ANTONIO M. SERRANO v. GALLANT MARITIME SERVICES

5/11/2020 ANTONIO M. SERRANO v.
GALLANT MARITIME SERVICES
601 Phil. 245
EN BANC
[ G.R. No. 167614, March 24, 2009 ]
ANTONIO M. SERRANO, PETITIONER, VS. GALLANT MARITIME SERVICES, INC.

AND MARLOW NAVIGATION CO., INC., RESPONDENTS.
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and
communities out of poverty. Their earnings have built houses, provided health
care, equipped schools and planted the seeds of businesses. They have woven
together the world by transmitting ideas and knowledge from country to country.
They have provided the dynamic human link between cultures, societies and
economies. Yet, only recently have we begun to understand not only
how much international migration impacts development, but how
smart public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon Global Forum on Migration and

Development Brussels, July 10, 2007[1]
th
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5
[2]
paragraph of Section 10, Republic Act (R.A.) No. 8042, to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment
without just, valid or authorized cause as defined by law or contract, the workers
shall be entitled to the full reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for the unexpired portion of
his employment contract or for three (3) months for every year of the
unexpired term, whichever is less.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the
unexpired portion of their employment contract "or for three months for every year of
the unexpired term, whichever is less" (subject clause). Petitioner claims that the last
clause violates the OFWs' constitutional rights in that it impairs the terms of their
contract, deprives them of equal protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails
[3] [4]
the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of
lawyerly.ph/juris/view/cbf6e# 1/35
5/11/2020 ANTONIO M. SERRANO v. GALLANT MARITIME SERVICES
Appeals (CA), which applied the subject clause, entreating this Court to declare the
subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co.,
Ltd. (respondents) under a Philippine Overseas Employment Administration (POEA)-
approved Contract of Employment with the following terms and conditions:
Duration of contract 12 months
Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700.00 per month
[5]
Vacation leave with pay 7.00 days per month
On March 19, 1998, the date of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second Officer with a monthly
salary of US$1,000.00, upon the assurance and representation of respondents that he
would be made Chief Officer by the end of April 1998.[6]
Respondents did not deliver on their promise to make petitioner Chief Officer.[7]
Hence, petitioner refused to stay on as Second Officer and was repatriated to the
Philippines on May 26, 1998.[8]
Petitioner's employment contract was for a period of 12 months or from March 19,
1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had
served only two (2) months and seven (7) days of his contract, leaving an unexpired
portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint[9] against respondents for
constructive dismissal and for payment of his money claims in the total amount of
US$26,442.73, broken down as follows:
May 27/31, 1998 (5 days) incl. Leave payUS$ 413.90
June 01/30, 1998 2,590.00
July 01/31, 1998 2,590.00
August 01/31, 1998 2,590.00
Sept. 01/30, 1998 2,590.00
Oct. 01/31, 1998 2,590.00
Nov. 01/30, 1998 2,590.00
Dec. 01/31, 1998 2,590.00
Jan. 01/31, 1999 2,590.00
Feb. 01/28, 1999 2,590.00
Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00
25,382.23
Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) [10]
1,060.50
+
[11]
TOTAL CLAIM US$ 26,442.73
as well as moral and exemplary damages and attorney's fees.
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, judgment is hereby rendered declaring that
the dismissal of the complainant (petitioner) by the respondents in the above-
entitled case was illegal and the respondents are hereby ordered to pay the
complainant [petitioner], jointly and severally, in Philippine Currency, based on
the rate of exchange prevailing at the time of payment, the amount of EIGHT
THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US
$8,770.00), representing the complainant's salary for three (3)
months of the unexpired portion of the aforesaid contract of
employment.
The respondents are likewise ordered to pay the complainant [petitioner], jointly
and severally, in Philippine Currency, based on the rate of exchange prevailing at
the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),
[12]
representing the complainant's claim for a salary differential. In addition,
the respondents are hereby ordered to pay the complainant, jointly and severally,
in Philippine Currency, at the exchange rate prevailing at the time of payment,
the complainant's (petitioner's) claim for attorney's fees equivalent to ten
percent (10%) of the total amount awarded to the aforesaid employee under this
Decision.
The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.
All other claims are hereby DISMISSED.
[13]
SO ORDERED. (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his

computation on the salary period of three months only -- rather than the entire
unexpired portion of nine months and 23 days of petitioner's employment contract -
applying the subject clause. However, the LA applied the salary rate of US$2,590.00,
consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month,
fixed overtime pay, + US$490.00/month, vacation leave pay =
US$2,590.00/compensation per month." [14]
Respondents appealed[15] to the National Labor Relations Commission (NLRC) to

question the finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed[16] to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor
Relations Commission[17] that in case of illegal dismissal, OFWs are entitled to their
salaries for the unexpired portion of their contracts.[18]
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are

hereby ordered to pay complainant, jointly and severally, in Philippine currency,
at the prevailing rate of exchange at the time of payment the following:
1. Three (3) months salary
$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorney's fees 424.50
TOTAL US$4,669.50
The other findings are affirmed.
[19]
SO ORDERED.
The NLRC corrected the LA's computation of the lump-sum salary awarded to
petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00
because R.A. No. 8042 "does not provide for the award of overtime pay, which should
be proven to have been actually performed, and for vacation leave pay."[20]
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.[21] The NLRC denied the motion.[22]
Petitioner filed a Petition for Certiorari[23] with the CA, reiterating the constitutional
challenge against the subject clause.[24] After initially dismissing the petition on a
technicality, the CA eventually gave due course to it, as directed by this Court in its
Resolution dated August 7, 2003 which granted the petition for certiorari, docketed
as G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the
reduction of the applicable salary rate; however, the CA skirted the constitutional
issue raised by petitioner.[25]
His Motion for Reconsideration[26] having been denied by the CA,[27] petitioner
brings his cause to this Court on the following grounds:
The Court of Appeals and the labor tribunals have decided the case in a way not
in accord with applicable decision of the Supreme Court involving similar issue
of granting unto the migrant worker back wages equal to the unexpired portion
of his contract of employment instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely
applying their interpretation of Section 10 of Republic Act No. 8042, it is
submitted that the Court of Appeals gravely erred in law when it failed to
discharge its judicial duty to decide questions of substance not theretofore
determined by the Honorable Supreme Court, particularly, the constitutional
issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back
wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic

