G.R. No.

167614 March 24, 2009 Resolution4 of the Court of Appeals (CA), which applied the subject clause,
entreating this Court to declare the subject clause unconstitutional.
ANTONIO M. SERRANO, Petitioner,
vs. Petitioner was hired by Gallant Maritime Services, Inc. and Marlow
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., Navigation Co., Ltd. (respondents) under a Philippine Overseas
INC., Respondents. Employment Administration (POEA)-approved Contract of Employment with
the following terms and conditions:
DECISION
Duration of contract 12 months
AUSTRIA-MARTINEZ, J.:
Position Chief Officer
For decades, the toil of solitary migrants has helped lift entire families and Basic monthly salary US$1,400.00
communities out of poverty. Their earnings have built houses, provided
health care, equipped schools and planted the seeds of businesses. They Hours of work 48.0 hours per week
have woven together the world by transmitting ideas and knowledge from
Overtime US$700.00 per month
country to country. They have provided the dynamic human link between
cultures, societies and economies. Yet, only recently have we begun to Vacation leave with pay 7.00 days per month5
understand not only how much international migration impacts
development, but how smart public policies can magnify this effect.
On March 19, 1998, the date of his departure, petitioner was constrained
United Nations Secretary-General Ban Ki-Moon to accept a downgraded employment contract for the position of Second
Global Forum on Migration and Development Officer with a monthly salary of US$1,000.00, upon the assurance and
Brussels, July 10, 20071 representation of respondents that he would be made Chief Officer by the
end of April 1998.6

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the
5th paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit: 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
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 Petitioner's employment contract was for a period of 12 months or from
placement fee with interest of twelve percent (12%) per annum, plus his March 19, 1998 up to March 19, 1999, but at the time of his repatriation on
salaries for the unexpired portion of his employment contract or for three May 26, 1998, he had served only two (2) months and seven (7) days of his
(3) months for every year of the unexpired term, whichever is contract, leaving an unexpired portion of nine (9) months and twenty-three
less. (23) days.

x x x x (Emphasis and underscoring supplied) 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$26,442.73, broken down as follows:
does not magnify the contributions of overseas Filipino workers (OFWs) to
national development, but exacerbates the hardships borne by them by
unduly limiting their entitlement in case of illegal dismissal to their lump- May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90
sum salary either for the unexpired portion of their employment contract
"or for three months for every year of the unexpired term, whichever is June 01/30, 1998 2,590.00
less" (subject clause). Petitioner claims that the last clause violates the July 01/31, 1998 2,590.00
OFWs' constitutional rights in that it impairs the terms of their contract,
deprives them of equal protection and denies them due process. August 01/31, 1998 2,590.00

Sept. 01/30, 1998 2,590.00

By way of Petition for Review under Rule 45 of the Rules of Court,
petitioner assails the December 8, 2004 Decision 3 and April 1, 2005
Oct. 01/31, 1998 2,590.00 and severally, in Philippine Currency, at the exchange rate
prevailing at the time of payment, the complainant’s (petitioner's)
Nov. 01/30, 1998 2,590.00 claim for attorney’s fees equivalent to ten percent (10%) of the
total amount awarded to the aforesaid employee under this
Dec. 01/31, 1998 2,590.00 Decision.
Jan. 01/31, 1999 2,590.00
The claims of the complainant for moral and exemplary damages
Feb. 01/28, 1999 2,590.00 are hereby DISMISSED for lack of merit.
Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00
All other claims are hereby DISMISSED.
----------------------------
---------------------------- SO ORDERED.13 (Emphasis supplied)
------------------------

25,382.23 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 --
Amount adjusted to chief mate's salary rather than the entire unexpired portion of nine months and 23
days of petitioner's employment contract - applying the subject
(March 19/31, 1998 to April 1/30, 1998) + 1,060.5010
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$2,590.00/compensation per month." 14
----------
Respondents appealed15 to the National Labor Relations
TOTAL CLAIM US$ 26,442.7311
Commission (NLRC) to question the finding of the LA that petitioner
was illegally dismissed.
as well as moral and exemplary damages and attorney's fees.
Petitioner also appealed16 to the NLRC on the sole issue that the LA
The LA rendered a Decision dated July 15, 1999, declaring the erred in not applying the ruling of the Court in Triple Integrated
dismissal of petitioner illegal and awarding him monetary benefits, Services, Inc. v. National Labor Relations Commission 17 that in case
to wit: of illegal dismissal, OFWs are entitled to their salaries for the
unexpired portion of their contracts.18
WHEREFORE, premises considered, judgment is hereby rendered
declaring that the dismissal of the complainant (petitioner) by the In a Decision dated June 15, 2000, the NLRC modified the LA
respondents in the above-entitled case was illegal and the Decision, to wit:
respondents are hereby ordered to pay the complainant
[petitioner], jointly and severally, in Philippine Currency, based on WHEREFORE, the Decision dated 15 July 1999 is MODIFIED.
the rate of exchange prevailing at the time of payment, the Respondents are hereby ordered to pay complainant, jointly and
amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. severally, in Philippine currency, at the prevailing rate of exchange
DOLLARS (US $8,770.00), representing the complainant’s at the time of payment the following:
salary for three (3) months of the unexpired portion of the
aforesaid contract of employment.1avvphi1
1. Three (3) months salary
The respondents are likewise ordered to pay the complainant $1,400 x 3 US$4,200.00
[petitioner], jointly and severally, in Philippine Currency, based on
the rate of exchange prevailing at the time of payment, the 2. Salary differential 45.00
amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing
the complainant’s claim for a salary differential. In addition, the US$4,245.00
respondents are hereby ordered to pay the complainant, jointly
 3. 10% Attorney’s fees 424.50 constitutional issues raised by the petitioner on the constitutionality of said
law, which unreasonably, unfairly and arbitrarily limits payment of the
TOTAL US$4,669.50 award for back wages of overseas workers to three (3) months.

