement fee, both with legal interest.