Act No. 8042, the Court of Appeals gravely erred in law in excluding from
petitioner's award the overtime pay and vacation pay provided in his contract
[28]
since under the contract they form part of his salary.
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is
already old and sickly, and he intends to make use of the monetary award for his
medical treatment and medication.[29] Required to comment, counsel for petitioner
filed a motion, urging the court to allow partial execution of the undisputed monetary
award and, at the same time, praying that the constitutional question be resolved.[30]
Considering that the parties have filed their respective memoranda, the Court now
takes up the full merit of the petition mindful of the extreme importance of the
constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was
illegal is not disputed. Likewise not disputed is the salary differential of US$45.00
awarded to petitioner in all three fora. What remains disputed is only the computation
of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
petitioner at the monthly rate of US$1,400.00 covering the period of three months out
of the unexpired portion of nine months and 23 days of his employment contract or a
total of 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 to
US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire
nine months and 23 days left of his employment contract, computed at the monthly
rate of US$2,590.00.[31]
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly

impairs the freedom of OFWs to negotiate for and stipulate in their overseas
employment contracts a determinate employment period and a fixed salary package.
[32] It also impinges on the equal protection clause, for it treats OFWs differently
from local Filipino workers (local workers) by putting a cap on the amount of lump-
sum salary to which OFWs are entitled in case of illegal dismissal, while setting no
limit to the same monetary award for local workers when their dismissal is declared
illegal; that the disparate treatment is not reasonable as there is no substantial
distinction between the two groups;[33] and that it defeats Section 18,[34] Article II
of the Constitution which guarantees 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 CA and the labor tribunals are
not in line with existing jurisprudence on the issue of money claims of illegally
dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the
Court to sort them out for the guidance of affected OFWs.[36]
Petitioner further underscores that the insertion of the subject clause into R.A. No.
8042 serves no other purpose but to benefit local placement agencies. He marks the
statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of
money claims in the event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer reneges on its obligation. Hence,
placement agencies that are in good faith and which fulfill their obligations are
unnecessarily penalized for the acts of the foreign employer. To protect them
and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money claims was reduced
[37]
under Section 10 of R.A. No. 8042. (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the
subject clause sacrifices the well-being of OFWs. Not only that, the provision makes
foreign employers better off than local employers because in cases involving the illegal
dismissal of employees, foreign employers are liable for salaries covering a maximum
of only three months of the unexpired employment contract while local employers are
liable for the full lump-sum salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the
amount of backwages they have to give their employees they have illegally
dismissed, following well-entrenched and unequivocal jurisprudence on the
matter. On the other hand, foreign employers will only be limited to giving the
illegally dismissed migrant workers the maximum of three (3) months unpaid
salaries notwithstanding the unexpired term of the contract that can be more
[38]
than three (3) months.
Lastly, petitioner claims that the subject clause violates the due process clause, for it
deprives him of the salaries and other emoluments he is entitled to under his fixed-
period employment contract.[39]
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional

issue should not be entertained, for this was belatedly interposed by petitioner in his
appeal before the CA, and not at the earliest opportunity, which was when he filed an
appeal before the NLRC.[40]
The Arguments of the Solicitor General
The Solicitor General (OSG)[41] points out that as R.A. No. 8042 took effect on July
15, 1995, its provisions could not have impaired petitioner's 1998 employment
contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions
thereof are deemed part 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 local workers differ in terms of the
nature of their employment, such that their rights to monetary benefits must
necessarily be treated differently. The OSG enumerates the essential elements that
distinguish OFWs from local workers: first, while local workers perform their jobs
within Philippine territory, OFWs perform their jobs for foreign employers, over
whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost
impossible to enforce judgment; and second, as held in Coyoca v. National Labor
Relations Commission[43] and Millares v. National Labor Relations Commission,
[44] OFWs are contractual employees who can never acquire regular employment
status, unlike local workers who are or can become regular employees. Hence, the
OSG posits that there are rights and privileges exclusive to local workers, but not
available to OFWs; that these peculiarities make for a reasonable and valid basis for
the differentiated treatment under the subject clause of the 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 subject clause as a police power
measure adopted to mitigate the solidary liability of placement agencies for this
"redounds to the benefit of the migrant workers whose welfare the government seeks
to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under
lawyerly.ph/juris/view/cbf6e# [46] 7/35
decent and humane conditions."[46]
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial 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 a conflict of rights susceptible of
judicial determination;[47] (2) that the constitutional question is raised by a proper
party[48] and at the earliest opportunity;[49] and (3) that the constitutional question
is the very lis mota of the case,[50] otherwise the Court will dismiss the case or decide
the same on some other ground.[51]
Without a doubt, there exists in this case an actual controversy directly involving
petitioner who is personally aggrieved that the labor tribunals and the CA computed
his monetary award based on the salary period of three months only as provided
under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity entails the
interposition of the issue in the pleadings before a competent court, such that, if
the issue is not raised in the pleadings before that competent court, it cannot be
considered at the trial and, if not considered in the trial, it cannot be considered on
appeal.[52] Records disclose that the issue on the constitutionality of the subject
clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for
Partial Reconsideration with said labor tribunal,[53] and reiterated in his Petition for
Certiorari before the CA.[54] Nonetheless, the issue is deemed seasonably raised
because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-
judicial function - its function in the present case is limited to determining questions
of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving
such questions in accordance with the standards laid down by the law itself;[55] thus,
its foremost function is to administer and enforce R.A. No. 8042, and not to inquire
into the validity of its provisions. The CA, on the other hand, is vested with the power
of judicial review or the power to declare unconstitutional a law or a provision thereof,
such as the subject clause.[56] Petitioner's interposition of the constitutional issue
before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to
take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case
likewise obtains because the monetary claim of petitioner to his lump-sum salary for
the entire unexpired portion of his 12-month employment contract, and not just for a
period of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject
clause.
Does the subject clause violate Section 10,

Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his
contract on the term of his employment and the fixed salary package he will
receive[57] is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have
only a prospective operation,[58] and cannot affect acts or contracts already
perfected;[59] however, as to laws already in existence, their provisions are read into
contracts and deemed a part thereof.[60] Thus, the non-impairment clause under
Section 10, Article II is limited in application to laws about to be enacted that would in
any way derogate from existing acts or contracts by enlarging, abridging or in any
manner 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 employment contract between petitioner and respondents in 1998.
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause,
impaired the employment contract of the parties. Rather, when the parties executed
their 1998 employment contract, they were deemed to have incorporated into it all the
provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be
declared unconstitutional on the ground that it impinges on the impairment clause,
for the law was enacted in the exercise of the police power of 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 be employed.[61] Police power legislations adopted by the State to
promote the health, morals, peace, education, good order, safety, and general welfare
of the people are generally applicable not only to future contracts but even to those
already in existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to promote public welfare.[62]
Does the subject clause violate Section 1,