III
The other findings are affirmed.

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

SO ORDERED.19
Republic Act No. 8042, the Court of Appeals gravely erred in law in
excluding from petitioner’s award the overtime pay and vacation pay
The NLRC corrected the LA's computation of the lump-sum salary awarded provided in his contract since under the contract they form part of his
to petitioner by reducing the applicable salary rate from US$2,590.00 to salary.28
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,
On February 26, 2008, petitioner wrote the Court to withdraw his petition
and for vacation leave pay."20
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
Petitioner filed a Motion for Partial Reconsideration, but this time he comment, counsel for petitioner filed a motion, urging the court to allow
questioned the constitutionality of the subject clause. 21 The NLRC denied partial execution of the undisputed monetary award and, at the same time,
the motion.22 praying that the constitutional question be resolved.30

Petitioner filed a Petition for Certiorari23 with the CA, reiterating the Considering that the parties have filed their respective memoranda, the
constitutional challenge against the subject clause. 24 After initially Court now takes up the full merit of the petition mindful of the extreme
dismissing the petition on a technicality, the CA eventually gave due importance of the constitutional question raised therein.
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.
On the first and second issues
151833, filed by petitioner.

The unanimous finding of the LA, NLRC and CA that the dismissal of
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on
petitioner was illegal is not disputed. Likewise not disputed is the salary
the reduction of the applicable salary rate; however, the CA skirted the
differential of US$45.00 awarded to petitioner in all three fora. What
constitutional issue raised by petitioner.25
remains disputed is only the computation of the lump-sum salary to be
awarded to petitioner by reason of his illegal dismissal.
His Motion for Reconsideration26 having been denied by the CA,27 petitioner
brings his cause to this Court on the following grounds:
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
I 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.
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 Impugning the constitutionality of the subject clause, petitioner contends
similar issue of granting unto the migrant worker back wages equal to the that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he
unexpired portion of his contract of employment instead of limiting it to is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to
three (3) months 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
II
The Arguments of Petitioner
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, Petitioner contends that the subject clause is unconstitutional because it
it is submitted that the Court of Appeals gravely erred in law when it failed unduly impairs the freedom of OFWs to negotiate for and stipulate in their
to discharge its judicial duty to decide questions of substance not overseas employment contracts a determinate employment period and a
theretofore determined by the Honorable Supreme Court, particularly, the fixed salary package.32 It also impinges on the equal protection clause, for
it treats OFWs differently from local Filipino workers (local workers) by Lastly, petitioner claims that the subject clause violates the due process
putting a cap on the amount of lump-sum salary to which OFWs are clause, for it deprives him of the salaries and other emoluments he is
entitled in case of illegal dismissal, while setting no limit to the same entitled to under his fixed-period employment contract.39
monetary award for local workers when their dismissal is declared illegal;
that the disparate treatment is not reasonable as there is no substantial The Arguments of Respondents
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 In their Comment and Memorandum, respondents contend that the
overseas.35 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
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 The Arguments of the Solicitor General
this, petitioner urges the Court to sort them out for the guidance of
affected OFWs.36 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
Petitioner further underscores that the insertion of the subject clause into employment contract. Rather, R.A. No. 8042 having preceded petitioner's
R.A. No. 8042 serves no other purpose but to benefit local placement contract, the provisions thereof are deemed part of the minimum terms of
agencies. He marks the statement made by the Solicitor General in his petitioner's employment, especially on the matter of money claims, as this
Memorandum, viz.: was not stipulated upon by the parties.42

