1. antonio serrano vs gallant maritime

8/11/2019 1. Antonio Serrano vs Gallant Maritime

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EN BANC

[G.R. No. 167614. March 24, 2009.]

ANTONIO M. SERRANO, petitioner, vs.GALLANT MARITIME SERVICES, INC.and MARLOW NAVIGATION CO., INC.,respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J p:

For decades, the toil of solitary migrants hashelped lift entire families and communitiesout of poverty. Their earnings have builthouses, provided health care, equipped

schools and planted the seeds of businesses.They have woven together the world bytransmitting ideas and knowledge fromcountry to country. They have provided thedynamic human link between cultures,societies and economies.Yet, only recentlyhave we begun to understand not onlyhow much international migration

impacts development, but how smartpublic policies can magnify this effect.TacESD

UnitedNationsSecretary-


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General BanKi-Moon

Global Forum

on MigrationandDevelopment

Brussels, July10, 2007 1

For Antonio Serrano (petitioner), a Filipino seafarer, thelast clause in the 5th paragraph of Section 10, Republic

Act (R.A.) No. 8042, 2to wit:

Sec. 10.Money Claims. . . . In case oftermination of overseas employment without

just, valid or authorized cause as defined bylaw or contract, the workers shall be entitledto the full reimbursement of his placementfee with interest of twelve percent (12%) per

annum, plus his salaries for the unexpiredportion of his employment contract or forthree (3) months for every year of theunexpired term, whichever is less.

xxx xxx xxx (Emphasis and underscoringsupplied)

does not magnify the contributions of overseas

Filipino workers (OFWs) to national development, butexacerbates the hardships borne by them by undulylimiting their entitlement in case of illegal dismissal totheir lump-sum salary either for the unexpired portionof their employment contract "or for three months for


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every year of the unexpired term, whichever is less"(subject clause). Petitioner claims that the last clauseviolates the OFWs' constitutional rights in that it

impairs the terms of their contract, deprives them ofequal protection and denies them due process.

By way of Petition for Review under Rule 45 of the Rulesof Court, petitioner assails the December 8, 2004Decision 3and April 1, 2005 Resolution 4of the Court ofAppeals (CA), which applied the subject clause,entreating this Court to declare the subject clauseunconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc.and Marlow Navigation Co., Ltd. (respondents) under aPhilippine Overseas Employment Administration (POEA)-approved Contract of Employment with the followingterms and conditions:

Duration of contract12 months

PositionChief Officer

Basic monthly salaryUS$1,400.00

Hours of work48.0 hours per week

OvertimeUS$700.00 per month

Vacation leave with pay7.00 days per month 5

On March 19, 1998, the date of his departure, petitionerwas constrained to accept a downgraded employmentcontract for the position of Second Officer with a monthlysalary of US$1,000.00, upon the assurance andrepresentation of respondents that he would be made


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Chief Officer by the end of April 1998. 6

Respondents did not deliver on their promise to makepetitioner Chief Officer. 7Hence, petitioner refused to

stay on as Second Officer and was repatriated to thePhilippines on May 26, 1998. 8DHAcET

Petitioner's employment contract was for a period of 12months or from March 19, 1998 up to March 19, 1999,but at the time of his repatriation on May 26, 1998, hehad served only two (2) months and seven (7) days ofhis contract, leaving an unexpired portion of nine (9)

months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint 9against respondents for constructive dismissal and forpayment of his money claims in the total amount ofUS$26,442.73, broken down as follows:

May 27/31, 1998 (5 days) incl. Leave

payUS$413.90

June 01/30, 19982,590.00

July 01/31, 19982,590.00

August 01/31, 19982,590.00

Sept. 01/30, 19982,590.00

Oct. 01/31, 19982,590.00

Nov. 01/30, 19982,590.00

Dec. 01/31, 19982,590.00

Jan. 01/31, 19992,590.00


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Feb. 01/28, 19992,590.00

Mar. 1/19, 1999 (19 days) incl. leave pay1,640.00

25,382.23

Amount adjusted to chief mate's salary

(March 19/31, 1998 to April 1/30, 1998)+1,060.50 10

TOTAL CLAIMUS$26,442.73 11

=============

as well as moral and exemplary damages andattorney's fees. SIDTCa

The LA rendered a Decision dated July 15, 1999,declaring the dismissal of petitioner illegal and awarding

him monetary benefits, to wit:WHEREFORE, premises considered, judgmentis hereby rendered declaring that thedismissal of the complainant (petitioner) bythe respondents in the above-entitled casewas illegal and the respondents are herebyordered to pay the complainant [petitioner],

jointly and severally, in Philippine Currency,

based on the rate of exchange prevailing atthe time of payment, the amount of EIGHTTHOUSAND SEVEN HUNDRED SEVENTYU.S. DOLLARS (US $8,770.00),representing the complainant's salary


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for three (3) months of the unexpiredportion of the aforesaid contract ofemployment.

The respondents are likewise ordered to paythe complainant [petitioner], jointly andseverally, in Philippine Currency, based onthe rate of exchange prevailing at the time ofpayment, the amount of FORTY FIVE U.S.DOLLARS (US$ 45.00), 12representing thecomplainant's claim for a salary differential.In addition, the respondents are hereby

ordered to pay the complainant, jointly andseverally, in Philippine Currency, at theexchange rate prevailing at the time ofpayment, the complainant's (petitioner's)claim for attorney's fees equivalent to tenpercent (10%) of the total amount awardedto the aforesaid employee under thisDecision.

The claims of the complainant for moral andexemplary damages are hereby DISMISSEDfor lack of merit.

All other claims are hereby DISMISSED.

SO ORDERED. 13(Emphasis supplied)

In awarding petitioner a lump-sum salary of

US$8,770.00, the LA based his computation on the salaryperiod of three months only rather than the entireunexpired portion of nine months and 23 days ofpetitioner's employment contract applying the subjectclause. However, the LA applied the salary rate of


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US$2,590.00, consisting of petitioner's "[b]asic salary,US$1,400.00/month + US$700.00/month, fixed overtimepay, + US$490.00/month, vacation leave pay =

US$2,590.00/compensation per month." 14

Respondents appealed 15to the National Labor RelationsCommission (NLRC) to question the finding of the LA thatpetitioner was illegally dismissed. ESacHC

Petitioner also appealed 16to the NLRC on the sole issuethat the LA erred in not applying the ruling of the Courtin Triple Integrated Services, Inc. v. National Labor

Relations Commission 17that in case of illegal dismissal,OFWs are entitled to their salaries for the unexpiredportion of their contracts. 18

In a Decision dated June 15, 2000, the NLRC modifiedthe LA Decision, to wit:

WHEREFORE, the Decision dated 15 July1999 is MODIFIED. Respondents are herebyordered to pay complainant, jointly andseverally, in Philippine currency, at theprevailing rate of exchange at the time ofpayment the following:

1.Three (3) months salary

$1,400 x 3US$4,200.00

2.Salary differential45.00

US$4,245.00

3.10% Attorney's fees424.50


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TOTALUS$4,669.50

==========

The other findings are affirmed.