Article III of the Constitution, and Section 18,
Article II and Section 3, 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, or property without due process of law nor
shall any person be denied the equal protection of the law.
Section 18,[63] Article II and Section 3,[64] Article XIII accord all members of the
labor sector, without distinction as to place of deployment, full protection of their
rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional

provisions translate to economic security and parity: all monetary benefits should be
equally enjoyed by workers of similar category, while all monetary obligations should
be borne by them in equal degree; none should be denied the protection of the laws
which is enjoyed by, or spared the burden imposed on, others in like circumstances.
[65]
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation; however, to
be valid, the classification must comply with these requirements: 1) it is based on
substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited
to existing conditions only; and 4) it applies equally to all members of the class.[66]
There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which
the challenged classification needs only be shown to be rationally related to serving a
legitimate state interest;[67] b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state
interest and that the classification is at least substantially related to serving that
interest;[68] and c) strict judicial scrutiny[69] in which a legislative classification
which impermissibly interferes with the exercise of a fundamental right[70] or
operates to the peculiar disadvantage of a suspect class[71] is presumed
unconstitutional, and the burden is upon the government to prove that the
classification is necessary to achieve a compelling state interest and that it is the
least restrictive means to protect such interest.[72]
Under American jurisprudence, strict judicial scrutiny is triggered by suspect

classifications[73] based on race[74] or gender[75] but not when the classification is
drawn along 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,[77] the
constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas
(BSP), a government financial institution (GFI), was challenged for maintaining its
rank-and-file employees under the Salary Standardization Law (SSL), even when the
rank-and-file employees of other GFIs had been exempted from the SSL by their
respective charters. Finding that the disputed provision contained a suspect
classification based on salary grade, the Court deliberately employed the standard of
strict judicial scrutiny in its review of the constitutionality of said provision. More
significantly, it was in this case that the Court revealed the broad outlines of its
judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its
policies should be accorded recognition and respect by the courts of justice
except when they run afoul of the Constitution. The deference stops where the
classification violates a fundamental right, or prejudices persons accorded
special protection by the Constitution. When these violations arise, this
Court must discharge its primary role as the vanguard of constitutional
guaranties, and require a stricter and more exacting adherence to constitutional
limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special

protection by the Constitution requires a stricter judicial scrutiny
finds no support in American or English jurisprudence.
Nevertheless, these foreign decisions and authorities are not per se
controlling in this jurisdiction. At best, they are persuasive and have been
used to support many of our decisions. We should not place undue and fawning
reliance upon them and regard them as indispensable mental crutches without
which we cannot come to our own decisions through the employment of our own
endowments. We live in a different ambience and must decide our own problems
in the light of our own interests and needs, and of our qualities and even
idiosyncrasies as a people, and always with our own concept of law and justice.
Our laws must be construed in accordance with the intention of our own
lawmakers and such intent may be deduced from the language of each law and
the context of other local legislation related thereto. More importantly, they must
be construed to serve our own public interest which is the be-all and the end-all
of all our laws. And it need not be stressed that our public interest is distinct and
different from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the
Constitution. The Preamble proclaims "equality" as an ideal precisely in protest
against crushing inequities in Philippine society. The command to promote
social justice in Article II, Section 10, in "all phases of national development,"
further explicitated in Article XIII, are clear commands to the State to take
affirmative action in the direction of greater equality. x x x [T]here is thus in the
Philippine Constitution no lack of doctrinal support for a more vigorous state
effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital

social and economic rights to marginalized groups of society,
including labor. Under the policy of social justice, the law bends
over backward to accommodate the interests of the working class on
the humane justification that those with less privilege in life should
have more in law. And the obligation to afford protection to labor is
incumbent not only on the legislative and executive branches but
also on the judiciary to translate this pledge into a living reality.

Social justice calls for the humanization of laws and the
equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at
least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding
questions of constitutionality, recognizing the broad discretion given to Congress
in exercising its legislative power. Judicial scrutiny would be based on the
"rational basis" test, and the legislative discretion would be given deferential
treatment.
But if the challenge to the statute is premised on the denial of a fundamental

right, or the perpetuation of prejudice against persons favored by the
Constitution with special protection, judicial scrutiny ought to be
more strict. A weak and watered down view would call for the abdication of
this Court's solemn duty to strike down any law repugnant to the Constitution
and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its
instrumentalities. Oppressive acts will be struck down regardless of the character
or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary
grade or officer-employee status. It is akin to a distinction based on
economic class and status, with the higher grades as recipients of a
benefit specifically withheld from the lower grades. Officers of the BSP
now receive higher compensation packages that are competitive with the
industry, while the poorer, low-salaried employees are limited to the rates
prescribed by the SSL. The implications are quite disturbing: BSP rank-and-file
employees are paid the strictly regimented rates of the SSL while employees
higher in rank - possessing higher and better education and opportunities for
career advancement - are given higher compensation packages to entice them to
stay. Considering that majority, if not all, the rank-and-file
employees consist of people whose status and rank in life are less
and limited, especially in terms of job marketability, it is they - and
not the officers - who have the real economic and financial need for
the adjustment. This is in accord with the policy of the Constitution "to free
the people from poverty, provide adequate social services, extend to them a
decent standard of living, and improve the quality of life for all." Any act of
Congress that runs counter to this constitutional desideratum
deserves strict scrutiny by this Court before it can pass muster.
(Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in
the present case also employs the standard of strict judicial scrutiny, for it perceives in
the subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis-à-vis OFWs
with employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis-à-vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis-à-vis OFWs
with employment contracts of one year or more
As pointed out by petitioner,[78] it was in Marsaman Manning Agency, Inc. v.

National Labor Relations Commission[79] (Second Division, 1999) that the Court
laid 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 clearly reveals that the choice of which
amount to award an illegally dismissed overseas contract worker,
i.e., whether his salaries for the unexpired portion of his
employment contract or three (3) months' salary for every year of
the unexpired term, whichever is less, comes into play only when the
employment contract concerned has a term of at least one (1) year
or more. This is evident from the words "for every year of the
unexpired term" which follows the words "salaries x x x for three
months." To follow petitioners' thinking that private respondent is entitled to
three (3) months salary only simply because it is the lesser amount is to
completely disregard and overlook some words used in the statute while giving
effect to some. This is contrary to the well-established rule in legal hermeneutics
that in interpreting a statute, care should be taken that every part or word
thereof be given effect since the law-making body is presumed to know the
meaning of the words employed in the statue and to have used them advisedly.
[80]
Ut res magis valeat quam pereat. (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-
month contract, but was awarded his salaries for the remaining 8 months and 6 days
of his contract.
Prior to Marsaman, however, there were two cases in which the Court made
conflicting rulings on Section 10(5). One was Asian Center for Career and
Employment System and Services v. National Labor Relations Commission (Second
Division, October 1998),[81] which involved an OFW who was awarded a two-year
employment contract, but was dismissed after working for one year and two months.
The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum
salary covering eight months, the unexpired portion of his contract. On appeal, the
Court reduced the award to SR3,600.00 equivalent to his three months' salary, this
being the lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas
employment without just, valid or authorized cause is entitled to his salary for
the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.
In the case at bar, the unexpired portion of private respondent's employment

contract is eight (8) months. Private respondent should therefore be paid his
[82]
basic salary corresponding to three (3) months or a total of SR3,600.
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations

Commission (Third Division, December 1998),[83] which involved an OFW (therein
respondent Erlinda Osdana) who was originally granted a 12-month contract, which
was deemed renewed for another 12 months. After serving for one year and seven-
and-a-half months, respondent Osdana was illegally dismissed, and the Court
awarded her salaries for the entire unexpired portion of four and one-half months of
her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the
following cases:
Period
Applied in
the
Contract Period of Unexpired
Case Title Computation
Period Service Period
of the
Monetary
Award
[84]
Skippers v. Maguad 6 months 2 months 4 months 4 months
Bahia Shipping v.
[85] 9 months 8 months 4 months 4 months
Reynaldo Chua
Centennial Transmarine
v. dela Cruz l
[87]
Talidano v. Falcon
Univan v. CA 12 months 3 months 9 months 3 months
[89] more than
Oriental v. CA 12 months 10 months 3 months
2 months
[90] more than more or less
PCL v. NLRC 12 months 3 months
2 months 9 months
[91] 11 months and
Olarte v. Nayona 12 months 21 days 3 months
9 days
[92] 11 months and
JSS v. Ferrer 12 months 16 days 3 months
24 days
Pentagon v. 9 months 2 months and 2 months and
[93] 12 months
Adelantar and 7 days 23 days 23 days
Phil. Employ[94]v. 10 Unexpired
. 12 months 2 months
Paramio, et al months portion
6 months or 3
Flourish Maritime v. 23 months and months for
[95] 2 years 26 days
Almanzor 4 days each year of
contract
6 months or 3
1 year, 10 1 year, 9
Athenna Manpower
[96] v. months and 1 month months and 28 months for
Villanos each year of
28 days days
contract
As the foregoing matrix readily shows, the subject clause classifies OFWs into two
categories. The first category includes OFWs with fixed-period employment contracts
of less than one year; in case of illegal dismissal, they are entitled to their salaries for
the entire unexpired portion of their contract. The second category consists of OFWs
with fixed-period employment contracts of one year or more; in case of illegal
dismissal, they are entitled to monetary award equivalent to only 3 months of the
unexpired portion of their contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers,
the respondent OFW worked 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
Oriental and PCL who had also worked for about 2 months out of their 12-month
contracts were awarded their salaries for only 3 months of the unexpired portion of
their contracts. Even the OFWs involved in Talidano and Univan who had worked for
a longer period of 3 months out of their 12-month contracts before being illegally
dismissed were awarded their salaries for only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A
with an employment contract of 10 months at a monthly salary rate of US$1,000.00
and a hypothetical OFW-B with an employment contract of 15 months with the same
monthly salary rate of US$1,000.00. Both commenced work 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 to US$9,000.00, equivalent to his
salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled to
only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of
his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his
contract, as the US$3,000.00 is the lesser amount.
The disparity becomes more aggravating when the Court takes into account
jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14, 1995,
[97] illegally dismissed OFWs, no matter how long the period of their employment
contracts, were entitled to their salaries for the entire unexpired portions of their
contracts. The matrix below speaks for itself:
Period
Applied in
the
Contract Period of Unexpired
Case Title Computation
Period Service Period
of the
Monetary
Award
[98]
ATCI v. CA, et al. 2 years 2 months 22 months 22 months
23 months
Phil. Integrated v. 23 months and
[99] 2 years 7 days and
NLRC 23 days
23 days
[100]
JGB v. NLC 2 years 9 months 15 months 15 months
[101]
Agoy v. NLRC 2 years 2 months 22 months 22 months
[102]
EDI v. NLRC, et al. 2 years 5 months 19 months 19 months
Barros v. NLRC,
et al.
6 months
Philippine Transmarine 5 months and 5 months and
[104] 12 months and 22
v. Carilla 18 days 18 days
days
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
unexpired portions thereof, 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 of computation: their basic salaries multiplied by the entire unexpired
portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule
of computation of the money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category whose contracts have
an unexpired portion of one year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their salaries for 3 months or
for the unexpired portion thereof, whichever is less, but all the while sparing the other
category from such prejudice, simply because the latter's unexpired contracts fall
short of one year.
Among OFWs With Employment

Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court
now has misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the
unexpired term, whichever is 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.[105] Corollarily, that "every year" is but part of an "unexpired
term" is significant in many ways: first, the unexpired term 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 original term must be more than one year,
for otherwise, whatever would be the unexpired term thereof will not reach even a
year. Consequently, the more decisive factor in the determination of when the subject
clause "for three (3) months for every year of the unexpired term, whichever is less"
shall apply is not the length of the original contract period as held in Marsaman,[106]
but the length of the unexpired portion of the contract period -- the subject clause
applies in cases when the unexpired portion of the contract period is at least one year,
which arithmetically requires that the original contract period be more than one year.
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 are illegally
dismissed with less than one year left in their contracts shall be entitled to their
salaries for the entire unexpired portion thereof, while those who are illegally
dismissed with one year or more remaining in their contracts shall be covered by the
subject clause, and their monetary benefits limited to their salaries for three months
only.
To concretely illustrate the application of the foregoing interpretation of the subject

clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-
month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally
dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there
is at least 12 months remaining in the contract period of OFW-C, the subject clause
applies to the computation of the latter's monetary benefits. Thus, OFW-C will be
entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired
portion of the contract, but to the lesser amount of US$3,000.00 or the latter's
salaries for 3 months out of the 12-month unexpired term of the contract. On the
other hand, OFW-D is spared 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 is equivalent to his/her total salaries for the entire 11-month
unexpired portion.
OFWs vis-à-vis Local Workers

With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the
monetary awards of illegally dismissed OFWs was in place. This uniform system was
applicable even to local workers with fixed-term employment.[107]
The earliest rule prescribing a uniform system of computation was actually Article 299
of the Code of Commerce (1888),[108] to wit:
Article 299. If the contracts between the merchants and their shop
clerks and employees should have been made of a fixed period, none
of the contracting parties, without the consent of the other, may
withdraw from the fulfillment of said contract until the termination
of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage
suffered, with the exception of the provisions contained in the following articles.
In Reyes v. The Compañia Maritima,[109] the Court applied the foregoing provision
to determine the liability of a shipping company for the illegal discharge of its
managers prior to the expiration of their fixed-term employment. The Court therein
held the shipping company liable for the salaries of its managers for the remainder of
their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code
of Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the
agent should be for a definite period or voyage, they cannot be discharged until
the fulfillment of their contracts, except for reasons of insubordination in serious
matters, robbery, theft, habitual drunkenness, and damage caused 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,[110] in which
the Court held the shipping company liable for the salaries and subsistence allowance
of its illegally dismissed employees for the entire unexpired portion of their
employment contracts.
While Article 605 has remained good law up to the present,[111] Article 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
certain time and for a certain work cannot leave or be dismissed without
sufficient cause, before the fulfillment of the contract. (Emphasis supplied.)