Often, placement agencies, their liability being solidary, shoulder the Moreover, the OSG emphasizes that OFWs and local workers differ in terms
payment of money claims in the event that jurisdiction over the foreign of the nature of their employment, such that their rights to monetary
employer is not acquired by the court or if the foreign employer reneges on benefits must necessarily be treated differently. The OSG enumerates the
its obligation. Hence, placement agencies that are in good faith and which essential elements that distinguish OFWs from local workers: first, while
fulfill their obligations are unnecessarily penalized for the acts of the local workers perform their jobs within Philippine territory, OFWs perform
foreign employer. To protect them and to promote their continued helpful their jobs for foreign employers, over whom it is difficult for our courts to
contribution in deploying Filipino migrant workers, liability for money acquire jurisdiction, or against whom it is almost impossible to enforce
claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis judgment; and second, as held in Coyoca v. National Labor Relations
supplied) Commission43 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.
Petitioner argues that in mitigating the solidary liability of placement Hence, the OSG posits that there are rights and privileges exclusive to
agencies, the subject clause sacrifices the well-being of OFWs. Not only local workers, but not available to OFWs; that these peculiarities make for
that, the provision makes foreign employers better off than local a reasonable and valid basis for the differentiated treatment under the
employers because in cases involving the illegal dismissal of employees, subject clause of the money claims of OFWs who are illegally dismissed.
foreign employers are liable for salaries covering a maximum of only three Thus, the provision does not violate the equal protection clause nor Section
months of the unexpired employment contract while local employers are 18, Article II of the Constitution.45
liable for the full lump-sum salaries of their employees. As petitioner puts
it:
Lastly, the OSG defends the rationale behind the subject clause as a police
power measure adopted to mitigate the solidary liability of placement
In terms of practical application, the local employers are not limited to the agencies for this "redounds to the benefit of the migrant workers whose
amount of backwages they have to give their employees they have welfare the government seeks to promote. The survival of legitimate
illegally dismissed, following well-entrenched and unequivocal placement agencies helps [assure] the government that migrant workers
jurisprudence on the matter. On the other hand, foreign employers will are properly deployed and are employed under decent and humane
only be limited to giving the illegally dismissed migrant workers the conditions."46
maximum of three (3) months unpaid salaries notwithstanding the
unexpired term of the contract that can be more than three (3) months.38
The Court's Ruling
The Court sustains petitioner on the first and second issues. Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
When the Court is called upon to exercise its power of judicial review of the of contracts?
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 The answer is in the negative.
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 Petitioner's claim that the subject clause unduly interferes with the
opportunity;49 and (3) that the constitutional question is the very lis mota stipulations in his contract on the term of his employment and the fixed
of the case,50 otherwise the Court will dismiss the case or decide the same salary package he will receive57 is not tenable.
on some other ground.51
Section 10, Article III of the Constitution provides:
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 No law impairing the obligation of contracts shall be passed.
three months only as provided under the subject clause.
The prohibition is aligned with the general principle that laws newly
The constitutional challenge is also timely. It should be borne in mind that enacted have only a prospective operation, 58 and cannot affect acts or
the requirement that a constitutional issue be raised at the earliest contracts already perfected;59 however, as to laws already in existence,
opportunity entails the interposition of the issue in the pleadings before their provisions are read into contracts and deemed a part thereof. 60 Thus,
a competent court, such that, if the issue is not raised in the pleadings the non-impairment clause under Section 10, Article II is limited in
before that competent court, it cannot be considered at the trial and, if not application to laws about to be enacted that would in any way derogate
considered in the trial, it cannot be considered on appeal. 52 Records from existing acts or contracts by enlarging, abridging or in any manner
disclose that the issue on the constitutionality of the subject clause was changing the intention of the parties thereto.
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 As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995
Petition for Certiorari before the CA.54 Nonetheless, the issue is deemed preceded the execution of the employment contract between petitioner
seasonably raised because it is not the NLRC but the CA which has the and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042,
competence to resolve the constitutional issue. The NLRC is a labor particularly the subject clause, impaired the employment contract of the
tribunal that merely performs a quasi-judicial function – its function in the parties. Rather, when the parties executed their 1998 employment
present case is limited to determining questions of fact to which the contract, they were deemed to have incorporated into it all the provisions
legislative policy of R.A. No. 8042 is to be applied and to resolving such of R.A. No. 8042.
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. But even if the Court were to disregard the timeline, the subject clause
8042, and not to inquire into the validity of its provisions. The CA, on the may not be declared unconstitutional on the ground that it impinges on the
other hand, is vested with the power of judicial review or the power to impairment clause, for the law was enacted in the exercise of the police
declare unconstitutional a law or a provision thereof, such as the subject power of the State to regulate a business, profession or calling, particularly
clause.56 Petitioner's interposition of the constitutional issue before the CA the recruitment and deployment of OFWs, with the noble end in view of
was undoubtedly seasonable. The CA was therefore remiss in failing to ensuring respect for the dignity and well-being of OFWs wherever they
take up the issue in its decision. may be employed.61 Police power legislations adopted by the State to
promote the health, morals, peace, education, good order, safety, and
The third condition that the constitutional issue be critical to the resolution general welfare of the people are generally applicable not only to future
of the case likewise obtains because the monetary claim of petitioner to his contracts but even to those already in existence, for all private contracts
lump-sum salary for the entire unexpired portion of his 12-month must yield to the superior and legitimate measures taken by the State to
employment contract, and not just for a period of three months, strikes at promote public welfare.62
the very core of the subject clause.
Does the subject clause violate Section 1,
Thus, the stage is all set for the determination of the constitutionality of Article III of the Constitution, and Section 18,
the subject clause. Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative. Standardization Law (SSL), even when the rank-and-file employees of other
GFIs had been exempted from the SSL by their respective charters. Finding
Section 1, Article III of the Constitution guarantees: 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
No person shall be deprived of life, liberty, or property without due process significantly, it was in this case that the Court revealed the broad outlines
of law nor shall any person be denied the equal protection of the law. of its judicial philosophy, to wit:

Section 18,63 Article II and Section 3,64 Article XIII accord all members of the Congress retains its wide discretion in providing for a valid classification,
labor sector, without distinction as to place of deployment, full protection and its policies should be accorded recognition and respect by the courts
of their rights and welfare. of justice except when they run afoul of the Constitution. The deference
stops where the classification violates a fundamental right, or prejudices
To Filipino workers, the rights guaranteed under the foregoing persons accorded special protection by the Constitution. When
constitutional provisions translate to economic security and parity: all these violations arise, this Court must discharge its primary role as the
monetary benefits should be equally enjoyed by workers of similar vanguard of constitutional guaranties, and require a stricter and more
category, while all monetary obligations should be borne by them in equal exacting adherence to constitutional limitations. Rational basis should not
degree; none should be denied the protection of the laws which is enjoyed suffice.
by, or spared the burden imposed on, others in like circumstances. 65
Admittedly, the view that prejudice to persons accorded special protection
Such rights are not absolute but subject to the inherent power of Congress by the Constitution requires a stricter judicial scrutiny finds no support in
to incorporate, when it sees fit, a system of classification into its American or English jurisprudence. Nevertheless, these foreign decisions
legislation; however, to be valid, the classification must comply with these and authorities are not per se controlling in this jurisdiction. At best, they
requirements: 1) it is based on substantial distinctions; 2) it is germane to are persuasive and have been used to support many of our decisions. We
the purposes of the law; 3) it is not limited to existing conditions only; and should not place undue and fawning reliance upon them and regard them
4) it applies equally to all members of the class.66 as indispensable mental crutches without which we cannot come to our
own decisions through the employment of our own endowments. We live in
There are three levels of scrutiny at which the Court reviews the a different ambience and must decide our own problems in the light of our
constitutionality of a classification embodied in a law: a) the deferential or own interests and needs, and of our qualities and even idiosyncrasies as a
rational basis scrutiny in which the challenged classification needs only be people, and always with our own concept of law and justice. Our laws must
shown to be rationally related to serving a legitimate state interest; 67 b) be construed in accordance with the intention of our own lawmakers and
the middle-tier or intermediate scrutiny in which the government must such intent may be deduced from the language of each law and the
show that the challenged classification serves an important state interest context of other local legislation related thereto. More importantly, they
and that the classification is at least substantially related to serving that must be construed to serve our own public interest which is the be-all and
interest;68 and c) strict judicial scrutiny 69 in which a legislative classification the end-all of all our laws. And it need not be stressed that our public
which impermissibly interferes with the exercise of a fundamental right 70 or interest is distinct and different from others.
operates to the peculiar disadvantage of a suspect class 71 is presumed
unconstitutional, and the burden is upon the government to prove that the xxxx
classification is necessary to achieve a compelling state interest and
that it is the least restrictive means to protect such interest.72 Further, the quest for a better and more "equal" world calls for the use of
equal protection as a tool of effective judicial intervention.
Under American jurisprudence, strict judicial scrutiny is triggered by
suspect classifications73 based on race74 or gender75 but not when the Equality is one ideal which cries out for bold attention and action in the
classification is drawn along income categories. 76 Constitution. The Preamble proclaims "equality" as an ideal precisely in
protest against crushing inequities in Philippine society. The command to
It is different in the Philippine setting. In Central Bank (now Bangko Sentral promote social justice in Article II, Section 10, in "all phases of national
ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng development," further explicitated in Article XIII, are clear commands to
Pilipinas,77 the constitutionality of a provision in the charter of the Bangko the State to take affirmative action in the direction of greater equality. x x
Sentral ng Pilipinas (BSP), a government financial institution (GFI), was x [T]here is thus in the Philippine Constitution no lack of doctrinal support
challenged for maintaining its rank-and-file employees under the Salary
for a more vigorous state effort towards achieving a reasonable measure of the people from poverty, provide adequate social services, extend to them
equality. 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
Our present Constitution has gone further in guaranteeing vital social and strict scrutiny by this Court before it can pass muster. (Emphasis supplied)
economic rights to marginalized groups of society, including labor. Under
the policy of social justice, the law bends over backward to accommodate Imbued with the same sense of "obligation to afford protection to labor,"
the interests of the working class on the humane justification that those the Court in the present case also employs the standard of strict judicial
with less privilege in life should have more in law. And the obligation to scrutiny, for it perceives in the subject clause a suspect classification
afford protection to labor is incumbent not only on the legislative and prejudicial to OFWs.
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 Upon cursory reading, the subject clause appears facially neutral, for it
equalization of social and economic forces by the State so that justice in its applies to all OFWs. However, a closer examination reveals that the subject
rational and objectively secular conception may at least be approximated. clause has a discriminatory intent against, and an invidious impact on,
OFWs at two levels:
xxxx
First, OFWs with employment contracts of less than one year vis-à-
Under most circumstances, the Court will exercise judicial restraint in vis OFWs with employment contracts of one year or more;
deciding questions of constitutionality, recognizing the broad discretion
given to Congress in exercising its legislative power. Judicial scrutiny would Second, among OFWs with employment contracts of more than
be based on the "rational basis" test, and the legislative discretion would one year; and
be given deferential treatment.
Third, OFWs vis-à-vis local workers with fixed-period employment;
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 OFWs with employment contracts of less than one year vis-à-
scrutiny ought to be more strict. A weak and watered down view would vis OFWs with employment contracts of one year or more
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 As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v.
whether the actor committing the unconstitutional act is a private person National Labor Relations Commission 79 (Second Division, 1999) that the
or the government itself or one of its instrumentalities. Oppressive acts will Court laid down the following rules on the application of the periods
be struck down regardless of the character or nature of the actor. prescribed under Section 10(5) of R.A. No. 804, to wit:

xxxx A plain reading of Sec. 10 clearly reveals that the choice of which
amount to award an illegally dismissed overseas contract worker,
In the case at bar, the challenged proviso operates on the basis of the i.e., whether his salaries for the unexpired portion of his
salary grade or officer-employee status. It is akin to a distinction based on employment contract or three (3) months’ salary for every year of
economic class and status, with the higher grades as recipients of a benefit the unexpired term, whichever is less, comes into play only when
specifically withheld from the lower grades. Officers of the BSP now receive the employment contract concerned has a term of at least one (1)
higher compensation packages that are competitive with the industry, year or more. This is evident from the words "for every year of the
while the poorer, low-salaried employees are limited to the rates unexpired term" which follows the words "salaries x x x for three
prescribed by the SSL. The implications are quite disturbing: BSP rank-and- months." To follow petitioners’ thinking that private respondent is entitled
file employees are paid the strictly regimented rates of the SSL while to three (3) months salary only simply because it is the lesser amount is to
employees higher in rank - possessing higher and better education and completely disregard and overlook some words used in the statute while
opportunities for career advancement - are given higher compensation giving effect to some. This is contrary to the well-established rule in legal
packages to entice them to stay. Considering that majority, if not all, the hermeneutics that in interpreting a statute, care should be taken that
rank-and-file employees consist of people whose status and rank in life are every part or word thereof be given effect since the law-making body is
less and limited, especially in terms of job marketability, it is they - and not presumed to know the meaning of the words employed in the statue and to
the officers - who have the real economic and financial need for the have used them advisedly. Ut res magis valeat quam pereat. 80 (Emphasis
adjustment . This is in accord with the policy of the Constitution "to free supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his
Centennial 9 months 4 months 5 months 5 mon
10-month contract, but was awarded his salaries for the remaining 8
Transmarine v.
months and 6 days of his contract.
dela Cruz l86

Prior to Marsaman, however, there were two cases in which the Court Talidano v. 12 months 3 months 9 months 3 mon
made conflicting rulings on Section 10(5). One was Asian Center for Career Falcon87
and Employment System and Services v. National Labor Relations
88
Commission (Second Division, October 1998),81 which involved an OFW Univan v. CA 12 months 3 months 9 months 3 mon
who was awarded a two-year employment contract, but was dismissed 89
after working for one year and two months. The LA declared his dismissal Oriental v. CA 12 months more than 2 10 months 3 mon
illegal and awarded him SR13,600.00 as lump-sum salary covering eight months
months, the unexpired portion of his contract. On appeal, the Court
reduced the award to SR3,600.00 equivalent to his three months’ salary, PCL v. NLRC90 12 months more than 2 more or less 9 3 mon
this being the lesser value, to wit: months months

Olarte v. 12 months 21 days 11 months and 9 3 mon

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas Nayona91 days
employment without just, valid or authorized cause is entitled to his salary
for the unexpired portion of his employment contract or for three (3) JSS v.Ferrer92 12 months 16 days 11 months and 24 3 mon
months for every year of the unexpired term, whichever is less. days

Pentagon v. 12 months 9 months and 2 months and 23 2 mo

In the case at bar, the unexpired portion of private respondent’s
Adelantar93 7 days days days
employment contract is eight (8) months. Private respondent should
therefore be paid his basic salary corresponding to three (3) months or a Phil. Employ v. 12 months 10 months 2 months Unexp
total of SR3,600.82 Paramio, et al.94

Another was Triple-Eight Integrated Services, Inc. v. National Labor Flourish 2 years 26 days 23 months and 4 6 m
Relations Commission (Third Division, December 1998),83 which involved Maritime v. days month
95
an OFW (therein respondent Erlinda Osdana) who was originally granted a Almanzor year o
12-month contract, which was deemed renewed for another 12 months.
After serving for one year and seven-and-a-half months, respondent Athenna 1 year, 10 1 month 1 year, 9 months 6 m
Osdana was illegally dismissed, and the Court awarded her salaries for the Manpower v. months and and 28 days month
entire unexpired portion of four and one-half months of her contract. Villanos 96 28 days year o

The Marsaman interpretation of Section 10(5) has since been adopted in As the foregoing matrix readily shows, the subject clause classifies OFWs
the following cases: 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
Case Title Contract Period of Unexpired Period Applied in
contract. The second category consists of OFWs with fixed-period
Period Service Period the Computation
employment contracts of one year or more; in case of illegal dismissal,
of the Monetary
they are entitled to monetary award equivalent to only 3 months of the
Award
unexpired portion of their contracts.
Skippers v. 6 months 2 months 4 months 4 months
Maguad84 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-
Bahia Shipping 9 months 8 months 4 months 4 months
month contract, but was awarded his salaries for the remaining 4 months.
v. Reynaldo In contrast, the respondent OFWs in Oriental and PCL who had also worked
Chua 85 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 Their claims were subjected to a uniform rule of computation: their basic
dismissed were awarded their salaries for only 3 months. salaries multiplied by the entire unexpired portion of their employment
contracts.
To illustrate the disparity even more vividly, the Court assumes a
hypothetical OFW-A with an employment contract of 10 months at a The enactment of the subject clause in R.A. No. 8042 introduced a
monthly salary rate of US$1,000.00 and a hypothetical OFW-B with an differentiated rule of computation of the money claims of illegally
employment contract of 15 months with the same monthly salary rate of dismissed OFWs based on their employment periods, in the
US$1,000.00. Both commenced work on the same day and under the same process singling out one category whose contracts have an unexpired
employer, and were illegally dismissed after one month of work. Under the portion of one year or more and subjecting them to the peculiar
subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his disadvantage of having their monetary awards limited to their salaries for
salaries for the remaining 9 months of his contract, whereas OFW-B will be 3 months or for the unexpired portion thereof, whichever is less, but all the
entitled to only US$3,000.00, equivalent to his salaries for 3 months of the while sparing the other category from such prejudice, simply because the
unexpired portion of his contract, instead of US$14,000.00 for the latter's unexpired contracts fall short of one year.
unexpired portion of 14 months of his contract, as the US$3,000.00 is the
lesser amount. Among OFWs With Employment Contracts of More Than One Year