SO ORDERED. 19

The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing theapplicable salary rate from US$2,590.00 to US$1,400.00because R.A. No. 8042 "does not provide for the awardof overtime pay, which should be proven to have been

actually performed, and for vacation leave pay." 20

Petitioner filed a Motion for Partial Reconsideration, butthis time he questioned the constitutionality of thesubject clause. 21The NLRC denied the motion. 22

Petitioner filed a Petition for Certiorari 23with the CA,reiterating the constitutional challenge against thesubject clause. 24After initially dismissing the petition on

a technicality, the CA eventually gave due course to it, asdirected by this Court in its Resolution dated August 7,2003 which granted the petition for certiorari, docketedas G.R. No. 151833, filed by petitioner.

In a Decision dated December 8, 2004, the CA affirmedthe NLRC ruling on the reduction of the applicable salaryrate; however, the CA skirted the constitutional issue

raised by petitioner. 25

His Motion for Reconsideration 26having been denied bythe CA, 27petitioner brings his cause to this Court on thefollowing grounds:


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his contract since under the contract theyform part of his salary. 28

On February 26, 2008, petitioner wrote the Court towithdraw his petition as he is already old and sickly, andhe intends to make use of the monetary award for hismedical treatment and medication. 29Required tocomment, counsel for petitioner filed a motion, urgingthe court to allow partial execution of the undisputedmonetary award and, at the same time, praying that the

constitutional question be resolved. 30

Considering that the parties have filed their respectivememoranda, the Court now takes up the full merit of thepetition mindful of the extreme importance of theconstitutional question raised therein.

On the first and second issues

The unanimous finding of the LA, NLRC and CA that thedismissal of petitioner was illegal is not disputed.Likewise not disputed is the salary differential ofUS$45.00 awarded to petitioner in all three fora. Whatremains disputed is only the computation of the lump-sum salary to be awarded to petitioner by reason of hisillegal dismissal.

Applying the subject clause, the NLRC and the CAcomputed the lump-sum salary of petitioner at themonthly rate of US$1,400.00 covering the period of threemonths out of the unexpired portion of nine months and23 days of his employment contract or a total of


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US$4,200.00.

Impugning the constitutionality of the subject clause,petitioner contends that, in addition to the US$4,200.00

awarded by the NLRC and the CA, he is entitled toUS$21,182.23 more or a total of US$25,382.23,equivalent to his salaries for the entire nine months and23 days left of his employment contract, computed at themonthly rate of US$2,590.00. 31AcTHCE

The Arguments of Petitioner

Petitioner contends that the subject clause isunconstitutional because it unduly impairs the freedomof OFWs to negotiate for and stipulate in their overseasemployment contracts a determinate employment periodand a fixed salary package. 32It also impinges on theequal protection clause, for it treats OFWs differentlyfrom local Filipino workers (local workers) by putting acap on the amount of lump-sum salary to which OFWs

are entitled in case of illegal dismissal, while setting nolimit to the same monetary award for local workers whentheir dismissal is declared illegal; that the disparatetreatment is not reasonable as there is no substantialdistinction between the two groups; 33and that itdefeats Section 18, 34Article II of the Constitution whichguarantees the protection of the rights and welfare of all

Filipino workers, whether deployed locally or overseas. 35

Moreover, petitioner argues that the decisions of the CAand the labor tribunals are not in line with existingjurisprudence on the issue of money claims of illegallydismissed OFWs. Though there are conflicting rulings on


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this, petitioner urges the Court to sort them out for theguidance of affected OFWs. 36

Petitioner further underscores that the insertion of the

subject clause into R.A. No. 8042 serves no otherpurpose but to benefit local placement agencies. Hemarks the statement made by the Solicitor General in hisMemorandum, viz.:

Often, placement agencies, their liabilitybeing solidary, shoulder the payment ofmoney claims in the event that jurisdiction

over the foreign employer is not acquired bythe court or if the foreign employer renegeson its obligation. Hence, placement agenciesthat are in good faith and which fulfill theirobligations are unnecessarily penalized forthe acts of the foreign employer. To protectthem and to promote their continuedhelpful contribution in deploying

Filipino migrant workers, liability formoney claims was reduced underSection 10 of R.A. No. 8042. 37(Emphasissupplied)

Petitioner argues that in mitigating the solidary liability ofplacement agencies, the subject clause sacrifices thewell-being of OFWs. Not only that, the provision makes

foreign employers better off than local employersbecause in cases involving the illegal dismissal ofemployees, foreign employers are liable for salariescovering a maximum of only three months of theunexpired employment contract while local employersare liable for the full lump-sum salaries of their


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employees. As petitioner puts it:

In terms of practical application, the localemployers are not limited to the amount of

backwages they have to give their employeesthey have illegally dismissed, following well-entrenched and unequivocal jurisprudence onthe matter. On the other hand, foreignemployers will only be limited to giving theillegally dismissed migrant workers themaximum of three (3) months unpaid salariesnotwithstanding the unexpired term of the

contract that can be more than three (3)months. 38

Lastly, petitioner claims that the subject clause violatesthe due process clause, for it deprives him of the salariesand other emoluments he is entitled to under his fixed-period employment contract. 39

The Arguments of Respondents

In their Comment and Memorandum, respondentscontend that the constitutional issue should not beentertained, for this was belatedly interposed bypetitioner in his appeal before the CA, and not at theearliest opportunity, which was when he filed an appealbefore the NLRC. 40cTACIa

The Arguments of the Solicitor General

The Solicitor General (OSG) 41points out that as R.A.No. 8042 took effect on July 15, 1995, its provisionscould not have impaired petitioner's 1998 employmentcontract. Rather, R.A. No. 8042 having preceded


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petitioner's contract, the provisions thereof are deemedpart of the minimum terms of petitioner's employment,especially on the matter of money claims, as this was not

stipulated upon by the parties. 42

Moreover, the OSG emphasizes that OFWs and localworkers differ in terms of the nature of theiremployment, such that their rights to monetary benefitsmust necessarily be treated differently. The OSGenumerates the essential elements that distinguish OFWsfrom local workers: first, while local workers perform

their jobs within Philippine territory, OFWs perform theirjobs for foreign employers, over whom it is difficult forour courts to acquire jurisdiction, or against whom it isalmost impossible to enforce judgment; and second, asheld in Coyoca v. National Labor Relations Commission 43and Millares v. National Labor Relations Commission, 44OFWs are contractual employees who can never acquireregular employment status, unlike local workers who are

or can become regular employees. Hence, the OSGposits that there are rights and privileges exclusive tolocal workers, but not available to OFWs; that thesepeculiarities make for a reasonable and valid basis forthe differentiated treatment under the subject clause ofthe money claims of OFWs who are illegally dismissed.Thus, the provision does not violate the equal protection

clause nor Section 18, Article II of the Constitution. 45

Lastly, the OSG defends the rationale behind the subjectclause as a police power measure adopted to mitigatethe solidary liability of placement agencies for this"redounds to the benefit of the migrant workers whose


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welfare the government seeks to promote. The survivalof legitimate placement agencies helps [assure] thegovernment that migrant workers are properly deployed

and are employed under decent and humane conditions."46

The Court's Ruling

The Court sustains petitioner on the first and secondissues.