Citing Manresa, the Court in Lemoine v. Alkan[112] read the disjunctive "or" in
Article 1586 as a conjunctive "and" so as to apply the provision to local workers who
are employed for a time certain although for no particular skill. This interpretation of
Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company.[113] And
in both Lemoine and Palomar, the Court adopted the general principle that in actions
for wrongful discharge founded on Article 1586, local workers are entitled to recover
damages to the extent of the amount stipulated to be paid to them by the terms of
their contract. On the computation of the amount of such damages, the Court in Aldaz
v. Gay[114] held:
The doctrine is well-established in American jurisprudence, and nothing has
been brought to our attention to the contrary under Spanish jurisprudence, that
when an employee is wrongfully discharged it is his duty to seek other
employment of the same kind in the same community, for the purpose of
reducing the damages resulting from such wrongful discharge. However, while
this is the general rule, the burden of showing that he failed to make an effort to
secure other employment of a like nature, and that other employment of a like
nature was obtainable, is upon the defendant. When an employee is
wrongfully discharged under a contract of employment his prima
facie damage is the amount which he would be entitled to had he
continued in such employment until the termination of the period.
(Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs.
[115]
School District No. 2, 98 Mich., 43.) (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new 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 a Piece of Work), Chapter 3, Title VIII, Book
IV.[116] Much like Article 1586 of the Civil Code of 1889, the new provisions of the
Civil Code do not expressly provide for the remedies available to a fixed-term worker
who is illegally discharged. However, it is noted that in Mackay Radio & Telegraph
Co., Inc. v. Rich,[117] the Court carried over the principles on the payment of damages
underlying Article 1586 of the Civil Code of 1889 and applied the same to a case
involving the illegal discharge of a local worker whose fixed-period employment
contract was entered into in 1952, when the new Civil Code was already in effect.[118]
More significantly, the same principles were applied to cases involving overseas
Filipino workers whose fixed-term employment contracts were illegally terminated,
such as in First Asian Trans & Shipping Agency, Inc. v. Ople,[119] involving seafarers
who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National
Labor Relations Commission,[120] an OFW who was illegally dismissed prior to the
expiration of her fixed-period employment contract as a baby sitter, was awarded
salaries corresponding to the unexpired portion of her contract. The Court arrived at
the same ruling in Anderson v. National Labor Relations Commission,[121] which
involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but
who was illegally dismissed after only nine months on the job -- the Court awarded
him salaries corresponding to 15 months, the unexpired portion of his contract. In
Asia World Recruitment, Inc. v. National Labor Relations Commission,[122] a
Filipino working as a security officer in 1989 in Angola was awarded his salaries for
the remaining period of his 12-month contract after he was wrongfully discharged.
Finally, in Vinta Maritime Co., Inc. v. National Labor Relations Commission,[123] an

OFW whose 12-month contract was illegally cut short in the second month was
declared entitled to his salaries for the remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term
employment who were illegally discharged were treated alike in terms of the
computation of their money claims: they were uniformly entitled to their salaries for
the entire unexpired portions of 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 of one year or more in their employment contract have since been
differently treated in that their money claims are subject to a 3-month cap, whereas
no such limitation is imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect

classification in that, in the computation of the monetary benefits of
fixed-term employees who are illegally discharged, it imposes a 3-month
cap on the claim of OFWs with an unexpired portion of one year or more
in their contracts, but none on the claims of other OFWs or local workers
with fixed-term employment. The subject clause singles out one
classification of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the

Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive
means.
What constitutes compelling state interest is measured by the scale of rights and
powers arrayed in the Constitution and calibrated by history.[124] It is akin to the
paramount interest of the state[125] for which some individual liberties must give
way, such as the public interest in safeguarding health or maintaining medical
standards,[126] or in maintaining access to information on matters of public concern.
[127]
In the present case, the Court dug deep into the records but found no compelling state
interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect
the employment of Filipino seafarers overseas x x x. By limiting the liability to three
months [sic], Filipino seafarers have better chance of getting hired by foreign
employers." The limitation also protects the interest of local placement agencies,
which otherwise may be made to shoulder millions of pesos in "termination pay."
[128]
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of
money claims in the event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer reneges on its obligation. Hence,
placement agencies that are in good faith and which fulfill their obligations are
unnecessarily penalized for the acts of the foreign employer. To protect them
and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money are reduced under
Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies
helps [assure] the government that migrant workers are properly deployed and
[129]
are employed under decent and humane conditions. (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of
its perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego
in sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;
[130] but the speech makes no reference to the underlying reason for the adoption of
the subject clause. That is only natural for none of the 29 provisions in HB 14314
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. - Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of the complaint, the claim arising
out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas employment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and
all claims under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money

claims exclusive of damages under this Section shall not be less than fifty percent
(50%) of such money claims: Provided, That any installment payments, if
applicable, to satisfy any such compromise or voluntary settlement shall not be
more than two (2) months. Any compromise/voluntary agreement in violation of
this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided

under this Section shall subject the responsible officials to any or all of the
following penalties:
(1) The salary of any such official who fails to render his decision or
resolution within the prescribed period shall be, or caused to be, withheld
until the said official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive
public office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice
to any liability which any such official may have incurred under other existing
laws or rules and regulations as a consequence of violating the provisions of this
paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the
computation of money claims.
A rule on the computation of money claims containing the subject clause was inserted
and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The
Court examined the rationale of the subject clause in the transcripts of the "Bicameral
Conference Committee (Conference Committee) Meetings on the Magna Carta on
OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)."
However, the Court finds no discernible state interest, let alone a compelling one, that
is sought to be protected or advanced by the adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination
against OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect
the employment of OFWs by mitigating the solidary liability of placement agencies,
such callous and cavalier rationale will have to be rejected. There can never be a
justification for any form of government action that alleviates the burden of one
sector, but imposes the same burden on another sector, especially when the favored
sector is composed of private businesses such as placement agencies, while the
disadvantaged sector is composed of OFWs whose protection no less than the
Constitution commands. The idea that private business interest can be elevated to the
level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in
place that can be employed to achieve that purpose without infringing on the
constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of
Land-Based Overseas Workers, dated February 4, 2002, imposes administrative
disciplinary measures on erring foreign employers who default on their contractual
obligations to migrant workers and/or their Philippine agents. These disciplinary
measures range from temporary disqualification to preventive suspension. The POEA
Rules and Regulations Governing the Recruitment and Employment of Seafarers,
dated May 23, 2003, contains similar administrative disciplinary measures against
erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of

aiding local placement agencies in enforcing the solidary liability of their foreign
principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is
violative of the right of petitioner and other OFWs to equal protection.
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause
directly violates state policy on labor under Section 3,[131] Article XIII of the
Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,,[132]
there are some which this Court has declared not judicially enforceable, Article
XIII being one,[133] particularly Section 3 thereof, the nature of which, this Court, in
Agabon v. National Labor Relations Commission,[134] has described to be not self-
actuating:
Thus, the constitutional mandates of protection to labor and security of tenure