The disparity becomes more aggravating when the Court takes into Upon closer examination of the terminology employed in the subject
account jurisprudence that, prior to the effectivity of R.A. No. 8042 clause, the Court now has misgivings on the accuracy of
on July 14, 1995,97 illegally dismissed OFWs, no matter how long the the Marsaman interpretation.
period of their employment contracts, were entitled to their salaries for the
entire unexpired portions of their contracts. The matrix below speaks for
itself: 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
Case Title Contract Period of Unexpired word "term"
Period Applied means a limited or definite extent of time. 105 Corollarily, that
in the
Period Service Period Computation of the but part of an "unexpired term" is significant in many ways:
"every year" is
Monetaryfirst, the unexpired term must be at least one year, for if it were any
Award
shorter, there would be no occasion for such unexpired term to be
ATCI v. CA, et 2 years 2 months 22 months measured by every year; and second, the original term must be more than
22 months
al.98 one year, for otherwise, whatever would be the unexpired term thereof will
not reach even a year. Consequently, the more decisive factor in the
Phil. Integrated 2 years 7 days 23 months 23 months and 23 days of when the subject clause "for three (3) months for every
determination
v. NLRC99 and 23 days 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
JGB v. NLC100 2 years 9 months 15 months 15 months
unexpired portion of the contract period -- the subject clause applies in
cases when the unexpired portion of the contract period is at least one
Agoy v. NLRC101 2 years 2 months 22 months 22 months
year, which arithmetically requires that the original contract period be
more than one year.
EDI v. NLRC, et 2 years 5 months 19 months 19 months
al.102
Viewed in that light, the subject clause creates a sub-layer of
Barros v. NLRC, 12 months 4 months 8 months 8 monthsdiscrimination among OFWs whose contract periods are for more than one
et al.103 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
Philippine 12 months 6 months and 5 months and 5 monthsthereof,
and 18 days
while those who are illegally dismissed with one year or more
Transmarine v. 22 days 18 days remaining in their contracts shall be covered by the subject clause, and
Carilla104 their monetary benefits limited to their salaries for three months only.

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract To concretely illustrate the application of the foregoing interpretation of
periods or the unexpired portions thereof, were treated alike in terms of the subject clause, the Court assumes hypothetical OFW-C and OFW-D,
the computation of their monetary benefits in case of illegal dismissal. 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 Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
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 which the Court held the shipping company liable for the salaries and
the latter's monetary benefits. Thus, OFW-C will be entitled, not to subsistence allowance of its illegally dismissed employees for
US$12,000,00 or the latter's total salaries for the 12 months unexpired the entire unexpired portion of their employment contracts.
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 While Article 605 has remained good law up to the present, 111 Article 299
subject clause, for there are only 11 months left in the latter's contract of the Code of Commerce was replaced by Art. 1586 of the Civil Code of
period. Thus, OFW-D will be entitled to US$11,000.00, which is equivalent 1889, to wit:
to his/her total salaries for the entire 11-month unexpired portion.
Article 1586. Field hands, mechanics, artisans, and other laborers hired for
OFWs vis-à-vis Local Workers a certain time and for a certain work cannot leave or be dismissed without
With Fixed-Period Employment sufficient cause, before the fulfillment of the contract. (Emphasis supplied.)