When the Court is called upon to exercise its power ofjudicial review of the acts of its co-equals, such as the

Congress, it does so only when these conditions obtain:(1) that there is an actual case or controversy involving aconflict of rights susceptible of judicial determination; 47(2) that the constitutional question is raised by a properparty 48and at the earliest opportunity; 49and (3) thatthe constitutional question is the very lis mota of thecase, 50otherwise the Court will dismiss the case or

decide the same on some other ground. 51DICcTa

Without a doubt, there exists in this case an actualcontroversy directly involving petitioner who is personallyaggrieved that the labor tribunals and the CA computedhis monetary award based on the salary period of threemonths only as provided under the subject clause.

The constitutional challenge is also timely. It should beborne in mind that the requirement that a constitutionalissue be raised at the earliest opportunity entails theinterposition of the issue in the pleadings before acompetent court, such that, if the issue is not raised inthe pleadings before that competent court, it cannot be


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considered at the trial and, if not considered in the trial,it cannot be considered on appeal. 52Records disclosethat the issue on the constitutionality of the subject

clause was first raised, not in petitioner's appeal with theNLRC, but in his Motion for Partial Reconsideration withsaid labor tribunal, 53and reiterated in his Petition forCertiorari before the CA. 54Nonetheless, the issue isdeemed seasonably raised because it is not the NLRC butthe CA which has the competence to resolve theconstitutional issue. The NLRC is a labor tribunal thatmerely performs a quasi-judicial function its function

in the present case is limited to determining questions offact to which the legislative policy of R.A. No. 8042 is tobe applied and to resolving such questions in accordancewith the standards laid down by the law itself; 55thus,its foremost function is to administer and enforce R.A.No. 8042, and not to inquire into the validity of itsprovisions. The CA, on the other hand, is vested with the

power of judicial review or the power to declareunconstitutional a law or a provision thereof, such as thesubject clause. 56Petitioner's interposition of theconstitutional issue before the CA was undoubtedlyseasonable. The CA was therefore remiss in failing totake up the issue in its decision.

The third condition that the constitutional issue be criticalto the resolution of the case likewise obtains because themonetary claim of petitioner to his lump-sum salary forthe entire unexpired portion of his 12-monthemployment contract, and not just for a period of threemonths, strikes at the very core of the subject clause.


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Thus, the stage is all set for the determination of theconstitutionality of the subject clause.

Does the subject clause violate Section 10, Article III

of the Constitution on non-impairmentof contracts?

The answer is in the negative.

Petitioner's claim that the subject clause undulyinterferes with the stipulations in his contract on theterm of his employment and the fixed salary package hewill receive 57is not tenable. ETAICc

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contractsshall be passed.

The prohibition is aligned with the general principle thatlaws newly enacted have only a prospective operation, 58and cannot affect acts or contracts already perfected; 59however, as to laws already in existence, their provisionsare read into contracts and deemed a part thereof. 60Thus, the non-impairment clause under Section 10,Article II is limited in application to laws about to beenacted that would in any way derogate from existingacts or contracts by enlarging, abridging or in anymanner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No.8042 in 1995 preceded the execution of the employmentcontract between petitioner and respondents in 1998.Hence, it cannot be argued that R.A. No. 8042,particularly the subject clause, impaired the employmentcontract of the parties. Rather, when the parties


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executed their 1998 employment contract, they weredeemed to have incorporated into it all the provisions ofR.A. No. 8042.

But even if the Court were to disregard the timeline, thesubject clause may not be declared unconstitutional onthe ground that it impinges on the impairment clause, forthe law was enacted in the exercise of the police powerof the State to regulate a business, profession or calling,particularly the recruitment and deployment of OFWs,with the noble end in view of ensuring respect for the

dignity and well-being of OFWs wherever they may beemployed. 61Police power legislations adopted by theState to promote the health, morals, peace, education,good order, safety, and general welfare of the people aregenerally applicable not only to future contracts but evento those already in existence, for all private contractsmust yield to the superior and legitimate measures takenby the State to promote public welfare. 62

Does the subject clause violate Section 1, Article III ofthe Constitution, and Section 18,

Article II and Section3, Article XIII on labor

as a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, orproperty without due process of law nor shallany person be denied the equal protection ofthe law.

Section 18, 63Article II and Section 3, 64Article XIIIaccord all members of the labor sector, without


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distinction as to place of deployment, full protection oftheir rights and welfare.

To Filipino workers, the rights guaranteed under the

foregoing constitutional provisions translate to economicsecurity and parity: all monetary benefits should beequally enjoyed by workers of similar category, while allmonetary obligations should be borne by them in equaldegree; none should be denied the protection of the lawswhich is enjoyed by, or spared the burden imposed on,others in like circumstances. 65AECacT

Such rights are not absolute but subject to the inherentpower of Congress to incorporate, when it sees fit, asystem of classification into its legislation; however, tobe valid, the classification must comply with theserequirements: 1) it is based on substantial distinctions;2) it is germane to the purposes of the law; 3) it is notlimited to existing conditions only; and 4) it applies

equally to all members of the class. 66There are three levels of scrutiny at which the Courtreviews the constitutionality of a classification embodiedin a law: a) the deferential or rational basis scrutiny inwhich the challenged classification needs only be shownto be rationally related to serving a legitimate stateinterest; 67b) the middle-tier or intermediate scrutiny in

which the government must show that the challengedclassification serves an important state interest and thatthe classification is at least substantially related toserving that interest; 68and c) strict judicial scrutiny 69in which a legislative classification which impermissiblyinterferes with the exercise of a fundamental right 70or


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operates to the peculiar disadvantage of a suspect class71is presumed unconstitutional, and the burden is uponthe government to prove that the classification is

necessary to achieve a compelling state interestandthat it is the least restrictive meansto protect suchinterest. 72

Under American jurisprudence, strict judicial scrutiny istriggered by suspect classifications 73based on race 74or gender 75but not when the classification is drawnalong income categories. 76

It is different in the Philippine setting. In Central Bank(now Bangko Sentral ng Pilipinas) Employee Association,Inc. v. Bangko Sentral ng Pilipinas, 77theconstitutionality of a provision in the charter of theBangko Sentral ng Pilipinas (BSP), a governmentfinancial institution (GFI), was challenged for maintainingits rank-and-file employees under the Salary

Standardization Law (SSL), even when the rank-and-fileemployees of other GFIs had been exempted from theSSL by their respective charters. Finding that thedisputed provision contained a suspect classificationbased on salary grade, the Court deliberately employedthe standard of strict judicial scrutiny in its review of theconstitutionality of said provision. More significantly, itwas in this case that the Court revealed the broad

outlines of its judicial philosophy, to wit: aHDTAI

Congress retains its wide discretion inproviding for a valid classification, and itspolicies should be accorded recognition andrespect by the courts of justice except when


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they run afoul of the Constitution. Thedeference stops where the classificationviolates a fundamental right, orprejudicespersons accorded special protection bythe Constitution. When these violationsarise, this Court must discharge its primaryrole as the vanguard of constitutionalguaranties, and require a stricter and moreexacting adherence to constitutionallimitations. Rational basis should not suffice.