may be deemed as self-executing in the sense that these are automatically
acknowledged and observed without need for any enabling legislation. However,
to declare that the constitutional provisions are enough to guarantee the full
exercise of the rights embodied therein, and the realization of ideals therein
expressed, would be impractical, if not unrealistic. The espousal of such view
presents the dangerous tendency of being overbroad and exaggerated. The
guarantees of "full protection to labor" and "security of tenure", when examined
in isolation, are facially unqualified, and the broadest interpretation possible
suggests a blanket shield in favor of labor against any form of removal regardless
of circumstance. This interpretation implies an unimpeachable right to
continued employment-a utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is still needed to define the
parameters of these guaranteed rights to ensure the protection and promotion,
not only the rights of the labor sector, but of the employers' as well. Without
specific and pertinent legislation, judicial bodies will be at a loss, formulating
their own conclusion to approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be

a source of a positive enforceable right to stave off the dismissal of an
employee for just cause owing to the failure to serve proper notice or hearing. As
manifested by several framers of the 1987 Constitution, the provisions on social
[135]
justice require legislative enactments for their enforceability. (Emphasis
added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct

enforceable rights, for the violation of which the questioned clause may be declared
unconstitutional. It may unwittingly risk opening the floodgates of litigation to every
worker or union over every conceivable violation of so broad a concept as social justice
for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working
class any actual enforceable right, but merely clothes it with the status of a sector for
whom the Constitution urges protection through executive or legislative action and
judicial recognition. Its utility is best limited to being an impetus not just for the
executive and legislative departments, but for the judiciary as well, to protect the
welfare of the working class. And it was in fact consistent with that constitutional
agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee
Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice
now Chief Justice Reynato S. Puno, formulated the judicial precept that when the
challenge to a statute is premised on the perpetuation of prejudice against persons
favored by the Constitution with special protection -- such as the working class or a
section thereof -- the Court may recognize the existence of a suspect classification and
subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny
formulated in Central Bank Employee Association exaggerate the significance of
Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII
in conjunction with the equal protection clause. Article XIII, by itself, without the
application of the equal protection clause, has no life or force of its own as elucidated
in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause
violates petitioner's right to substantive due process, for it deprives him of property,
consisting of monetary benefits, without any existing valid governmental purpose.
[136]
The argument of the Solicitor General, that the actual purpose of the subject clause of
limiting the entitlement of OFWs to their three-month salary in case of illegal
dismissal, is to give them a better chance of getting hired by foreign employers. This is
plain speculation. As earlier discussed, there is nothing in the text of the law or the
records of the deliberations leading to its enactment or the pleadings of respondent
that would indicate that there 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 definitive governmental purpose; and it
is for that precise reason that the clause violates not just petitioner's right to equal
protection, but also her right to substantive due process under Section 1,[137] Article
III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the
entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary
basis in the computation of 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 include overtime and leave pay. For
seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the
basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay
is compensation for all work "performed" in excess of the regular eight hours, and
holiday pay is compensation for any work "performed" on designated rest days and
holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of
overtime and holiday pay in the computation of petitioner's monetary award, unless
there is evidence that he performed work during those periods. As the Court held in
Centennial Transmarine, Inc. v. Dela Cruz,[138]
However, the payment of overtime pay and leave pay should be disallowed in
light of our ruling in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that
said was actually performed are conditions to be satisfied before a seaman
could be entitled to overtime pay which should be computed on the basis of
30% of the basic monthly salary. In short, the contract provision guarantees
the right to overtime pay but the entitlement to such benefit must first be
established.
In the same vein, the claim for the day's leave pay for the unexpired portion
of the contract is unwarranted since the same is given during the actual
service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three
months for every year of the unexpired term, whichever is less" in the 5th paragraph
of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL;
and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of
Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for
the entire unexpired portion of his employment contract consisting of nine months
and 23 days computed at the rate of US$1,400.00 per month.
No costs.
SO ORDERED.
Puno, C.J., Ynares-Santiago, Corona, Carpio Morales, Tinga, Velasco, Jr., Nachura,
Leonardo-De Castro, and Peralta, JJ., concur.
Quisumbing, J., join J. Carpio's opinion.
Carpio, and Brion, JJ., see separate concurring opinion.
Chico-Nazario, J., on leave.
[1] http://www.un.org/News/Press/docs/2007/sgsm11084.doc.htm.
[2] Migrant Workers and Overseas Filipinos Act of 1995, effective July 15, 1995.
[3] Penned by Associate Justice Andres B. Reyes, Jr. and concurred in by Associate
Justices Lucas P. Bersamin and Celia C. Librea-Leagogo; rollo, p. 231.
[4] Id. at 248.
[5] Rollo, p. 57.
[6] Id. at 58.
[7] Id. at 59.
[8] Id. at 48.
[9] Id. at 55.
[10] According to petitioner, this amount represents the pro-rated difference between
the salary of US$2,590.00 per month which he was supposed to receive as Chief
Officer from March 19, 1998 to April 30, 1998 and the salary of US$1,850.00 per
month which he was actually paid as Second Officer for the same period. See LA
Decision, rollo, pp. 107 and 112.
[11] Position Paper, id. at 53-54.
[12] The LA awarded petitioner US$45.00 out of the US$1,480.00 salary differential
to which petitioner is entitled in view of his having received from respondents
US$1,435.00 as evidenced by receipts marked as Annexes "F", "G" and "H", id. at 319-
321.
[13] Id. at 114.
[14] Rollo, pp. 111-112.
[15] Id. at 124.
[16] Id. at 115.
[17] G.R. No. 129584, December 3, 1998, 299 SCRA 608.
[18] Appeal Memorandum, rollo, p. 121.
[19] Id. at 134.
[20] NLRC Decision, rollo, p. 140.
[21] Id. at 146-150.
[22] Id. at 153.
[23] Id. at 155.
[24] Id. at 166-177.
[25] CA Decision, id. at 239-241.
[26] Id. at 242.
[2 ]
[27] Id. at 248.
[28] Petition, rollo, p. 28.
[29] Id. at 787.
[30] Id. at 799.
[31] Rollo, p. 282
[32] Memorandum for Petitioner, id. at 741-742.
[33] Id. at 746-753.
[34] Section 18. The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.
[35] Rollo, pp. 763-766.
[36] Petition, id. at 735.
[37] Memorandum of the Solicitor General, rollo, p. 680.
[38] Memorandum for Petitioner, id. at 755.
[39] Id. at 761-763.
[40] Rollo, pp. 645-646 and 512-513.
[41] Alfredo L. Benipayo was Solicitor General at the time the Comment was filed.
Antonio Eduardo B. Nachura (now an Associate Justice of the Supreme Court) was
Solicitor General when the Memorandum was filed.
[42] Memorandum of the Solicitor General, id. at 662-665.
[43] G.R. No. 113658, March 31, 1995, 243 SCRA 190.
[44] G.R. No. 110524, July 29, 2002, 385 SCRA 306.
[45] Memorandum of the Solicitor General, rollo, pp. 668-678.
[46] Id. at 682.
[47] The Province of North Cotabato v. The Government of the Republic of the
Philippines Peace Panel on Ancestral Domain, G.R. No. 183591 October 14, 2008.
[48] Automotive Industry Workers Alliance v. Romulo, G.R. No. 157509, January
18, 2005, 449 SCRA 1.
[49] David v. Macapagal-Arroyo, G.R. No. 171396, May 3, 2006, 489 SCRA 160.
[50] Arceta v. Mangrobang, G.R. No. 152895, June 15, 2004, 432 SCRA 136.
[51] Moldex Realty, Inc. v. Housing and Land Use Regulatory Board, G.R. No.
149719, June 21, 2007, 525 SCRA 198; Marasigan v. Marasigan, G.R. No. 156078,
March 14, 2008, 548 SCRA 409.
[52] Matibag v. Benipayo, G.R. No. 149036, April 2, 2002, 380 SCRA 49.
[53] Rollo, p. 145.
[54] Id. at 166.
[55] Smart Communications, Inc. v. National Telecommunications Commission, G.R.