As discussed earlier, prior to R.A. No. 8042, a uniform system of Citing Manresa, the Court in Lemoine v. Alkan 112 read the disjunctive "or" in
computation of the monetary awards of illegally dismissed OFWs was in Article 1586 as a conjunctive "and" so as to apply the provision to local
place. This uniform system was applicable even to local workers with fixed- workers who are employed for a time certain although for no particular
term employment.107 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
The earliest rule prescribing a uniform system of computation was actually founded on Article 1586, local workers are entitled to recover damages to
Article 299 of the Code of Commerce (1888),108 to wit: 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
Article 299. If the contracts between the merchants and their shop clerks Court in Aldaz v. Gay114 held:
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 doctrine is well-established in American jurisprudence, and nothing
the fulfillment of said contract until the termination of the period agreed has been brought to our attention to the contrary under Spanish
upon. jurisprudence, that when an employee is wrongfully discharged it is his
duty to seek other employment of the same kind in the same community,
Persons violating this clause shall be subject to indemnify the loss and for the purpose of reducing the damages resulting from such wrongful
damage suffered, with the exception of the provisions contained in the discharge. However, while this is the general rule, the burden of showing
following articles. 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
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing the defendant. When an employee is wrongfully discharged under a
provision to determine the liability of a shipping company for the illegal contract of employment his prima facie damage is the amount which he
discharge of its managers prior to the expiration of their fixed-term would be entitled to had he continued in such employment until the
employment. The Court therein held the shipping company liable for the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs.
salaries of its managers for the remainder of their fixed-term employment. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)
There is a more specific rule as far as seafarers are concerned: Article 605
of the Code of Commerce which provides: 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
Article 605. If the contracts of the captain and members of the crew with Work), Chapter 3, Title VIII, Book IV. 116 Much like Article 1586 of the Civil
the agent should be for a definite period or voyage, they cannot be Code of 1889, the new provisions of the Civil Code do not expressly
discharged until the fulfillment of their contracts, except for reasons of provide for the remedies available to a fixed-term worker who is illegally
insubordination in serious matters, robbery, theft, habitual drunkenness, discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc.
and damage caused to the vessel or to its cargo by malice or manifest or v. Rich,117 the Court carried over the principles on the payment of damages
proven negligence. 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 What constitutes compelling state interest is measured by the scale of
employment contract was entered into in 1952, when the new Civil Code rights and powers arrayed in the Constitution and calibrated by
was already in effect.118 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
More significantly, the same principles were applied to cases involving safeguarding health or maintaining medical standards, 126 or in maintaining
overseas Filipino workers whose fixed-term employment contracts were access to information on matters of public concern.127
illegally terminated, such as in First Asian Trans & Shipping Agency, Inc. v.
Ople,119 involving seafarers who were illegally discharged. In Teknika Skills In the present case, the Court dug deep into the records but found no
and Trade Services, Inc. v. National Labor Relations Commission, 120 an OFW compelling state interest that the subject clause may possibly serve.
who was illegally dismissed prior to the expiration of her fixed-period
employment contract as a baby sitter, was awarded salaries corresponding The OSG defends the subject clause as a police power measure "designed
to the unexpired portion of her contract. The Court arrived at the same to protect the employment of Filipino seafarers overseas x x x. By limiting
ruling in Anderson v. National Labor Relations Commission, 121 which the liability to three months [sic], Filipino seafarers have better chance of
involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two getting hired by foreign employers." The limitation also protects the
years, but who was illegally dismissed after only nine months on the job -- interest of local placement agencies, which otherwise may be made to
the Court awarded him salaries corresponding to 15 months, the unexpired shoulder millions of pesos in "termination pay."128
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 The OSG explained further:
contract after he was wrongfully discharged. Finally, in Vinta Maritime Co.,
Inc. v. National Labor Relations Commission, 123 an OFW whose 12-month Often, placement agencies, their liability being solidary, shoulder the
contract was illegally cut short in the second month was declared entitled payment of money claims in the event that jurisdiction over the foreign
to his salaries for the remaining 10 months of his contract. 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
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term fulfill their obligations are unnecessarily penalized for the acts of the
employment who were illegally discharged were treated alike in terms of foreign employer. To protect them and to promote their continued helpful
the computation of their money claims: they were uniformly entitled to contribution in deploying Filipino migrant workers, liability for money
their salaries for the entire unexpired portions of their contracts. But with are reduced under Section 10 of RA 8042.
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 This measure redounds to the benefit of the migrant workers whose
more in their employment contract have since been differently treated in welfare the government seeks to promote. The survival of legitimate
that their money claims are subject to a 3-month cap, whereas no such placement agencies helps [assure] the government that migrant workers
limitation is imposed on local workers with fixed-term employment. are properly deployed and are employed under decent and humane
conditions.129 (Emphasis supplied)
The Court concludes that the subject clause contains a suspect
classification in that, in the computation of the monetary benefits However, nowhere in the Comment or Memorandum does the OSG cite the
of fixed-term employees who are illegally discharged, it imposes a source of its perception of the state interest sought to be served by the
3-month cap on the claim of OFWs with an unexpired portion of subject clause.
one year or more in their contracts, but none on the claims of
other OFWs or local workers with fixed-term employment. The The OSG locates the purpose of R.A. No. 8042 in the speech of Rep.
subject clause singles out one classification of OFWs and burdens Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314), from
it with a peculiar disadvantage. 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
There being a suspect classification involving a vulnerable sector protected natural for none of the 29 provisions in HB 14314 resembles the subject
by the Constitution, the Court now subjects the classification to a strict clause.
judicial scrutiny, and determines whether it serves a compelling state
interest through the least restrictive means. 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 the Court finds no discernible state interest, let alone a compelling one,
contrary, the Labor Arbiters of the National Labor Relations Commission that is sought to be protected or advanced by the adoption of the subject
(NLRC) shall have the original and exclusive jurisdiction to hear and decide, clause.
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 In fine, the Government has failed to discharge its burden of proving the
complaint, the claim arising out of an employer-employee relationship or existence of a compelling state interest that would justify the perpetuation
by virtue of any law or contract involving Filipino workers for overseas of the discrimination against OFWs under the subject clause.
employment including claims for actual, moral, exemplary and other forms
of damages.
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