Admittedly, the view that prejudice to

persons accorded special protection bythe Constitution requires a stricter

judicial scrutiny finds no support inAmerican or English jurisprudence.Nevertheless, these foreign decisionsand authorities are not per secontrolling in this jurisdiction.At best,they are persuasive and have been used to

support many of our decisions. We shouldnot place undue and fawning reliance uponthem and regard them as indispensablemental crutches without which we cannotcome to our own decisions through theemployment of our own endowments. Welive in a different ambience and must decideour own problems in the light of our own

interests and needs, and of our qualities andeven idiosyncrasies as a people, and alwayswith our own concept of law and justice. Ourlaws must be construed in accordance withthe intention of our own lawmakers and suchintent may be deduced from the language of


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each law and the context of other locallegislation related thereto. More importantly,they must be construed to serve our ownpublic interest which is the be-all and theend-all of all our laws. And it need not bestressed that our public interest is distinctand different from others.

xxx xxx xxx

Further, the quest for a better and more"equal" world calls for the use of equalprotection as a tool of effective judicialintervention.

Equality is one ideal which cries out for boldattention and action in the Constitution. ThePreamble proclaims "equality" as an idealprecisely in protest against crushinginequities in Philippine society. The commandto promote social justice in Article II, Section

10, in "all phases of national development",further explicitated in Article XIII, are clearcommands to the State to take affirmativeaction in the direction of greater equality. . . .[T]here is thus in the Philippine Constitutionno lack of doctrinal support for a morevigorous state effort towards achieving areasonable measure of equality.

Our present Constitution has gonefurther in guaranteeing vital social andeconomic rights to marginalized groupsof society, including labor. Under thepolicy of social justice, the law bends


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over backward to accommodate theinterests of the working class on thehumane justification that those withless privilege in life should have more inlaw. And the obligation to affordprotection to labor is incumbent notonly on the legislative and executivebranches but also on the judiciary totranslate this pledge into a livingreality. Social justice calls for thehumanization of laws and theequalization of social and economicforces by the State so that justice in itsrational and objectively secularconception may at least beapproximated. TDcHCa

xxx xxx xxx

Under most circumstances, the Court will

exercise judicial restraint in decidingquestions of constitutionality, recognizing thebroad discretion given to Congress inexercising its legislative power. Judicialscrutiny would be based on the "rationalbasis" test, and the legislative discretionwould be given deferential treatment.

But if the challenge to the statute is premisedon the denial of a fundamental right, or theperpetuation of prejudice againstpersons favored by the Constitutionwith special protection, judicial scrutiny


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ought to be more strict.A weak andwatered down view would call for theabdication of this Court's solemn duty tostrike down any law repugnant to theConstitution and the rights it enshrines. Thisis true whether the actor committing theunconstitutional act is a private person or thegovernment itself or one of itsinstrumentalities. Oppressive acts will bestruck down regardless of the character ornature of the actor.

xxx xxx xxx

In the case at bar, the challenged provisooperates on the basis of the salary grade orofficer-employee status. It is akin to adistinction based on economic class andstatus, with the higher grades asrecipients of a benefit specifically

withheld from the lower grades.Officersof the BSP now receive higher compensationpackages that are competitive with theindustry, while the poorer, low-salariedemployees are limited to the rates prescribedby the SSL. The implications are quitedisturbing: BSP rank-and-file employees arepaid the strictly regimented rates of the SSL

while employees higher in rank

possessinghigher and better education andopportunities for career advancement aregiven higher compensation packages toentice them to stay. Considering thatmajority, if not all, the rank-and-file


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employees consist of people whosestatus and rank in life are less andlimited, especially in terms of jobmarketability, it is they and not theofficers who have the real economicand financial need for the adjustment.This is in accord with the policy of theConstitution "to free the people from poverty,provide adequate social services, extend tothem a decent standard of living, andimprove the quality of life for all."Any act ofCongress that runs counter to thisconstitutional desideratum deservesstrict scrutiny by this Court before itcan pass muster.(Emphasis supplied)

Imbued with the same sense of "obligation to affordprotection to labor", the Court in the present case alsoemploys the standard of strict judicial scrutiny, for itperceives in the subject clause a suspect classification

prejudicial to OFWs.

Upon cursory reading, the subject clause appears faciallyneutral, for it applies to all OFWs. However, a closerexamination reveals that the subject clause has adiscriminatory intent against, and an invidious impact on,OFWs at two levels:

First, OFWs with employment contracts ofless than one year vis--vis OFWs withemployment contracts of one year or more;

Second, among OFWs with employmentcontracts of more than one year; and


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Third, OFWs vis--vis local workers withfixed-period employment; cITCAa

OFWs with employment contracts of less

than one year vis--vis OFWswithemployment contracts of one yearormore

As pointed out by petitioner, 78it was in MarsamanManning Agency, Inc. v. National Labor RelationsCommission 79(Second Division, 1999) that the Courtlaid down the following rules on the application of the

periods prescribed under Section 10 (5) of R.A. No. 804,to wit:

A plain reading of Sec. 10 clearlyreveals that the choice of which amountto award an illegally dismissed overseascontract worker, i.e., whether hissalaries for the unexpired portion of hisemployment contract or three (3)months' salary for every year of theunexpired term, whichever is less,comes into play only when theemployment contract concerned has aterm of at least one (1) year or more.This is evident from the words "forevery year of the unexpired term"

which follows the words "salaries . . .for three months". To follow petitioners'thinking that private respondent is entitled tothree (3) months salary only simply becauseit is the lesser amount is to completelydisregard and overlook some words used in


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the statute while giving effect to some. Thisis contrary to the well-established rule inlegal hermeneutics that in interpreting astatute, care should be taken that every partor word thereof be given effect since the law-making body is presumed to know themeaning of the words employed in thestatute and to have used them advisedly. Utres magis valeat quam pereat. 80(Emphasissupplied)

In Marsaman, the OFW involved was illegally

dismissed two months into his 10-month contract, butwas awarded his salaries for the remaining 8 monthsand 6 days of his contract.