No. 151908, August 12, 2003, 408 SCRA 678.
[56] Equi-Asia Placement, Inc. v. Department of Foreign Affairs, G.R. No. 152214,
September 19, 2006, 502 SCRA 295.
[57] Memorandum for Petitioner, rollo, pp. 741-742.
[58] Ortigas & Co., Ltd. v. Court of Appeals, G.R. No. 126102, December 4,
2000, 346 SCRA 748.
[59] Picop Resources, Inc. v. Base Metals Mineral Resources Corporation, G.R. No.
163509, December 6, 2006, 510 SCRA 400.
[60] Walker v. Whitehead, 83 U.S. 314 (1873); Wood v. Lovett, 313 U.S. 362, 370
(1941); Intrata-Assurance Corporation v. Republic of the Philippines, G.R. No.
156571, July 9, 2008; Smart Communications, Inc. v. City of Davao, G.R. No.
155491, September 16, 2008.
[61] Executive Secretary v. Court of Appeals, G.R. No. 131719, May 25, 2004, 429
SCRA 81, citing JMM Promotion and Management, Inc. v. Court of Appeals, G.R. No.
120095, August 5, 1996, 260 SCRA 319.
[62] Ortigas & Co., Ltd. v. Court of Appeals, supra note 58.
[63] Section 18. The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.
[64] Section 3, The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.
[65] See City of Manila v. Laguio, G.R. No. 118127, April 12, 2005, 455 SCRA 308;
Pimentel III v. Commission on Elections, G.R. No. 178413, March 13, 2008, 548 SCRA
169.
[66] League of Cities of the Philippines v. Commission on Elections G.R. No. 176951,
November 18, 2008; Beltran v. Secretary of Health, G.R. No. 139147,November 25,
2005, 476 SCRA 168.
[67] Association of Small Landowners in the Philippines v. Secretary of Agrarian

Reform, G.R. No. 78742, July 14, 1989, 175 SCRA 343.
[68] Los Angeles v. Almeda Books, Inc., 535 U.S. 425 (2002); Craig v. Boren, 429 US
190 (1976).
[69] There is also the "heightened scrutiny" standard of review which is less
demanding than "strict scrutiny" but more demanding than the standard rational
relation test. Heightened scrutiny has generally been applied to cases that involve
discriminatory classifications based on sex or illegitimacy, such as in Plyler v. Doe,
457 U.S. 202, where a heightened scrutiny standard was used to invalidate a State's
denial to the children of illegal aliens of the free public education that it made
available to other residents.
[70] America v. Dale, 530 U.S. 640 (2000); Parents Involved in Community Schools
v. Seattle School District No. 1, 551 U.S. (2007);
http://www.supremecourtus.gov/opinions/06pdf/05-908.pdf.
[71] Adarand Constructors, Inc. v. Peña, 515 US 230 (1995).
[72] Grutter v. Bollinger, 539 US 306 (2003); Bernal v. Fainter, 467 US 216 (1984).
[73] The concept of suspect classification first emerged in the famous footnote in the
opinion of Justice Harlan Stone in U.S. v. Carolene Products Co., 304 U.S. 144 (1938),
the full text of which footnote is reproduced below:
There may be narrower scope for operation of the presumption of

constitutionality when legislation appears on its face to be within a
specific prohibition of the Constitution, such as those of the first ten
amendments, which are deemed equally specific when held to be embraced within the
Fourteenth. See Stromberg v. California, 283 U.S. 359, 369-370; Lovell v. Griffin, 303
U.S. 444, 452.
It is unnecessary to consider now whether legislation which restricts those political