The liability of the principal and the recruitment/placement agency or any placement agencies, such callous and cavalier rationale will have to be
and all claims under this Section shall be joint and several. rejected. There can never be a justification for any form of government
action that alleviates the burden of one sector, but imposes the same
Any compromise/amicable settlement or voluntary agreement on any burden on another sector, especially when the favored sector is composed
money claims exclusive of damages under this Section shall not be less of private businesses such as placement agencies, while the
than fifty percent (50%) of such money claims: Provided, That any disadvantaged sector is composed of OFWs whose protection no less than
installment payments, if applicable, to satisfy any such compromise or the Constitution commands. The idea that private business interest can be
voluntary settlement shall not be more than two (2) months. Any elevated to the level of a compelling state interest is odious.
compromise/voluntary agreement in violation of this paragraph shall be
null and void. 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
Non-compliance with the mandatory period for resolutions of cases mechanisms already in place that can be employed to achieve that
provided under this Section shall subject the responsible officials to any or purpose without infringing on the constitutional rights of OFWs.
all of the following penalties:
The POEA Rules and Regulations Governing the Recruitment and
(1) The salary of any such official who fails to render his decision or Employment of Land-Based Overseas Workers, dated February 4, 2002,
resolution within the prescribed period shall be, or caused to be, imposes administrative disciplinary measures on erring foreign employers
withheld until the said official complies therewith; who default on their contractual obligations to migrant workers and/or their
Philippine agents. These disciplinary measures range from temporary
(2) Suspension for not more than ninety (90) days; or 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
(3) Dismissal from the service with disqualification to hold any foreign employers.
appointive public office for five (5) years.
Resort to these administrative measures is undoubtedly the less restrictive
Provided, however, That the penalties herein provided shall be without means of aiding local placement agencies in enforcing the solidary liability
prejudice to any liability which any such official may have incurred under of their foreign principals.
other existing laws or rules and regulations as a consequence of violating
the provisions of this paragraph.
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
But significantly, Section 10 of SB 2077 does not provide for any rule on protection.1avvphi1
the computation of money claims.
Further, there would be certain misgivings if one is to approach the
A rule on the computation of money claims containing the subject clause declaration of the unconstitutionality of the subject clause from the lone
was inserted and eventually adopted as the 5th paragraph of Section 10 of perspective that the clause directly violates state policy on labor under
R.A. No. 8042. The Court examined the rationale of the subject clause in Section 3,131 Article XIII of the Constitution.
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,
While all the provisions of the 1987 Constitution are presumed self- prejudice against persons favored by the Constitution with special
executing,132 there are some which this Court has declared not judicially protection -- such as the working class or a section thereof -- the Court
enforceable, Article XIII being one,133 particularly Section 3 thereof, the may recognize the existence of a suspect classification and subject the
nature of which, this Court, in Agabon v. National Labor Relations same to strict judicial scrutiny.
Commission,134 has described to be not self-actuating:
The view that the concepts of suspect classification and strict judicial
Thus, the constitutional mandates of protection to labor and security of scrutiny formulated in Central Bank Employee Association exaggerate the
tenure may be deemed as self-executing in the sense that these are significance of Section 3, Article XIII is a groundless apprehension. Central
automatically acknowledged and observed without need for any enabling Bank applied Article XIII in conjunction with the equal protection clause.
legislation. However, to declare that the constitutional provisions are Article XIII, by itself, without the application of the equal protection clause,
enough to guarantee the full exercise of the rights embodied therein, and has no life or force of its own as elucidated in Agabon.
the realization of ideals therein expressed, would be impractical, if not
unrealistic. The espousal of such view presents the dangerous tendency of Along the same line of reasoning, the Court further holds that the subject
being overbroad and exaggerated. The guarantees of "full protection to clause violates petitioner's right to substantive due process, for it deprives
labor" and "security of tenure", when examined in isolation, are facially him of property, consisting of monetary benefits, without any existing valid
unqualified, and the broadest interpretation possible suggests a blanket governmental purpose.136
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 argument of the Solicitor General, that the actual purpose of the
the contemplation of the framers. Subsequent legislation is still needed to subject clause of limiting the entitlement of OFWs to their three-month
define the parameters of these guaranteed rights to ensure the protection salary in case of illegal dismissal, is to give them a better chance of getting
and promotion, not only the rights of the labor sector, but of the hired by foreign employers. This is plain speculation. As earlier discussed,
employers' as well. Without specific and pertinent legislation, judicial there is nothing in the text of the law or the records of the deliberations
bodies will be at a loss, formulating their own conclusion to approximate at leading to its enactment or the pleadings of respondent that would indicate
least the aims of the Constitution. that there is an existing governmental purpose for the subject clause, or
even just a pretext of one.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own,
be a source of a positive enforceable right to stave off the dismissal The subject clause does not state or imply any definitive governmental
of an employee for just cause owing to the failure to serve proper notice or purpose; and it is for that precise reason that the clause violates not just
hearing. As manifested by several framers of the 1987 Constitution, the petitioner's right to equal protection, but also her right to substantive due
provisions on social justice require legislative enactments for their process under Section 1,137 Article III of the Constitution.
enforceability.135 (Emphasis added)
The subject clause being unconstitutional, petitioner is entitled to his
Thus, Section 3, Article XIII cannot be treated as a principal source of direct salaries for the entire unexpired period of nine months and 23 days of his
enforceable rights, for the violation of which the questioned clause may be employment contract, pursuant to law and jurisprudence prior to the
declared unconstitutional. It may unwittingly risk opening the floodgates of enactment of R.A. No. 8042.
litigation to every worker or union over every conceivable violation of so
broad a concept as social justice for labor. On the Third Issue

It must be stressed that Section 3, Article XIII does not directly bestow on Petitioner contends that his overtime and leave pay should form part of the
the working class any actual enforceable right, but merely clothes it with salary basis in the computation of his monetary award, because these are
the status of a sector for whom the Constitution urges protection through fixed benefits that have been stipulated into his contract.
executive or legislative action and judicial recognition. Its utility is best
limited to being an impetus not just for the executive and legislative Petitioner is mistaken.
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 The word salaries in Section 10(5) does not include overtime and leave
Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate pay. For seafarers like petitioner, DOLE Department Order No. 33, series
Justice now Chief Justice Reynato S. Puno, formulated the judicial precept 1996, provides a Standard Employment Contract of Seafarers, in which
that when the challenge to a statute is premised on the perpetuation of 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.