Prior to Marsaman, however, there were two cases inwhich the Court made conflicting rulings on Section 10(5). One was Asian Center for Career and EmploymentSystem and Services v. National Labor Relations

Commission (Second Division, October 1998), 81whichinvolved an OFW who was awarded a two-yearemployment contract, but was dismissed after workingfor one year and two months. The LA declared hisdismissal illegal and awarded him SR13,600.00 as lump-sum salary covering eight months, the unexpired portionof his contract. On appeal, the Court reduced the awardto SR3,600.00 equivalent to his three months' salary, thisbeing the lesser value, to wit:

Under Section 10 of R.A. No. 8042, a workerdismissed from overseas employment without

just, valid or authorized cause is entitled tohis salary for the unexpired portion of his


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employment contract or for three (3) monthsfor every year of the unexpired term,whichever is less. SATDEI

In the case at bar, the unexpired portion ofprivate respondent's employment contract iseight (8) months. Private respondent shouldtherefore be paid his basic salarycorresponding to three (3) months or a totalof SR3,600. 82

Another was Triple-Eight Integrated Services, Inc. v.

National Labor Relations Commission (Third Division,December 1998), 83which involved an OFW (thereinrespondent Erlinda Osdana) who was originally granted a12-month contract, which was deemed renewed foranother 12 months. After serving for one year andseven-and-a-half months, respondent Osdana wasillegally dismissed, and the Court awarded her salariesfor the entire unexpired portion of four and one-half

months of her contract.

The Marsaman interpretation of Section 10 (5) has sincebeen adopted in the following cases:

Case TitleContractPeriod of UnexpiredPeriodAppliedPeriodServicePeriodin theComputationof the MonetaryAward

Skippers v.6 months2 months4 months4monthsMaguad 84

Bahia9 months8 months4 months4monthsShipping v.ReynaldoChua 85

Centennial9 months4 months5 months5


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monthsTransmarine v.dela Cruz l 86

Talidano v.12 months3 months9 months3monthsFalcon 87

Univan v.12 months3 months9 months3monthsCA 88

Oriental v.12 monthsmore than 210 months3monthsCA 89months

PCL v.12 monthsmore than 2more or less 93monthsNLRC 90monthsmonths

Olarte v.12 months21 days11 months and3

monthsNayona 919 days

JSS v.12 months16 days11 months and3monthsFerrer 9224 days

Pentagon v.12 months9 months and2 monthsand2 months and Adelantar 937 days23 days23days

Phil. Employ12 months10 months2

monthsUnexpired

v. Paramio,portionet al. 94ECDHIc

Flourish2 years26 days23 months and6 monthsorMaritime v.4 days3 months forAlmanzor 95each year ofcontract

Athenna1 year, 101 month1 year, 96 monthsorManpower v.monthsmonths and3 monthsforVillanos 96and 28 days28 dayseach year of

contract

As the foregoing matrix readily shows, the subject clauseclassifies OFWs into two categories. The first categoryincludes OFWs with fixed-period employment contractsof less than one year; in case of illegal dismissal, they


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are entitled to their salaries for the entire unexpiredportion of their contract. The second category consists ofOFWs with fixed-period employment contracts of one

year or more; in case of illegal dismissal, they areentitled to monetary award equivalent to only 3 monthsof the unexpired portion of their contracts. IaSCTE

The disparity in the treatment of these two groupscannot be discounted. In Skippers, the respondent OFWworked for only 2 months out of his 6-month contract,but was awarded his salaries for the remaining 4

months. In contrast, the respondent OFWs in Orientaland PCL who had also worked for about 2 months out oftheir 12-month contracts were awarded their salaries foronly 3 months of the unexpired portion of theircontracts. Even the OFWs involved in Talidano andUnivan who had worked for a longer period of 3 monthsout of their 12-month contracts before being illegallydismissed were awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Courtassumes a hypothetical OFW-A with an employmentcontract of 10 months at a monthly salary rate ofUS$1,000.00 and a hypothetical OFW-B with anemployment contract of 15 months with the samemonthly salary rate of US$1,000.00. Both commencedwork on the same day and under the same employer,

and were illegally dismissed after one month of work.Under the subject clause, OFW-A will be entitled toUS$9,000.00, equivalent to his salaries for the remaining9 months of his contract, whereas OFW-B will be entitledto only US$3,000.00, equivalent to his salaries for 3


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months of the unexpired portion of his contract, insteadof US$14,000.00 for the unexpired portion of 14 monthsof his contract, as the US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the Courttakes into account jurisprudence that,prior to theeffectivity of R.A. No. 8042 on July 14, 1995, 97illegally dismissed OFWs, no matter how long the periodof their employment contracts, were entitled to theirsalaries for the entire unexpired portions of theircontracts. The matrix below speaks for itself:

Case TitleContractPeriod of UnexpiredPeriodApplied inPeriodServicePeriodtheComputationof the MonetaryAward

ATCI v.2 years2 months22 months22 monthsCA,et al. 98

Phil.2 years7 days23 months and23 months

and

Integrated v.23 days23 daysNLRC 99JGB v.2 years9 months15 months15 monthsNLC100

Agoy v.2 years2 months22 months22monthsNLRC 101

EDI v.2 years5 months19 months19monthsNLRC,et al. 102

Barros v.12 months4 months8 months8monthsNLRC,et al. 103

Philippine12 months6 months and5 months and5months andTransmarine v.22 days18 days18daysCarilla 104


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It is plain that prior to R.A. No. 8042, all OFWs,regardless of contract periods or the unexpired portionsthereof, were treated alike in terms of the computation

of their monetary benefits in case of illegal dismissal.Their claims were subjected to a uniform rule ofcomputation: their basic salaries multiplied by the entireunexpired portion of their employment contracts. TaDSHC

The enactment of the subject clause in R.A. No. 8042introduced a differentiated rule of computation of themoney claims of illegally dismissed OFWs based on their

employment periods, in the processsingling out onecategory whose contracts have an unexpired portion ofone year or more and subjecting them to the peculiardisadvantage of having their monetary awards limited totheir salaries for 3 months or for the unexpired portionthereof, whichever is less, but all the while sparing theother category from such prejudice, simply because thelatter's unexpired contracts fall short of one year.

Among OFWs With EmploymentContractsof More Than One Year

Upon closer examination of the terminology employed inthe subject clause, the Court now has misgivings on theaccuracy of the Marsaman interpretation.

The Court notes that the subject clause "or for three (3)

months for every year of the unexpired term, whicheveris less" contains the qualifying phrases "every year" and"unexpired term". By its ordinary meaning, the word"term" means a limited or definite extent of time. 105Corollarily, that "every year" is but part of an "unexpired


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term" is significant in many ways: first, the unexpiredterm must be at least one year, for if it were any shorter,there would be no occasion for such unexpired term to

be measured by every year; and second, the originalterm must be more than one year, for otherwise,whatever would be the unexpired term thereof will notreach even a year. Consequently, the more decisivefactor in the determination of when the subject clause"for three (3) months for every year of the unexpiredterm, whichever is less" shall apply is not the length ofthe original contract period as held in Marsaman, 106but

the length of the unexpired portion of the contract periodthe subject clause applies in cases when theunexpired portion of the contract period is at least oneyear, which arithmetically requires that the originalcontract period be more than one year. EDCIcH

Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract

periods are for more than one year: those who areillegally dismissed with less than one year left in theircontracts shall be entitled to their salaries for the entireunexpired portion thereof, while those who are illegallydismissed with one year or more remaining in theircontracts shall be covered by the subject clause, andtheir monetary benefits limited to their salaries for three

months only.