processes which can ordinarily be expected to bring about repeal of undesirable
legislation is to be subjected to more exacting judicial scrutiny under the general
prohibitions of the Fourteenth Amendment than are most other types of legislation.
On restrictions upon the right to vote, see Nixon v. Herndon, 273 U.S. 536; Nixon v.
Condon, 286 U.S. 73; on restraints upon the dissemination of information, see Near v.
Minnesota ex rel. Olson, 283 U.S. 697, 713-714, 718-720, 722; Grosjean v. American
Press Co., 297 U.S. 233; Lovell v. Griffin, supra; on interferences with political
organizations, see Stromberg v. California, supra, 369; Fiske v. Kansas, 274 U.S. 380;
Whitney v. California, 274 U.S. 357, 373-378; Herndon v. Lowry, 301 U.S. 242, and
see Holmes, J., in Gitlow v. New York, 268 U.S. 652, 673; as to prohibition of
peaceable assembly, see De Jonge v. Oregon, 299 U.S. 353, 365.
Nor need we enquire whether similar considerations enter into the review of statutes
directed at particular religious, Pierce v. Society of Sisters, 268 U.S. 510, or national,
Meyer v. Nebraska, 262 U.S. 390; Bartels v. Iowa, 262 U.S. 404; Farrington v.
Tokushige, 273 U.S. 284, or racial minorities, Nixon v. Herndon, supra; Nixon v.
Condon, supra: whether prejudice against discrete and insular minorities may be a
special condition, which tends seriously to curtail the operation of those political
processes ordinarily to be relied upon to protect minorities, and which may call for a
correspondingly more searching judicial inquiry. Compare McCulloch v. Maryland, 4
Wheat. 316, 428; South Carolina v. Barnwell Bros., 303 U.S. 177, 184, n 2, and cases
cited.
[74] Korematsu v. United States, 323 U.S. 214 (1944); Regents of the University of
California v. Bakke, 438 U.S. 265 (1978).
[75] Frontiero v. Richardson, 411 U.S. 677 (1973); U.S. v. Virginia, 518 U.S. 515
(1996).
[76] San Antonio Independent School District v. Rodriguez, 411 U.S. 1 (1973).
[77] G.R. No. 148208, December 15, 2004, 446 SCRA 299.
[78] Rollo, pp. 727 and 735.
[79] 371 Phil. 827 (1999).
[80] Id. at 840-841.
[81] G.R. No. 131656, October 20, 1998, 297 SCRA 727.
[82] Id.
[83] Supra note 17.
[84] G.R. No. 166363, August 15, 2006, 498 SCRA 639.
[85] G.R. No. 162195, April 8, 2008, 550 SCRA 600.
[86] G.R. No. 180719, August 22, 2008.
[87] G.R. No. 172031, July 14, 2008, 558 SCRA 279.
[88] G.R. No. 157534, June 18, 2003 (Resolution).
[89]
[89] G.R. No. 153750, January 25, 2006, 480 SCRA 100.
[90] G.R. No. 148418, July 28, 2005, 464 SCRA 314.
[91] G.R. No. 148407, November 12, 2003, 415 SCRA 720.
[93] G.R. No. 157373, July 27, 2004, 435 SCRA 342.
[94] G.R. No. 144786, April 15, 2004, 427 SCRA 732.
[95] G.R. No. 177948, March 14, 2008, 548 SCRA 712.
[96] G.R. No. 151303, April 15, 2005, 456 SCRA 313.
[97] Asian Center v. National Labor Relations Commission, supra note 81.
[98] G.R. No. 143949, August 9, 2001, 362 SCRA 571.
[100] G.R. No. 109390, March 7, 1996, 254 SCRA 457.
[103] G.R. No. 123901, September 22, 1999, 315 SCRA 23.
[104] G.R. No. 157975, June 26, 2007, 525 SCRA 586.
[105] www.merriam-webster.com/dictionary visited on November 22, 2008 at 3:09.
[106] See also Flourish, supra note 95; and Athena, supra note 96.
[107] It is noted that both petitioner and the OSG drew comparisons between OFWs
in general and local workers in general. However, the Court finds that the more
relevant comparison is between OFWs whose employment is necessarily subject to a
fixed term and local workers whose employment is also subject to a fixed term.
[108] Promulgated on August 6, 1888 by Queen Maria Cristina of Spain and extended
to the Philippines by Royal Decree of August 8, 1888. It took effect on December 1,
1888.
[109] No. 1133, March 29, 1904, 3 SCRA 519.
[110] No. L-8431, October 30, 1958, 104 SCRA 748.
[111] See also Wallem Philippines Shipping, Inc. v. Hon. Minister of Labor, No. L-
50734-37, February 20, 1981, 102 scra 835, where Madrigal Shipping Company, Inc.
v. Ogilvie is cited.
[112] No. L-10422, January 11, 1916, 33 SCRA 162.
[113] No. L-15878, January 11, 1922, 42 SCRA 660.
[114] 7 Phil. 268 (1907).
[115] See also Knust v. Morse, 41 Phil 184 (1920).
[116] Brent School, Inc. v. Zamora, No. L-48494, February 5, 1990, 181 SCRA 702.
[117] No. L-22608, June 30, 1969, 28 SCRA 699.
[118] The Labor Code itself does not contain a specific provision for local workers with
fixed-term employment contracts. As the Court observed in Brent School, Inc., the
concept of fixed-term employment has slowly faded away from our labor laws, such
that reference to our labor laws is of limited use in determining the monetary benefits
to be awarded to fixed-term workers who are illegally dismissed.
[119] No. L-65545, July 9, 1986., 142 SCRA 542.
[120] G.R. No. 100399, August 4, 1992, 212 SCRA 132.
[122] G.R. No. 113363, August 24, 1999, 313 SCRA 1.
[124] See Estrada v. Escritor, A.M. No. P-02-1651, August 4, 2003, 408 SCRA 1.
[125] Id.
[126] Roe v. Wade, 410 U.S. 113 (1971); see also Carey v. Population Service
International, 431 U.S. 678 (1977).
[127] Sabio v. Gordon, G.R. Nos. 174340, 174318, 174177, October 16, 2006, 504
SCRA 704.
[128] Comment, rollo, p. 555.
[129] Memorandum of the Solicitor General, id. at 682-683
[130] Id. at p. 693.
[131] Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining

and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and employers, recognizing the
right of labor to its just share in the fruits of production and the right of enterprises to
reasonable returns to investments, and to expansion and growth.
[132] Manila Prince Hotel v. Government Service Insurance System, G.R. No.
122156, February 3, 1997, 267 SCRA 408.
[133] Basco v. Philippine Amusement and Gaming Corporation, G.R. No. 91649, May
14, 1991, 197 SCRA 52.
[135] Agabon v. National Labor Relations Commission, supra note 134, at 686.
[136] Associated Communications and Wireless Services, Ltd. v. Dumlao, G. R. No.

136762, November 21, 2002, 392 SCRA 269.
[137] Section 1. No person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection of the laws.
[138] G.R. No. 180719, August 22, 2008. See also PCL Shipping Philippines, Inc.
v. National Labor Relations Commission. G.R. No. 153031, December 14, 2006, 511
SCRA 44.

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5/11/2020 ANTONIO M. SERRANO v.

GALLANT MARITIME SERVICES

601 Phil. 245

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

ANTONIO M. SERRANO, PETITIONER, VS. GALLANT MARITIME SERVICES, INC.

United Nations Secretary-General Ban Ki-Moon Global Forum on Migration and

x x x x (Emphasis and underscoring supplied)

as well as moral and exemplary damages and attorney's fees.

All other claims are hereby DISMISSED.

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his

Respondents appealed[15] to the National Labor Relations Commission (NLRC) to

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are

The other findings are affirmed.

Even without considering the constitutional limitations [of] Sec. 10 of Republic

On the first and second issues

Impugning the constitutionality of the subject clause, petitioner contends that, in

The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it unduly

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the constitutional

The Arguments of the Solicitor General

decent and humane conditions."[46]

The Court's Ruling

The Court sustains petitioner on the first and second issues.

Does the subject clause violate Section 10,

The answer is in the negative.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

Does the subject clause violate Section 1,

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

To Filipino workers, the rights guaranteed under the foregoing constitutional

Under American jurisprudence, strict judicial scrutiny is triggered by suspect

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng

Admittedly, the view that prejudice to persons accorded special

Our present Constitution has gone further in guaranteeing vital

also on the judiciary to translate this pledge into a living reality.

But if the challenge to the statute is premised on the denial of a fundamental

Third, OFWs vis-à-vis local workers with fixed-period employment;

As pointed out by petitioner,[78] it was in Marsaman Manning Agency, Inc. v.

In the case at bar, the unexpired portion of private respondent's employment

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations

Among OFWs With Employment

To concretely illustrate the application of the foregoing interpretation of the subject

OFWs vis-à-vis Local Workers

lawyerly.ph/juris/view/cbf6e# [112] 19/35

Finally, in Vinta Maritime Co., Inc. v. National Labor Relations Commission,[123] an

The Court concludes that the subject clause contains a suspect

There being a suspect classification involving a vulnerable sector protected by the

The OSG explained further:

Any compromise/amicable settlement or voluntary agreement on any money

Non-compliance with the mandatory period for resolutions of cases provided

(2) Suspension for not more than ninety (90) days; or

Resort to these administrative measures is undoubtedly the less restrictive means of

Thus, the constitutional mandates of protection to labor and security of tenure

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be

Thus, Section 3, Article XIII cannot be treated as a principal source of direct

On the Third Issue