To concretely illustrate the application of the foregoinginterpretation of the subject clause, the Court assumeshypothetical OFW-C and OFW-D, who each have a 24-month contract at a salary rate of US$1,000.00 per


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month. OFW-C is illegally dismissed on the 12th month,and OFW-D, on the 13th month. Considering that thereis at least 12 months remaining in the contract period of

OFW-C, the subject clause applies to the computation ofthe latter's monetary benefits. Thus, OFW-C will beentitled, not to US$12,000.00 or the latter's total salariesfor the 12 months unexpired portion of the contract, butto the lesser amount of US$3,000.00 or the latter'ssalaries for 3 months out of the 12-month unexpiredterm of the contract. On the other hand, OFW-D isspared from the effects of the subject clause, for there

are only 11 months left in the latter's contract period.Thus, OFW-D will be entitled to US$11,000.00, which isequivalent to his/her total salaries for the entire 11-month unexpired portion.

OFWs vis--vis Local WorkersWith Fixed-Period Employment

As discussed earlier, prior to R.A. No. 8042, a uniformsystem of computation of the monetary awards ofillegally dismissed OFWs was in place. This uniformsystem was applicable even to local workers with fixed-term employment. 107

The earliest rule prescribing a uniform system ofcomputation was actually Article 299 of the Code of

Commerce (1888),108

to wit:

Article 299.If the contracts between themerchants and their shop clerks andemployees should have been made of afixed period, none of the contractingparties, without the consent of the


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other, may withdraw from thefulfillment of said contract until thetermination of the period agreed upon.

Persons violating this clause shall be subjectto indemnify the loss and damage suffered,with the exception of the provisionscontained in the following articles.

In Reyes v. The Compaia Maritima, 109the Courtapplied the foregoing provision to determine the liabilityof a shipping company for the illegal discharge of its

managers prior to the expiration of their fixed-termemployment. The Court therein held the shippingcompany liable for the salaries of its managers for theremainder of their fixed-term employment. cAEaSC

There is a more specific rule as far as seafarers areconcerned: Article 605 of the Code of Commerce whichprovides:

Article 605.If the contracts of the captain andmembers of the crew with the agent shouldbe for a definite period or voyage, theycannot be discharged until the fulfillment oftheir contracts, except for reasons ofinsubordination in serious matters, robbery,theft, habitual drunkenness, and damagecaused to the vessel or to its cargo by malice

or manifest or proven negligence.

Article 605 was applied to Madrigal Shipping Company,Inc. v. Ogilvie, 110in which the Court held the shippingcompany liable for the salaries and subsistenceallowance of its illegally dismissed employees for the


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entire unexpired portion of their employment contracts.

While Article 605 has remained good law up to thepresent, 111Article 299 of the Code of Commerce was

replaced by Art. 1586 of the Civil Code of 1889, to wit:

Article 1586.Field hands, mechanics, artisans,and other laborers hired for a certaintime and for a certain work cannot leaveor be dismissed without sufficient cause,before the fulfillment of the contract.(Emphasis supplied.)

Citing Manresa, the Court in Lemoine v. Alkan 112readthe disjunctive "or" in Article 1586 as a conjunctive "and"so as to apply the provision to local workers who areemployed for a time certain although for no particularskill. This interpretation of Article 1586 was reiterated inGarcia Palomar v. Hotel de France Company. 113And inboth Lemoine and Palomar, the Court adopted the

general principle that in actions for wrongful dischargefounded on Article 1586, local workers are entitled torecover damages to the extent of the amount stipulatedto be paid to them by the terms of their contract. On thecomputation of the amount of such damages, the Courtin Aldaz v. Gay 114held: ITDHcA

The doctrine is well-established in American

jurisprudence, and nothing has been broughtto our attention to the contrary underSpanish jurisprudence, that when anemployee is wrongfully discharged it is hisduty to seek other employment of the samekind in the same community, for the purpose


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of reducing the damages resulting from suchwrongful discharge. However, while this isthe general rule, the burden of showing thathe failed to make an effort to secure otheremployment of a like nature, and that otheremployment of a like nature was obtainable,is upon the defendant.When an employeeis wrongfully discharged under acontract of employment his prima faciedamage is the amount which he wouldbe entitled to had he continued in suchemployment until the termination of theperiod.(Howard vs. Daly, 61 N. Y., 362;

Allen vs. Whitlark, 99 Mich., 492; Farrell vs.School District No. 2, 98 Mich., 43.) 115(Emphasis supplied)

On August 30, 1950, the New Civil Code took effect withnew provisions on fixed-term employment: Section 2(Obligations with a Period), Chapter 3, Title I, and

Sections 2 (Contract of Labor) and 3 (Contract for aPiece of Work), Chapter 3, Title VIII, Book IV. 116Muchlike Article 1586 of the Civil Code of 1889, the newprovisions of the Civil Code do not expressly provide forthe remedies available to a fixed-term worker who isillegally discharged. However, it is noted that in MackayRadio & Telegraph Co., Inc. v. Rich, 117the Court carried

over the principles on the payment of damagesunderlying Article 1586 of the Civil Code of 1889 andapplied the same to a case involving the illegal dischargeof a local worker whose fixed-period employmentcontract was entered into in 1952, when the new CivilCode was already in effect. 118


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More significantly, the same principles were applied tocases involving overseas Filipino workers whose fixed-term employment contracts were illegally terminated,

such as in First Asian Trans & Shipping Agency, Inc. v.Ople, 119involving seafarers who were illegallydischarged. In Teknika Skills and Trade Services, Inc. v.National Labor Relations Commission, 120an OFW whowas illegally dismissed prior to the expiration of herfixed-period employment contract as a baby sitter, wasawarded salaries corresponding to the unexpired portionof her contract. The Court arrived at the same ruling in

Anderson v. National Labor Relations Commission, 121which involved a foreman hired in 1988 in Saudi Arabiafor a fixed term of two years, but who was illegallydismissed after only nine months on the job the Courtawarded him salaries corresponding to 15 months, theunexpired portion of his contract. In Asia WorldRecruitment, Inc. v. National Labor Relations

Commission, 122a Filipino working as a security officer in1989 in Angola was awarded his salaries for theremaining period of his 12-month contract after he waswrongfully discharged. Finally, in Vinta Maritime Co., Inc.v. National Labor Relations Commission, 123an OFWwhose 12-month contract was illegally cut short in thesecond month was declared entitled to his salaries forthe remaining 10 months of his contract.

In sum, prior to R.A. No. 8042, OFWs and local workerswith fixed-term employment who were illegallydischarged were treated alike in terms of the


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computation of their money claims: they were uniformlyentitled to their salaries for the entire unexpired portionsof their contracts. But with the enactment of R.A. No.

8042, specifically the adoption of the subject clause,illegally dismissed OFWs with an unexpired portion ofone year or more in their employment contract havesince been differently treated in that their money claimsare subject to a 3-month cap, whereas no such limitationis imposed on local workers with fixed-term employment.DEAaIS

The Court concludes that the subject clause

contains a suspect classification in that, in thecomputation of the monetary benefits of fixed-term employees who are illegally discharged, itimposes a 3-month cap on the claim of OFWs withan unexpired portion of one year or more in theircontracts, but none on the claims of other OFWsor local workers with fixed-term employment. Thesubject clause singles out one classification ofOFWs and burdens it with a peculiardisadvantage.

There being a suspect classification involving avulnerable sector protected by the Constitution, theCourt now subjects the classification to a strict judicialscrutiny, and determines whether it serves a compellingstate interest through the least restrictive means.

What constitutes compelling state interest is measuredby the scale of rights and powers arrayed in theConstitution and calibrated by history. 124It is akin tothe paramount interest of the state 125for which some


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individual liberties must give way, such as the publicinterest in safeguarding health or maintaining medicalstandards, 126or in maintaining access to information on

matters of public concern. 127

In the present case, the Court dug deep into the recordsbut found no compelling state interest that the subjectclause may possibly serve.

The OSG defends the subject clause as a police powermeasure "designed to protect the employment of Filipinoseafarers overseas . . . . By limiting the liability to three

months [sic], Filipino seafarers have better chance ofgetting hired by foreign employers." The limitation alsoprotects the interest of local placement agencies, whichotherwise may be made to shoulder millions of pesos in"termination pay". 128

The OSG explained further:

Often, placement agencies, their liabilitybeing solidary, shoulder the payment ofmoney claims in the event that jurisdictionover the foreign employer is not acquired bythe court or if the foreign employer renegeson its obligation. Hence, placement agenciesthat are in good faith and which fulfill theirobligations are unnecessarily penalized for

the acts of the foreign employer.To protectthem and to promote their continuedhelpful contribution in deployingFilipino migrant workers, liability formoney are reduced under Section 10 ofRA 8042. IaHDcT


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This measure redounds to the benefit of themigrant workers whose welfare thegovernment seeks to promote. The survivalof legitimate placement agencies helps[assure] the government that migrantworkers are properly deployed and areemployed under decent and humaneconditions. 129(Emphasis supplied)

However, nowhere in the Comment or Memorandumdoes the OSG cite the source of its perception of thestate interest sought to be served by the subject clause.

The OSG locates the purpose of R.A. No. 8042 in thespeech of Rep. Bonifacio Gallego in sponsorship of HouseBill No. 14314 (HB 14314), from which the laworiginated; 130but the speech makes no reference to theunderlying reason for the adoption of the subject clause.That is only natural for none of the 29 provisions in HB14314 resembles the subject clause.

On the other hand, Senate Bill No. 2077 (SB 2077)contains a provision on money claims, to wit:

Sec. 10.Money Claims. Notwithstandingany provision of law to the contrary, theLabor Arbiters of the National Labor RelationsCommission (NLRC) shall have the originaland exclusive jurisdiction to hear and decide,within ninety (90) calendar days after thefiling of the complaint, the claims arising outof an employer-employee relationship or byvirtue of the complaint, the claim arising outof an employer-employee relationship or by


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virtue of any law or contract involving Filipinoworkers for overseas employment includingclaims for actual, moral, exemplary and otherforms of damages.

The liability of the principal and therecruitment/placement agency or any and allclaims under this Section shall be joint andseveral.

Any compromise/amicable settlement orvoluntary agreement on any money claimsexclusive of damages under this Section shallnot be less than fifty percent (50%) of suchmoney claims: Provided, That any installmentpayments, if applicable, to satisfy any suchcompromise or voluntary settlement shall notbe more than two (2) months. Anycompromise/voluntary agreement in violationof this paragraph shall be null and void. TaDAHE

Non-compliance with the mandatory periodfor resolutions of cases provided under thisSection shall subject the responsible officialsto any or all of the following penalties:

(1)The salary of any such official whofails to render his decision orresolution within the prescribed period

shall be, or caused to be, withhelduntil the said official compliestherewith;

(2)Suspension for not more thanninety (90) days; or


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(3)Dismissal from the service withdisqualification to hold any appointivepublic office for five (5) years.

Provided, however, That the penalties hereinprovided shall be without prejudice to anyliability which any such official may haveincurred under other existing laws or rulesand regulations as a consequence of violatingthe provisions of this paragraph.

But significantly, Section 10 of SB 2077 does not

provide for any rule on the computation of moneyclaims.

A rule on the computation of money claims containingthe subject clause was inserted and eventually adoptedas the 5th paragraph of Section 10 of R.A. No. 8042. TheCourt examined the rationale of the subject clause in thetranscripts of the "Bicameral Conference Committee(Conference Committee) Meetings on the Magna Cartaon OCWs (Disagreeing Provisions of Senate Bill No. 2077and House Bill No. 14314)." However, the Court finds nodiscernible state interest, let alone a compelling one, thatis sought to be protected or advanced by the adoption ofthe subject clause.

In fine, the Government has failed to discharge itsburden of proving the existence of a compelling stateinterest that would justify the perpetuation of thediscrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose ofthe subject clause is to protect the employment of OFWs


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by mitigating the solidary liability of placement agencies,such callous and cavalier rationale will have to berejected. There can never be a justification for any form

of government action that alleviates the burden of onesector, but imposes the same burden on another sector,especially when the favored sector is composed ofprivate businesses such as placement agencies, while thedisadvantaged sector is composed of OFWs whoseprotection no less than the Constitution commands. Theidea that private business interest can be elevated to thelevel of a compelling state interest is odious. EScIAa

Moreover, even if the purpose of the subject clause is tolessen the solidary liability of placement agencies vis-a-vis their foreign principals, there are mechanisms alreadyin place that can be employed to achieve that purposewithout infringing on the constitutional rights of OFWs.

The POEA Rules and Regulations Governing the

Recruitment and Employment of Land-Based OverseasWorkers, dated February 4, 2002, imposes administrativedisciplinary measures on erring foreign employers whodefault on their contractual obligations to migrantworkers and/or their Philippine agents. These disciplinarymeasures range from temporary disqualification topreventive suspension. The POEA Rules and RegulationsGoverning the Recruitment and Employment of

Seafarers, dated May 23, 2003, contains similaradministrative disciplinary measures against erringforeign employers.

Resort to these administrative measures is undoubtedlythe less restrictive means of aiding local placement


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agencies in enforcing the solidary liability of their foreignprincipals.

Thus, the subject clause in the 5th paragraph of Section

10 of R.A. No. 8042 is violative of the right of petitionerand other OFWs to equal protection.

Further, there would be certain misgivings if one is toapproach the declaration of the unconstitutionality of thesubject clause from the lone perspective that the clausedirectly violates state policy on labor under Section 3, 131Article XIII of the Constitution.

While all the provisions of the 1987 Constitution arepresumed self-executing, 132there are some which thisCourt has declared not judicially enforceable, ArticleXIII being one, 133particularly Section 3 thereof, thenature of which, this Court, in Agabon v. National LaborRelations Commission, 134has described to be not self-actuating:

Thus, the constitutional mandates ofprotection to labor and security of tenuremay be deemed as self-executing in thesense that these are automaticallyacknowledged and observed without need forany enabling legislation. However, to declarethat the constitutional provisions are enough

to guarantee the full exercise of the rightsembodied therein, and the realization ofideals therein expressed, would beimpractical, if not unrealistic. The espousal ofsuch view presents the dangerous tendencyof being overbroad and exaggerated. The


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guarantees of "full protection to labor" and"security of tenure", when examined inisolation, are facially unqualified, and thebroadest interpretation possible suggests ablanket shield in favor of labor against anyform of removal regardless of circumstance.This interpretation implies an unimpeachableright to continued employment a utopiannotion, doubtless but still hardly within thecontemplation of the framers. Subsequentlegislation is still needed to define theparameters of these guaranteed rights toensure the protection and promotion, notonly the rights of the labor sector, but of theemployers' as well. Without specific andpertinent legislation, judicial bodies will be ata loss, formulating their own conclusion toapproximate at least the aims of theConstitution. cSCTEH

Ultimately, therefore, Section 3 ofArticle XIII cannot, on its own, be asource of a positive enforceable right tostave off the dismissal of an employee for

just cause owing to the failure to serveproper notice or hearing. As manifested byseveral framers of the 1987 Constitution, the

provisions on social justice require legislativeenactments for their enforceability. 135(Emphasis added)

Thus, Section 3, Article XIII cannot be treated as aprincipal source of direct enforceable rights, for the


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violation of which the questioned clause may be declaredunconstitutional. It may unwittingly risk opening thefloodgates of litigation to every worker or union over

every conceivable violation of so broad a concept associal justice for labor.

It must be stressed that Section 3, Article XIII does notdirectly bestow on the working class any actualenforceable right, but merely clothes it with the status ofa sector for whom the Constitution urges protectionthrough executive or legislative action andjudicial

recognition. Its utility is best limited to being animpetus not just for the executive and legislativedepartments, but for the judiciary as well, to protect thewelfare of the working class. And it was in fact consistentwith that constitutional agenda that the Court in CentralBank (now Bangko Sentral ng Pilipinas) EmployeeAssociation, Inc. v. Bangko Sentral ng Pilipinas, pennedby then Associate Justice now Chief Justice Reynato S.

Puno, formulated the judicial precept that when thechallenge to a statute is premised on the perpetuation ofprejudice against persons favored by the Constitutionwith special protection such as the working class or asection thereof the Court may recognize the existenceof a suspect classification and subject the same to strictjudicial scrutiny.

The view that the concepts of suspect classification andstrict judicial scrutiny formulated inCentral BankEmployee Association exaggerate the significance ofSection 3, Article XIII is a groundless apprehension.Central Bank applied Article XIII in conjunction with the


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equal protection clause. Article XIII, by itself, without theapplication of the equal protection clause, has no life orforce of its own as elucidated in Agabon. aCTHDA

Along the same line of reasoning, the Court further holdsthat the subject clause violates petitioner's right tosubstantive due process, for it deprives him of property,consisting of monetary benefits, without any existingvalid governmental purpose. 136

The argument of the Solicitor General, that the actualpurpose of the subject clause of limiting the entitlement

of OFWs to their three-month salary in case of illegaldismissal, is to give them a better chance of getting hiredby foreign employers. This is plain speculation. As earlierdiscussed, there is nothing in the text of the law or therecords of the deliberations leading to its enactment orthe pleadings of respondent that would indicate thatthere is an existing governmental purpose for the subject

clause, or even just a pretext of one.The subject clause does not state or imply any definitivegovernmental purpose; and it is for that precise reasonthat the clause violates not just petitioner's right to equalprotection, but also her right to substantive due processunder Section 1, 137Article III of the Constitution.

The subject clause being unconstitutional, petitioner is

entitled to his salaries for the entire unexpired period ofnine months and 23 days of his employment contract,pursuant to law and jurisprudence prior to the enactmentof R.A. No. 8042.

On the Third Issue


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Petitioner contends that his overtime and leave payshould form part of the salary basis in the computationof his monetary award, because these are fixed benefits

that have been stipulated into his contract.

Petitioner is mistaken.

The word salaries in Section 10 (5) does not includeovertime and leave pay. For seafarers like petitioner,DOLE Department Order No. 33, series 1996, provides aStandard Employment Contract of Seafarers, in whichsalary is understood as the basic wage, exclusive of

overtime, leave pay and other bonuses; whereasovertime pay is compensation for all work "performed" inexcess of the regular eight hours, and holiday pay iscompensation for any work "performed" on designatedrest days and holidays. SAcCIH

By the foregoing definition alone, there is no basis forthe automatic inclusion of overtime and holiday pay in

the computation of petitioner's monetary award, unlessthere is evidence that he performed work during thoseperiods. As the Court held in Centennial Transmarine,Inc. v. Dela Cruz, 138

However, the payment of overtime pay andleave pay should be disallowed in light of ourruling in Cagampan v. National Labor

Relations Commission, to wit:

The rendition of overtime work andthe submission of sufficient proof thatsaid was actually performed areconditions to be satisfied before a


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seaman could be entitled to overtimepay which should be computed on thebasis of 30% of the basic monthlysalary. In short, the contract provisionguarantees the right to overtime paybut the entitlement to such benefitmust first be established.

In the same vein, the claim for theday's leave pay for the unexpiredportion of the contract is unwarrantedsince the same is given during the

actual service of the seamen.

WHEREFORE, the Court GRANTS the Petition. Thesubject clause "or for three months for every year of theunexpired term, whichever is less" in the 5th paragraphof Section 10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the December 8, 2004Decision and April 1, 2005 Resolution of the Court of

Appeals are MODIFIED to the effect that petitioner isAWARDED his salaries for the entire unexpired portion ofhis employment contract consisting of nine months and23 days computed at the rate of US$1,400.00 per month.

No costs. THacES

SO ORDERED.

Puno, C.J., Ynares-Santiago, Corona, Carpio-Morales,Tinga, Velasco, Jr., Nachura, Leonardo-de Castro andPeralta, JJ., concur.

Quisumbing, J., I join J. Carpio's opinion.


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Carpio, J., see separate concurring opinion.

Chico-Nazario, J., is on leave.

Brion, J., see separate concurring opinion.

1. antonio serrano vs gallant maritime

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